Manufacturer of cleaning and detergent The Clorox Company (NYSE: CLX) has been paying dividends for over fifty years. The current dividend yield is roughly 3%. However, against the backdrop of inflation, the corporation faced a significant fall in free cash flow.
CLX has benefited from the epidemic, which has significantly raised the demand for cleansers and disinfectants. Such demand could not be sustained for an extended period of time; hence, a steady decline against the backdrop of economic recovery and the diminishing impact of the epidemic was predicted.
The main issue for The Clorox Company (CLX), however, was not decreased sales, but the impact of inflation and supply chain issues. As a result, Clorox’s profit margins are quickly declining, undermining the cash flows needed to maintain dividend payments.
The Clorox Company (CLX) intends to limit inflationary effects by boosting prices across the board. It’s still hard to say how this will effect demand and the company’s total cash flow. The corporation is presently paying $566 million in dividends, while free cash flow has plateaued at $563 million. This signifies that the corporation needs greater capital to maintain the same dividend volume.
It should be highlighted that dividends are a significant component in attracting shareholders, particularly substantial ones, for such a cautious corporation as The Clorox Company (CLX), with rather modest development (the pandemic time being an exception).
For the previous 53 years, the firm has boosted its rewards every year. Over the last two decades, the yearly payout has increased by 428 percent, and the effective return is at 3 percent. In the near future, CLX will need to address the issue of free cash flow.
CLX stock rose 5.91 percent in the previous week and 7.22 percent in the previous month. During the previous quarter, this company’s stock climbed by 11.07 percent. The stock has been down -5.08 percent in the previous six months, with a full-year loss of -14.02 percent. This stock’s year-to-date (YTD) price performance is presently negative at -9.94 percent as of this writing.