Admit it. Most of us hate doing the laundry. How much fun can you have throwing a bunch of dirty clothes into a washer and dryer and then sit and fold each item? Well, as a dividend investor laundry time might be a little more exciting knowing that you are getting paid to do your laundry with dividends represented in each and every load. Just like my previous articles about dividends at breakfast time or dividends from your bathroom, dividends can come from your laundry room too! Think about the machines used to wash your clothes and the various detergents and dryer sheets you use. When looking at laundry along those lines a full hamper might actually start to look good to you. Let’s examine a typical laundry load, dividend style.
All those dirty clothes need to go into a washer and dryer. Let’s start by taking a look at appliance manufacturer General Electric Company (GE). GE has been a dividend stalwart for many decades and even though it has cut its dividend as a result of the stock market sell-off in 2008 – 2009 it has nonetheless returned to a policy of increasing dividends year after year. GE currently offers a very generous 3.30% with a moderate payout ratio of 52.4% making this dividend currently safe. On a PE scale GE is at 19.1 which pretty much means its fully valued by todays market standard even though it is slightly below its peers.
Another famous laundry appliance manufacturer is Whirlpool Corp. (WHR). Famous for many of its namesake machinery items WHR currently offers shareholders a decent yield of 2.10% with a low payout ratio of 24.4%. Having raised its dividend the last three years WHR can definitely continue to afford further increases with its current cash flow. From a valuation perspective WHR currently has a PE of 15.7 which is low by S&P standards however in line with its peers which might suggest that WHR is fully valued at current prices.
From the heavy machinery that cleans your clothes to the stuff that makes your clothes smell good and come out feeling fresh. Let’s examine some of the biggest names in detergents. First up, The Procter & Gamble Company (PG). From the makers of Tide, Gain, Ariel, Cheer and Bounce, PG is a company that is widely held and really needs no introduction. One of the classic dividend aristocrats with a very famous shareholder named Warren Buffett, PG has managed to raise its dividend every year an amazing 57 years. Currently yielding a generous 3.20% with a moderate payout ratio of 61.4%, PG will no doubt continue adding shareholder and dividend growth value to many portfolios around the world. Slightly rich at current prices with a PE of 21.4 you might want to wait for a more attractive opportunity to jump into PG shares if starting out a new position.
Finally, from the makers of Surf, Wisk, all and more, we have Unilever plc (UL). Another great dividend company with many billion dollar brands in its portfolio. While UL divested a lot of its North American fabric care business back in 2008 to Sun Products Corporation, it continues to sell detergents under other brand names outside the United States. UL currently offers a fairly high yield of 3.47% with a relatively high payout ratio of 70.6%. While there is enough cash flow to cover current dividend payouts future increases may be small going forward. UL’s PE currently stands at 19.9 which is pretty much in line with the market as whole suggesting that UL, at current prices, is more than likely fully valued.
Of course, one more mention of an awesome dividend stock that is in almost every laundry room, The Clorox Company (CLX). Another divided stalwart that is found in many dividend growth portfolios CLX currently yields a generous 3.30% with a moderate payout ratio of 68.4%. This may explain the recent lackluster dividend raise CLX just gave this month. On a PE scale CLX is 20.7 which makes it a bit high relative to the S&P but in line with its peers. As you know most consumer stocks are pretty expensive and CLX is no exception.
Next time you are doing a load of laundry ask yourself if you are getting paid by any of the companies represented here.
Disclosure: Long GE, PG, CLX