The Clorox Company (CLX), The Procter & Gamble Company (PG): 2 Great Dividends You Can Buy Now

A bright future
Clorox and Procter & Gamble both raised their full-year outlook on the strength of last quarter’s results. Now they each expect organic sales growth of around 4%, rather than the 3% they had forecast before. That’s an improvement for both companies, but it’s a mark that Colgate-Palmolive had no problem hitting last quarter, on its way to 6% organic growth for the year.

For P&G’s part, the company is banking on a strong slate of new product introductions in the back half of the year to boost sales even closer to that 4% target. It has seen success with innovations like its Tide Pods product in the U.S., and that’s given management confidence to introduce the brand in Europe and other new markets starting this spring.

As for Clorox, the company saw brisk sales of its new concentrated bleach products last quarter. And a full product pipeline should help lift results through the rest of 2013. Another factor that should help Clorox’s earnings is commodity costs. Thanks to a cooling inflation rate for inputs, those costs are expected to be flat this year, giving heft to the company’s forecast to grow earnings faster than revenue for the full year.

Picking favorites
Thanks to those improving results and relatively low valuations, I think both companies look like solid investments at these levels. But if I had to pick one, I’d go with P&G. The company has a slightly smaller yield, yet it has a more comfortable 50% payout ratio, as compared to Clorox’s 60%. And its broader portfolio gives it more potential upside as CEO Bob McDonald’s cost-cutting plan and new product strategies continue to play out.

The article 2 Great Dividends You Can Buy Now originally appeared on Fool.com and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble.

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