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Own Clorox by Oct. 28 to Qualify for Its Next Dividend (Yielding 6%). Here's How Many Shares You'd Need for $5,000 in Yearly Dividends.

Via Motley Fool

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Investors need to know certain key dates concerning dividends. These are the declaration date (the board of directors announces and approves the payout), ex-dividend date (the stock trades without the dividend), record date (the deadline by which shareholders must own the stock to receive the dividend), and payment date (the dividend gets paid to shareholders).

Clorox's (NYSE: CLX) upcoming dividend has a record date of Oct. 28. You'll need to purchase the shares and have the transaction settled to receive the $1.25 quarterly dividend the company will pay per share on Nov. 13.

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If you've targeted a $5,000 annual dividend, how many shares would you have to own? Some simple math provides the answer. The $ 1.25-per-share quarterly payment works out to an annual payout of $5 per share. Dividing the targeted $5,000 payment by $5 works out to 1,000 shares. The stock closed at $83.44 on Oct. 8. That means you'll have to invest $83,440 to own 1,000 shares.

Dividend investors will undoubtedly find the 6% yield attractive. That's nearly six times the S&P 500 index's roughly 1% yield.

Clorox has an impressive history of raising dividends, too. Earlier this year, the board of directors raised August's quarterly per-share payout by a penny. That ran the company's streak to 49 straight years, putting it on the precipice of becoming a Dividend King (companies that have raised dividends annually for at least 50 straight years).

However, Clorox has faced challenges over the last few years, which is reflected in its stock performance. Over the last five years through Oct. 8, the share price fell by over 49% compared to the S&P 500's nearly 78% gain.

The company's payout ratio of over 103% (dividends relative to earnings) should also make investors cautious about future dividends. Ratios that high are not sustainable over time and will eventually result in cuts or even suspension of the dividend until finances improve.

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Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Own Clorox by Oct. 28 to Qualify for Its Next Dividend (Yielding 6%). Here's How Many Shares You'd Need for $5,000 in Yearly Dividends. was originally published by The Motley Fool

Read original at Yahoo Finance News

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