Clorox – A defensive play during the COVID-19 economy

The consumer defense giant Clorox stock [stock_quote symbol=”CLX”] is trading around all time highs and that is no surprise. Additional demand for their products due to the COVID-19 pandemic is sending investors flocking to buy their stock. This increase in demand is not expected to cool off anytime soon while the COVID-19 situation isn’t resolved as of yet.

Clorox is getting a boost from the pandemic. Consumers are stocking up on wipes, detergents, food and other pantry items. Clorox wipes, bleach and other disinfectants are in high demand. This is very evident from their last quarter results.

Sales jumped to $1.8 billion, an increase of more than 15%. Moreover, analysts are expecting around 6% revenue growth and 9% growth on earnings.

Another reason why investors are flocking to buy Clorox stock is the dividend. Yes it is not huge at 2.2% currently, but investors feel it is safe and it pays more than the 10 year treasury bond, which pays a yield of 75 basis points. Moreover, Clorox has been increasing their dividend each year for the past 30 years, which gives investors more confidence that the company will do everything it can to keep paying its dividend. In fact, the company most recently gave a 4.7% increase to its dividend in May.

While Clorox is not a growth stock, its business defensive nature makes it a good defensive play during the COVID-19 economy. Consumers will continue to buy disinfectant products and the demand for it is expected to be high during the COVID-19 situation.