Church & Dwight (CHD) is a somewhat low-profile producer of some well-known name brand consumer products. The stock has provided an attractive return to investors over the last year and a half, gains which may be due to management moves to reward the company's shareholders.
Church & Dwight is best known for its Arm & Hammer brand baking soda and other consumer products under the Arm & Hammer brand. The company also owns the detergent brand OxiClean, Orange Glo furniture polish, Trojan condoms, Pepsodent, AIM, and Mentadent toothpastes, the Xtra and Nice ’n Fluffy detergent brands, plus a few more. Financial growth comes from the organic growth of sales of existing brands plus the occasional brand purchase.
CHD completed a two-for-one stock split in June 2011, so make sure any financial results you research are split adjusted. For example, the company reported net income of $1.15 per share in the first quarter, but the results will show up as 57 cents if adjusted for the split. In the second quarter Church & Dwight again earned 57 cents per share, an increase of 12 percent from a year earlier.
Church & Dwight management has significantly increased the dividend over the past two years. In August 2009, the quarterly payout was increased 55 percent to 14 cents from 9 cents per share. A year later, the payout was increased another 21 percent to 17 cents per share.
With the stock split, the dividend rate was maintained at 17 cents per share, an effective 100 percent increase in the distribution. In total, the dividend rate has increased almost fourfold in the last two years. With a current payout ratio of less than 30 percent of net income and forecasted double-digit earnings growth, it will be interesting to see what management does with the dividend going forward.
Analysts at Wells Fargo recently upgraded Church & Dwight to outperform from market perform. Analysts at RBC Capital Markets and William Blair also have reiterated their outperform ratings. In the same time period Deutsche Bank analysts confirmed their hold rating. The company reports next on Nov. 9.
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