Colgate-Palmolive

CL

Market cap $68.2B

CL is leaning on productivity, AI and cost discipline to offset input inflation and protect margins amid uneven demand.

Morgan Stanley analysts named a consumer products giant known for its toothpaste one of their top picks for the year.

The Investment Committee debate the latest Calls of the Day.

Colgate-Palmolive is rated a Buy, trading at an attractive valuation after a 30% pullback from its peak, supported by strong brands, resilient financials, and Dividend King status. CL maintains robust free cash flow, a 2.65% dividend yield, a renewed $5B buyback program with a manageable 53.5% dividend payout ratio, and a solid balance sheet. New guidance reflects 1–2% organic sales growth and flat margins, impacted by private label pet food exit, but long-term strategy remains intact.

Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Albertsons Companies, Inc. (ACI) or Colgate-Palmolive (CL). But which of these two companies is the best option for those looking for undervalued stocks?

I trimmed positions in NVDA and AMD due to valuation concerns and overexposure, favoring BDCs like ARCC, OBDC, and HTGC for yield. November dividend income reached a record $653, up 5% Y/Y, with BDCs now comprising 33% of total dividends despite potential sector-wide dividend cuts. My 2025 target is $11,000 in annual net dividends (8% growth), with flexibility to raise capital for real estate or travel if opportunities arise.

Colgate-Palmolive (CL) is a Dividend King with strong dividend safety, high margins, and consistent long-term execution, currently trading at a reasonable 21.6x earnings. CL's science-based innovation and focus on high-growth categories and incremental product improvements, reinforcing its wide moat and market share, especially in oral care. Despite reduced guidance and sector headwinds, CL remains undervalued with a fair value estimate of $84.18 versus a ~$79 share price, supporting a buy rating.

The ProShares S&P 500 Dividend Aristocrat ETF (NOBL) underperformed SPY in 2025, gaining 7.2% versus SPY's 18.42%. Despite average underperformance, select Aristocrats like CAH (+74.18%), ALB (+66.90%), and CHRW (+61.22%) delivered strong double-digit returns. Dividend growth for the Aristocrats slowed to 5.52% in 2025, down from 5.78% in 2024, with 68 of 69 raising payouts.

CL's productivity program is easing cost pressures and paving the way for mid-25% margins, balancing efficiency with brand investment.

Dividend Kings underperformed SPY in 2025, up 4.47% vs. SPY's 17.7%, but select Kings outperformed the index. Twenty-two Dividend Kings are identified as both potentially undervalued and offering long-term expected annualized returns of at least 10%. Dividend growth for the Kings remains subdued at 5.81% for 2025, trailing the 2024 rate of 6.32%.