Driven by strong positive outlook, the global consumer
) is going for a two-for-one stock split of its common shares.
Also, the company has increased its quarterly cash dividend
effective from the second quarter of fiscal 2013.
The company will distribute the additional shares relating to
the split on May 15 this year to the shareholders of record date
as of Apr 23, 2013. This will bring Colgate's total shares
outstanding to 936 million from the current level of 468 million
of a par value of $1.00 per share. Though splitting shares has no
real impact on the company's performances or share prices, but it
makes the shares affordable to small investors.
Concurrently, Colgate announced its decision to raise the
quarterly dividend by 6 cents on a pre-split basis to 68 cents
per share. This translates into a 10% hike from the prior
dividend. The increased dividend will be paid on May 15, 2013 to
stockholders of record as of Apr 23. Prior to this announcement,
this Zacks Rank #3 (Hold) stock had been paying a quarterly
dividend of 62 cents per share.
The strength of Colgate's business model is reflected in its
strong cash generation capabilities and its commitment to return
value to the shareholders. We believe that continued dividend
hikes will increase investors' confidence.
Colgate's strong balance sheet and cash flows provide
financial flexibility to the company for taking
shareholder-friendly moves, R&D investments and global
business expansions. During fiscal 2012, it shelled out $1,277
million on cash dividends. Cash and cash equivalents stood at
$884 million at the end of the fiscal, while Colgate generated
$3,196 million of cash from operational activities. We remain
encouraged by Colgate's strong cash position and its ability to
service long-term debts.
Other companies that recently increased dividend include
), by 11% to 30 cents,
The Coca-Cola Company
) by 10% to 28 cents, and
) by 10% to 27.5 cents.
We believe that dividend hikes not only enhance shareholder's
return, but raise the market value of the stock. Through dividend
raises, companies persuade investors to either buy or hold the
scrip instead of selling these. Looking ahead, Colgate remains
confident of its growth potential, suggesting enhanced value for
shareholders via dividend payout as well as share buybacks.
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