Church & Dwight

The Recipe for Success: Everyday Helpers

The traditional American company Church & Dwight has more to offer than you might think at first glance. For most people here in Germany, the company is probably rather unknown, yet its products can be found in almost every American household. From baking soda to toothpaste to condoms. The company has specialized in everyday helpers.

And the stock is indeed very boring. Anyone waiting for the right entry point here is probably waiting in vain. The stock and the company's profits keep rising and rising. The dividend has been paid without interruption for more than 70 years, and it has been raised regularly for more than 23 years. So here again we have a company you can confidently put in your portfolio.

The Origins and Business Model of Church & Dwight Co. Inc.

As early as 1846, John Dwight from Massachusetts and his brother-in-law Austin Church from Connecticut merged their two companies. In the beginning, the two founders refined sodium bicarbonate (better known as baking soda) in Dwight's kitchen and then sold it.

By the way, the Church & Dwight logo represents the Roman god Vulcan, holding the hammer up in the air with his muscular arm. This logo was originally intended only for the baking soda; it was meant to convey the power to make the dough rise.

Today, the corporation has more than 80 different brands, 11 of which are so-called power brands and account for 80% of sales. The product range starts with everyday necessities (laundry detergent, toothpaste, deodorant, etc.), moves on to cleaning products, and also includes condoms, dry shampoos, fabric softeners, hair removal creams, and pregnancy tests. In 2017, the company bought WaterPik, which mainly makes water flossers, for 1 billion US dollars.

Management has even cleverly planned for economically tougher times. Half of sales come from higher-priced products, the other half from the inexpensive everyday helpers.

What Are Church & Dwight's Plans for the Future? Can the Dividend Continue to Be Paid?

The outlook for the company looks very good! Hardly any other corporation can show a share price that has climbed like this over the decades. Over the last 20 years, it went up by an average of 16% per year. As I've said many times, that's no forecast for the future, but it does make pretty clear whether a company is solid or not.

In the future, Church & Dwight could focus more on the international market. Around 83% of sales come from the USA alone. Only the remaining 17% are international. So personally, I still see considerable growth potential here.

And the Dividend?

I'm not worried here either. Everyday helpers simply always get bought. Even when the economy isn't doing so well, people have to do laundry, want to bake delicious cake, or have fun in bed. Church & Dwight has built up enough brand-name products that ensure constant sales - so nothing stands in the way of the next dividend increases. If management keeps up the dividend increases for another 2 years, the company can also adorn itself with the coveted title: "Dividend Aristocrat".

Conclusion

Church & Dwight is very broadly diversified. It's prepared for bad times. For me, a very interesting company where it can be worth getting in (even if the price is at an all-time high).