To The Moon

$Colgate-Palmolive(CL)$ $Clorox(CLX)$

Dividend investing remains one of the most reliable ways to generate passive income and build long-term wealth. When done right, it combines the best of both worlds: steady income from dividend payouts and the potential for capital appreciation over time.

Among the most well-known consumer staples companies that dividend investors gravitate toward are Clorox (CLX) and Colgate-Palmolive (CL). Both firms offer global brand recognition, a long track record of profitability, and decades of uninterrupted dividend payments.

In this article, I’ll compare Clorox and Colgate-Palmolive across several key financial metrics to determine which company presents a more compelling opportunity for long-term dividend investors. We’ll explore:

• Dividend yield

• Revenue growth

• Return on invested capital (ROIC)

• Cash flow generation

• Discounted cash flow (DCF) valuations

• And ultimately, which stock offers better value today

Let’s dive in.

Colgate vs Clorox earning comparison

detailed earnings comparison between Colgate-Palmolive (NYSE: CL) and Clorox (NYSE: CLX), focusing on the most recent financial results and long-term profitability metrics. This analysis highlights which company is delivering better earnings performance, consistency, and long-term shareholder value.

Colgate vs. Clorox: Earnings Comparison (2024-2025)

Profitability and Margin Strength

Colgate-Palmolive

• Net Margin: ~14%

• Operating Margin: ~22%

• Gross Margin: ~59%

• Strong international presence and premium branding support high margins.

• Consistent earnings due to exposure to essential personal care and oral hygiene products.

• EPS growth CAGR (10-yr): ~6%

Clorox

• Net Margin: ~8–10% (pressured recently by cost inflation)

• Operating Margin: ~13%

• Gross Margin: ~42% (recovered after a dip during 2022–2023 inflationary spike)

• Experienced volatility post-pandemic due to supply chain and cost headwinds.

• EPS growth CAGR (10-yr): ~4–5%

Winner: Colgate-Palmolive Colgate consistently delivers superior margins and earnings stability due to its pricing power, higher-margin product mix, and scale advantages.

Earnings Growth Trends (Past 10 Years)

Colgate-Palmolive

• EPS growth (2014–2024): From ~$2.40 to ~$3.40

• CAGR: ~3.6%

• Stable earnings growth despite FX headwinds from international exposure.

• Regular cost discipline and margin preservation.

Clorox

• EPS growth (2014–2024): From ~$4.30 to ~$4.75

• CAGR: ~1%

• More cyclical earnings due to product mix, commodity price sensitivity, and lower pricing power.

• Pandemic provided a temporary earnings boost, followed by normalization and cost inflation headwinds.

Winner: Colgate-Palmolive Clorox’s earnings profile has been more erratic, while Colgate has delivered steadier, compounding growth.

Return on Equity and Capital Efficiency

Both companies use debt to enhance returns (ROE is inflated due to low equity), but ROIC and ROA give a clearer sense of operating efficiency.

Winner: Colgate-Palmolive

Forward Earnings Outlook (2025–2026)

While Clorox’s nominal EPS is higher, Colgate trades at a similar multiple but with greater earnings quality and consistency. Its geographic diversification also provides a buffer against domestic economic shocks.

Why Dividend Stocks Matter

Dividend stocks appeal to investors for a number of reasons:

• They offer steady, recurring income.

• Many companies increase their dividends annually, helping investors keep up with inflation.

• Dividend-paying firms tend to be more financially stable, with proven business models and disciplined capital allocation.

• Reinvesting dividends can lead to powerful compound growth over time.

For conservative investors and those nearing retirement, dividend income can offer financial independence. For younger investors, reinvested dividends accelerate wealth accumulation. Either way, the right dividend stocks can form the bedrock of a long-term portfolio.

1. Dividend Yield Comparison

Let’s begin with the most obvious metric: dividend yield.

• Clorox (CLX): 3.6%

• Colgate-Palmolive (CL): 2.18%

From a pure income standpoint, Clorox clearly comes out ahead. At 3.6%, its yield is nearly two-thirds higher than Colgate’s, which makes it more appealing to income-focused investors today.

However, there’s important context: both yields trail the 4.5% yield currently offered by 10-year U.S. Treasury bonds. While dividend stocks offer upside potential, bonds carry less risk if held to maturity — especially in turbulent markets.

Still, stocks offer the ability to grow both earnings and dividends over time, making them more attractive over a long time horizon.

Winner: Clorox (for current income)

2. Revenue Growth

Next, let’s look at how these businesses have grown over the long term.

Colgate-Palmolive:

• 20-year revenue CAGR: 2.9%

• 2005 revenue: $11.4 billion

• 2025 revenue: $19.9 billion (TTM)

Clorox:

• 20-year revenue CAGR: 2.5%

• 2005 revenue: $4.4 billion

• 2025 revenue: $7.0 billion (TTM)

Neither company is a high-growth business — they’re mature consumer staples companies. But Colgate has slightly outperformed Clorox in growing its top line, despite already being the larger business.

Winner: Colgate-Palmolive

3. Return on Invested Capital (ROIC)

ROIC is one of the most telling indicators of a company’s quality. It measures how efficiently a company turns investor capital into profits.

• Colgate-Palmolive ROIC: 26.4%

• Clorox ROIC: 18.8%

We can also compare these numbers to each company’s weighted average cost of capital (WACC):

• Colgate-Palmolive WACC: 7%

• Clorox WACC: 6.73%

This gives us an ROIC-to-WACC spread of:

• Colgate: 3.8x

• Clorox: 2.8x

Both companies are significantly exceeding their cost of capital, which means they’re generating shareholder value. But Colgate’s advantage here is substantial — its capital efficiency is among the best in its sector.

Winner: Colgate-Palmolive

4. Operating Cash Flow Growth

Operating cash flow is the engine that funds dividends, buybacks, and reinvestment. A healthy and growing cash flow base is essential for dividend sustainability.

Colgate-Palmolive:

• 20-year CAGR: 4.3%

• From $1.88 billion to $4 billion

Clorox:

• 20-year CAGR: 1.5%

• From ~$800 million to ~$1 billion

Once again, Colgate demonstrates stronger, more consistent growth in operating cash flow. For long-term dividend safety and potential future increases, this trend is very encouraging.

Winner: Colgate-Palmolive

5. Discounted Cash Flow Valuation

I ran a proprietary discounted cash flow (DCF) model for both companies, projecting their future free cash flows and discounting them to present value using their respective WACCs.

Colgate-Palmolive:

• Present value of future FCF: $104.5 billion

• Intrinsic value per share: $119.87

• Current price: $91.79

• Undervaluation: ~30%

Clorox:

• Present value of future FCF: $29.3 billion

• Intrinsic value per share: $212

• Current price: $135

• Undervaluation: ~36%

Both stocks are undervalued based on intrinsic cash flow — Clorox slightly more so. But valuation is only one piece of the puzzle; growth, capital efficiency, and brand strength all matter, too.

Winner: Clorox (slight edge on valuation)

Final Verdict: Which Dividend Stock Is Better?

Let’s tally up the comparison:

Overall Winner: Colgate-Palmolive

While Clorox wins on yield and appears slightly more undervalued today, Colgate-Palmolive consistently outperforms across the quality metrics that matter most to long-term investors: capital efficiency, operating cash flow growth, and revenue consistency.

For investors focused on total return, dividend safety, and resilience, Colgate stands out as the superior business — even if its yield is a bit lower today.

That said, both companies are worthy of a spot in any dividend investor’s portfolio. If you value yield more today, Clorox may suit your goals better. If you prioritize business quality and growth potential, Colgate-Palmolive is a standout.

Final Thoughts

Dividend investing doesn’t have to be complicated. When you focus on business quality, long-term cash flow, and valuation discipline, you set yourself up for long-term success.

Colgate and Clorox are both rock-solid dividend payers — but in a head-to-head comparison, Colgate-Palmolive wins by a narrow but meaningful margin.

As always, continue doing your own due diligence. And if you're interested in more dividend stock comparisons like this one — let me know which companies you'd like to see next!

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub