WD-40 Company (WDFC), The Clorox Company (CLX): Enhance Your Portfolio With These Stocks

While recent trends point to flat volume and mediocre 1% increase in sales according to its third-quarter FY 2013 earnings, the company should not be underestimated. Clorox is one of the best defensive stocks you can own. Its diverse portfolio provides immunity to trends in the marketplace. While analysts like those at Credit Suisse have given Clorox a downgrade recently, claiming it is outpacing the S&P 500 too quickly, history proves otherwise. The Clorox Company (NYSE:CLX) has beaten the index both at the five-year mark (59% vs. 16%) and 10-year mark (88% vs. 69%). If you factor in Clorox’s dividend, it isn’t even close.

Solid like a hammer

Like The Clorox Company (NYSE:CLX), Church & Dwight Co., Inc. (NYSE:CHD) holds a diverse portfolio of unrelated brands that include Arm & Hammer, Trojan, OxiClean, Spinbrush, First Response, Nair, Orajel, and Xtra. These eight key brands represent 80% of all sales of the company.

The stock is up over 460% the last 10 years and both average quarterly profit margins and dividends have increased just as greatly. First-quarter 2013 earnings show a record operating margin of 21.7% and the second-highest profit margins of 13.82% for the company. Average quarterly profit margin for the past five years has been 10.52%, so this past quarter’s result is over a 3% jump.

Dividends have grown from just $0.17 in 2008 to a projected $1.12 for 2013. This 558%+ dividend increase looks like it can increase more in the near future. Arm & Hammer brands are currently in nine out of 10 households in America. As the company grows around the world, the potential for this $8.5 billion market cap company to reach double digits and beyond in the near future is certainly attainable.

WDFC Total Return Price data by YCharts

The world needs chemicals

A defensive stock is one that investors want to own during uncertain times and one they should own during rough times. This has been proven by these stocks that declined relatively little during the Great Recession. While you can find dozens of other stocks that had similar declines, it would be harder to find three stocks that have a portfolio of products that are at the top of their categories.

Brand names count and market share is definitely not to be overlooked. With steady growth and dividends, WD-40 Company (NASDAQ:WDFC), Clorox, and Church & Dwight have crushed the S&P 500 in the past five years with total returns of 104%, 88%, and 135% versus the sub-20% return produced by the S&P 500.

Michael Carter has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Enhance Your Portfolio With These Stocks originally appeared on Fool.com.

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