Last but not least Clorox will target margin expansion and maximizing cash flow through implementation a continued robust cost-saving program and maintaining price increases the company has taken.
The Return on Assets increased to 11% in 2008 from 7.80% in 2001. I used return on assets, since the stockholders equity portion of the balance sheet was negative after in 2004 Clorox exchanged its ownership in a subsidiary for approximately 29% of the company's outstanding shares at the time of this transaction. In addition to that the company spent over 1.65 billion in share buybacks in 2007 and 2008.
Annual dividends have increased by an average of 13% annually since 1999, which is lower than the growth in EPS. Clorox has an ever-evolving dividend payment policy, which doesn't stop the company from raising the annual distributions for 21 years in a row. There have been times such as in 2007 when dividend were raised twice while there are times such as 2003-2004 and 2000-2002 when dividends were not being raised for 6 to 9 quarters.
A 13 % growth in dividends translates into the dividend payment doubling every five and a half years. If we look at historical data, going as far back as 1983, The Clorox Company has actually managed to double its dividend payment every six years on average. The dividend is very well covered at the moment and is safe.
The dividend payout ratio remained above 50% until 2002. Since then the dividend payout ratio has consistently remained below 50%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Clorox is trading at a P/E of 15 and yields 3.10%. I believe that the company is attractively valued at current levels and would consider adding to my position in the stock.
In comparison Procter & Gamble (PG) trades at a P/E multiple of 15 and yields 3.10%, Kimberly-Clark (KMB) trades at a P/E multiple of 14 and yields 4.30%, while Colgate Palmolive (CL) trades at a P/E multiple 20 while yielding 2.50%.
Full Disclosure: Long CL, CLX, PG, and KMB.