Updated on February 4th, 2025 by Felix Martinez
Consumer staples stocks are some of the most reliable dividend payers in the stock market. People need staples products for their daily lives, which provides a certain level of demand from year to year.
Demand for everyday products remains steady, even during recessions, which makes it an appealing industry for investors looking for consistent dividends.
This is why there are several consumer staples stocks on the Dividend Aristocrats list, which includes 69 companies in the S&P 500 Index, with 25+ consecutive years of dividend increases.
You can download an Excel spreadsheet of all 69 Dividend Aristocrats (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
Each year, we review all Dividend Aristocrats individually. The next stock in the series is The Clorox Company (CLX). Clorox has raised its dividend for 47 years in a row.
This article will provide an in-depth review of Clorox’s business model and future outlook.
Business Overview
Clorox started over 100 years ago, with its namesake liquid bleach debuting in 1913. Today, it is a global manufacturer of consumer and professional products that collectively span a wide variety of uses and customers. The company produces annual revenue in excess of $7.1 billion and sells its products in over 100 markets.
The company has a highly diverse set of businesses with myriad brands and products within each, providing Clorox with huge global scale.
The company’s largest segment is health and wellness, which is part of the core Cleaning segment. However, Clorox is much more than a cleaner company as it produces food, pet products, charcoal, and various other brands.
Source: Investor Presentation
The Household segment includes the Glad, Kingsford, Fresh Step, and Renew Life brands. Cleaning products include Clorox, Pine-Sol, and the Clorox Commercial Solutions businesses. Lifestyle brands include Hidden Valley, Burt’s Bees, and Brita. Lastly, the International segment sells Clorox’s brands around the world.
Approximately 60% of its total revenue comes from products that hold the #1 or #2 market share in their respective product categories.
Clorox reported its second-quarter fiscal 2025 results, showing a 15% decline in net sales to $1.69 billion, mainly due to the prior year’s inventory recovery following the August 2023 cyberattack and the divestiture of certain businesses. Despite the drop in sales, the company’s gross margin improved slightly to 43.8%, supported by cost-saving measures. Diluted EPS surged 105% to $1.54 due to the absence of last year’s cyberattack-related costs and a pension settlement charge, though adjusted EPS declined 28% to $1.55, reflecting lower net sales. Clorox also announced that it will acquire Procter & Gamble’s 20% stake in the Glad joint venture when it dissolves in January 2026, reinforcing its long-term growth strategy.
The company continues to make strategic progress, growing market share in seven of its eight categories and launching new products such as the Hidden Valley Ranch Easy Squeeze bottle and Brita Plus dispensers. Innovation remains a key focus, with Clorox receiving multiple industry awards for sustainability and technological advancements. The company has also maintained nine consecutive quarters of gross margin expansion, aligning with its plan to restore profitability. Operational highlights include achieving zero-waste-to-landfill status at its Martinsburg, West Virginia, manufacturing facility, advancing its sustainability commitments.
For fiscal 2025, Clorox updated its outlook, now expecting net sales to range from a 1% decline to a 2% increase, with organic sales projected to grow 4% to 7%. The company anticipates a gross margin improvement of 125 to 150 basis points, supported by cost efficiencies and margin management. EPS guidance was raised to $5.52–$5.92, reflecting a significant year-over-year increase, while adjusted EPS is expected to be $6.95–$7.35. Clorox remains committed to investing in its digital transformation and brand growth, positioning itself for sustained profitability despite economic and operational challenges.
Growth Prospects
Looking ahead, Clorox has some levers it can pull to continue its growth. The company continuously innovates with product extensions on its current lineup, such as flavors and cross-branding. It has done those things for a long time and will continue to do so in order to stay competitive.
It is also focusing its mergers and acquisitions on growing companies, focused in the US, and margin-accretive. The company wants to boost domestic growth and margins through acquisitions.
Margin expansion is another longer-term goal for the company.
Source: Investor Presentation
Clorox sees potential in rebuilding its margins through pricing actions, cost savings, and optimizing its supply chain over the long term.
Clorox is also taking a prudent approach by buying companies with a better margin profile than its existing portfolio, which boosts revenue and margins simultaneously.
Lastly, Clorox can increase earnings-per-share with share repurchases. We forecast 4% earnings-per-share growth annually for Clorox over the next five years.
Competitive Advantages & Recession Performance
Clorox has multiple competitive advantages. First, it holds a tremendously strong brand portfolio. As previously mentioned, Clorox products enjoy high market share across the portfolio.
Clorox retains its high industry position through advertising and spends very heavily to maintain that position. Product marketing is a necessity for consumer products manufacturers and Clorox spends ~10% of its revenue on this each year.
Another advantage of Clorox’s business model is that its products are used by millions of people each day, both in good and bad economies. According to the company, Clorox-branded products are in about nine of ten U.S. households.
There will always be a certain demand for household cleaning products and food, even if the economy is downturned. This allows the company to remain profitable during recessions. Indeed, Clorox is a strong example of a defensive stock. Its earnings-per-share through the Great Recession are shown below:
- 2007 earnings-per-share of $3.23
- 2008 earnings-per-share of $3.24 (0.3% increase)
- 2009 earnings-per-share of $3.81 (18% increase)
- 2010 earnings-per-share of $4.24 (11% increase)
As you can see, Clorox increased earnings-per-share each year throughout the recession, including double-digit earnings growth in 2009 and 2010.
Clorox also performed very well during the coronavirus pandemic, as its products saw much higher demand as consumers spent much more time at home. This demonstrates the company has a very recession-resistant business model and a high level of safety.
Valuation & Expected Returns
We expect Clorox to generate earnings-per-share of $7.20 for fiscal 2025. Based on this, CLX shares trade for a price-to-earnings ratio of 20.6x. This is above our estimate of fair value, which is 23 times earnings.
As the stock trades under our fair value, we see it as undervalued to fairly valued. If the P/E multiple climbs from 216x to 23x over the next five years, it would increase annual returns by 2.3%.
Shareholder returns will be further boosted by future earnings-per-share growth, which we estimate at 4% per year. Finally, Clorox’s 3.3% dividend yield will add to shareholder returns. This leads to total expected returns of 9.1% per year over the next five years.
This is a decent expected rate of return and warrants a hold rating at this time.
Final Thoughts
Clorox is a reliable dividend stock. The company has a leadership position across its product markets, with potential for some growth. The company should be able to continue its four-decade-long streak of annual dividend raises regardless of the overall economic climate. This makes it a consistent dividend stock for risk-averse income investors.
Thus, the stock is a hold, and investors interested in total return potential could pick up some shares at today’s price.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the ultimate dividend growth stocks, the Dividend Kings list is comprised of stocks with 50+ years of consecutive dividend increases
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: