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Johnson & Johnson (JNJ), The Clorox Co (CLX), The Procter & Gamble Company (PG): Three Companies for the Long Haul

Clorox’s dividends

The Clorox Co (NYSE:CLX) manufactures and markets consumer and institutional products worldwide. It has been paying consistently increasing dividends for a consecutive 36 years. Recently, it announced an increase of 10.9% in dividends–this takes its quarterly dividend to $0.71 per share.

Are the dividends safe?

The Clorox Co (NYSE:CLX) has a strong brand name, which means it has the capacity to transfer commodity price increases to consumers. The Clorox Co (NYSE:CLX) is seeking to grow earnings by innovative new product launches along with international expansion. Based on its centennial strategy, it is anticipating achieving double-digit annual growth in economic profit. To this purpose, its strategy to increase sales includes expanding into adjacent categories, growing existing brands, and entering new sales channels.

Recently, the company announced Q3 results with a 1% growth in sales. Its quarterly results were impacted by charcoal volume and sales due to unfavorable weather conditions. However, The Clorox Co (NYSE:CLX) is expecting to generate an EPS of $4.30 in 2013 and $4.63 in 2014. I believe its dividends are safe as Clorox is seeking to sustain its profitability momentum.

Additionally, this company has very solid cash flow, and its free cash flow is  providing full coverage to its dividends. In the trailing-12 months, its free cash flow stands at $565 million while dividends accounted for only $328 million. Its payout ratio of 59% is also manageable. Its current and quick ratios of 1.2 and 0.7 also indicate no sign of excessive debt burdens. The Clorox Co (NYSE:CLX) have sufficient funds to meet current liabilities.

In conclusion

Johnson & Johnson (NYSE:JNJ) is a solid pick for investors. The company’s investment to advance pipelines and enlarge its worldwide presence along with good diversification permits it to sustain returns for investors. Clorox is a solid company for defensive investors. Clorox has a strong brand with strong growth opportunities. The Clorox Co (NYSE:CLX) is in a strong financial situation to sustain returns for investors. Finally, in the case of The Procter & Gamble Company (NYSE:PG), it is a buy for the long haul. P&G is in a strong financial situation that will be further enhanced as the company implements its cost-reduction plan.

The article 3 Companies for the Long Haul originally appeared on and is written by siraj sarwar.

siraj sarwar has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson and Procter & Gamble. The Motley Fool owns shares of Johnson & Johnson. siraj is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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