As a dividend growth investor, consumer staples companies are great because people need to brush their teeth, clean their house and wash their body whether the economy is in boom or bust mode. It's the consistency in their operations and steady, although sometimes slow, growth that allows them to continue to grow year in and year out and the reason why you can find several consumer staples companies on the list of dividend champions. Earlier this week I updated my valuation on The Procter & Gamble Company (PG) (Full Analysis Here) but today I wanted to see how Colgate-Palmolive Company (CL) stacks up. Colgate-Palmolive closed trading on Monday, April 28th at $67.86 giving a current yield of 2.12%.
Analysts followed by Yahoo!Finance expect Colgate-Palmolive Company to grow earnings 8.90% per year over the next five years and I've assumed they can grow at 7.12% (80% of 8.90%) for the next three years and at 3.50% in perpetuity. Running these numbers through a discounted earnings analysis with a 10% discount rate and summing over 30 years yields a fair value price of $62.01. This means the shares are trading at a 9.4% premium to the discounted earnings analysis.
Click here to read the rest of the analysis on Seeking Alpha.
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