Ecolab In Buying Range From Bounce Off 10-Week Line


Investors in cleaning products supplier Ecolab ( ECL ) have enjoyed steady dividend growth and capital appreciation over many years.

The stock has risen 28% in the past year, about double the S&P 500's gain. It's currently testing a new high and is at the upper end of a buying range from a bounce off its 10-week line.

Meanwhile, Ecolab has hiked its dividend for 21 straight years, during which the stock has gone from less than 3 a share to more than 70. The latest dividend increase came in early December, when the company raised its quarterly payout by 13% to 23 cents a share.

The resulting annual dividend of 92 cents yields 1.2% at the current share price, well below the S&P 500 average. However, high dividend yields typically accompany riskier, lower-quality stocks.

St. Paul, Minn.-based Ecolab supplies cleaning products to the hospitality, food service and industrial markets in more than 160 countries. It earns more than 40% of revenue outside the U.S. and has been developing new technologies and expanding into faster-growing markets, mainly through acquisitions.

Ecolab said Wednesday it completed its buyout of Mexico-based Quimiproductos, a top maker of cleaning, sanitizing and water treatment products. It also recently bought water-treatment services provider Nalco and specialty chemicals firm Champion.

But Zacks Equity Research said Dec. 21 that it's concerned about currency fluctuations and "aggressive competition" from rivals Clorox ( CLX ) and Church & Dwight ( CHD ).

"Sluggish European markets and raw material price inflation also remain head winds," said Zacks, which has a neutral rating on Ecolab's shares.

The stock has an 89 Composite Rating, best in the six-member Soap & Cleaning Preparations industry group, which was rated a weak 163 out of 197 as of Friday.

Profit for the fourth quarter is expected to rise 27%, which would mark the third straight quarter of accelerating earnings growth. Sales growth has ranged from 74% to 85% over the past three quarters, after mostly low double-digit and single-digit growth prior to that.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CHD , CLX , ECL

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