Motley Fool: Clorox shares just keep getting shinier
Shares of Clorox could make your portfolio shinier, thanks to its flagship consumer products brand and its other names such as Pine-Sol, Liquid-Plumr, Fresh Step, Glad, Kingsford, Hidden Valley, Brita and Burt’s Bees.
The company raked in $5.7 billion in 2015, generating nearly $750 million in free cash flow in the process. More than 80 percent of its sales came from brands occupying the first or second market position in their respective categories.
Clorox has an impressive trajectory of dividend growth over the long term, reflecting a business that can produce consistently growing cash flows through good and bad economic times. The company has raised dividends every year since 1977, and recently yielded 2.4 percent.
Clorox also has an active share buyback program, reducing its share count over time, and in the process rewarding shareholders by boosting the value of remaining shares. Clorox isn’t likely to ever be a rapid grower, but it has grown steadily for a long time. Its revenue is rather reliable and its stock less volatile than the overall market.
It hasn’t been trading at bargain levels lately, so you might add it to your watch list, waiting for a lower price. Alternatively, perhaps buy a few shares now. You’re likely to enjoy slow, steady long-term growth, as Clorox stock has handily outperformed the S&P 500 for many years.
Ask the Fool
Q: How long should I keep various financial records? – A.M., Elkhart, Indiana
A: Play it conservative, and keep all your tax returns, along with insurance policies, pension-related and estate-planning documents (such as wills), forever. Keep canceled checks, bank statements and receipts for at least three years, ideally seven – perhaps printing out copies if you receive them electronically.
Do the same with any supporting documents for tax returns, such as 1099 and W-2 forms, charity receipts, bank and brokerage statements, and so on. Hang on to stock trade confirmation receipts for as long as you own each stock and for at least three years (ideally seven) after you close out your position (usually by selling).
Keep proof of improvements to property (such as a new roof) for at least three years after the sale of the property. Keep escrow closing documents (for both the purchase and sale of property) for at least three years (again, ideally, seven) after the property is sold.
It’s smart to think twice before you throw out any documents related to your finances or major life events (such as a marriage or divorce). When you do dispose of such papers, be sure to shred them, to deter identity thieves.
Q: What’s a stock’s “float”? – R.C., Mead, Washington
A: It’s the portion of shares outstanding available to be traded by the public. If a company has 20 million shares outstanding and its founder owns 18 million of them, its float is just 2 million shares. Pay attention to this number with smaller companies, as “thinly traded” stocks with small floats can be extra-volatile. A modest demand for their shares can send the stock price soaring, due to limited supply.
My dumbest investment
I had decided I wanted to invest in Netflix even before its initial public offering (IPO), when shares were made available to the public. I bought a few shares as early as I could, for less than $3 apiece (split-adjusted). Soon after its IPO, my investment counselor talked me out of Netflix, saying it would never go anywhere. So I sold it all. I figure he owes me lots and lots of money. The stock was recently trading above $100 per share. I could have had a thirtyfold or fortyfold profit. – Lois, online
The Fool responds: Many people find it hard to have sufficient faith in new and dynamic companies’ futures to justify investing their hard-earned dollars in them. That’s fair, and even superinvestor Warren Buffett would be likely to steer clear of such a company – even now – not feeling sure enough of how well it will be performing five or 10 years from now. (It does have competition, after all.)
That said, if you are very confident that it’s attractively priced now and will keep growing over time, investing and hanging on makes sense. Remember that Netflix’s IPO was in 2002, when its business was primarily sending out DVDs through the U.S. mail. It introduced video streaming services in 2007, and streaming is generating most of its revenue now. (The Motley Fool owns shares of and has recommended Netflix.)