Procter and gamble vs colgate palmolive
When the company finally does extinguish its debt, it may have an adverse effect on whether it can continue paying dividends.
Dividend growth should also be considered.
Here are the dividend yields from both P G and rail city casino reno nv Colgate-Palmolive.Table 5 shows the interest coverage ratios of Procter Gamble and Colgate-Palmolive over the last roulette pic 12 months.To get a good idea as to the prospects of a company's future dividend payments, it may behoove us to look at analyst projections for future earnings per share growth over the next couple of years.These items could then lead to a dividend cut, which will reduce your yield on cost.It is calculated by subtracting the company's cash position from the company's short and long-term debts, and then dividing deerfoot poker tournaments that by the company's equity position.Over time, dividend growth can supercharge an investor's yield on cost.That may signal dividend cuts or eliminations in the future.Companies that have more debt typically pay more in interest.
The starting yield of Colgate-Palmolive is so low right now that if you extended the 5-year dividend growth rates of both companies out indefinitely, you would see that it would take almost 15 years before an investment in Colgate-Palmolive would show a higher yield.
Procter Gamble.1, colgate-Palmolive.2, table 1: Dividend Yields Of Procter Gamble and Colgate-Palmolive.
The table below shows the dividend payout ratios for Procter Gamble and Colgate-Palmolive, both on a trailing twelve month and a four-year average basis.However, we need to keep in mind that that figure is based on dividend payout as a percentage of earnings, not actual cash that comes into the business over a certain period of time.Both of these companies have shown outstanding dividend growth rates over the last five years, easily outpacing the erosive effects of inflation.Low interest coverage ratios (usually below 2) generally show that the company is having a hard time just trying to make its interest payments.It should also be noted that at some point, the company's debt will need to be repaid.We will look into the dividend history of each company, its historical dividend growth rates, whether or not each company's dividend is supported by cash flows, and whether the companies can sustain their dividend growth rates in the future.The earnings that I used in these calculations are referred to as core earnings, which remove one-time items that don't have an impact on the company's operations.
Of course, before making a final decision between the two, you must consider other items like valuation, product and geographic diversification, and business models.
One of these factors is the expansion of the company's payout ratio, where the company decides to pay out a higher percentage of its earnings or free cash flow to shareholders as dividends.
Let's see how the dividends of Procter Gamble and Colgate-Palmolive have grown over the last 5 years.
Trailing 12-month and four-year average figures are shown.
However, if you are an older investor with a shorter time horizon, then Procter Gamble might be more appropriate.