Opinions Solicited: CLX (Clorox)
It's been really quiet here lately, so maybe it's a good time to ask for opinions.
I've been a DGI for nearly eight years. I prefer the more predictable dividend growers, like JNJ, MCD, LMT. Clorox (CLX) has fit the bill, with an annual average dividend growth rate north of 7% since I have owned it. In my nearly eight years of DGI, I have sold ONE stock "for cause"--Kraft Heinz, before it cut its dividend, but after I lost trust in management.
I have never sold a DGI stock for low yield (capital appreciation). I figure as long as the stock is supporting my (personally constructed) "growing annuity," it deserves to be kept in my portfolio. CLX has done that well. It's current yield is around 2.06%, but I expect a dividend increase shortly that should raise that to around 2.25% or so. I expect that. My concern is not with the yield or flow of income. My concern is that CLX has appreciated too much due to the Coronavirus crisis--from around $155 in January to the $205- to nearly $210-range recently--and that its long-term growth, even if boosted by more interest in its sanitizing products, is not enough to support a P/E of 30.
In summary: CLX has done just what I want a stock in my DGI portfolio to do, but I am fearful it is significantly overvalued. I have never sold a winner from my DGI portfolio, and it is in a taxable account, so there would be sizable state and federal taxes due to its 150% appreciation since bought. I am concerned about the level of the overall market right now, so I would probably keep the proceeds in cash for awhile. If I wanted to replace the dividend income in the short-ish term, I would likely buy a ute like AEP or PNW. I am not interested in high-yield investments, REITS, MLPs, BDCs, etc.
Thanks for any and all serious feedback.
Addendum: Someone (Don't recall whom) ask for opinions on CLX about two years ago, when it was about $120-$125. My advice then was: If there is nothing fundamentally wrong with the stock, buy it when its yield hits 3% (which was the upper $120s at the time). If that person bought, I would be interested in his (her) opinion. |
