Clorox: A High-Yield Dividend Stock Down 10% in 2025, But Still a Buy

Clorox (CLX) has been on a rollercoaster ride in recent years, but the company's turnaround is finally in sight. Despite a 10% decline in its stock price in 2025, Clorox remains an attractive option for long-term investors seeking a solid passive income opportunity. Here's why the sell-off in Clorox stock is a buying opportunity for those who understand the underlying business fundamentals.

Clorox's earnings have been all over the place in recent years due to external and internal factors. The COVID-19 pandemic initially boosted demand for household cleaning and hygiene products, but the company overestimated demand trends and left it vulnerable to supply chain and inflationary pressures. In addition, Clorox has been investing in long-term growth by replacing its enterprise resource planning (ERP) system, transitioning to a cloud-based platform, and investing in other digital technologies. These investments have put pressure on the company's earnings and cash flow.



Despite these challenges, Clorox has been focusing on margin improvement rather than revenue growth. The company has expanded its gross margin for nine consecutive quarters, and it expects full fiscal year gross margins to expand by 125 to 150 basis points. Clorox has also increased its adjusted earnings per share guidance for the fiscal year to a new range of $6.95 to $7.35, a year-over-year increase of 16% at the midpoint.

Clorox's aggressive sales, general, and administrative (SG&A) spending is noteworthy, as it impacts operating margins. The company is investing in its strongest, most profitable brands, which should drive future growth and support dividend increases. Clorox's 3.3% dividend yield is attractive, and its payout ratio of around 50% leaves room for future dividend increases as earnings grow.



Clorox's turnaround is progressing well, but it still needs to show that its divestitures, long-term investments, and SG&A expenses are paying off. The company's stock price decline in 2025 is an opportunity for long-term investors to buy a high-quality dividend stock at a discounted price. As the company's turnaround continues and its operating margins improve, it should be able to sustain and grow its dividend.

In conclusion, Clorox's 10% decline in stock price in 2025 is a buying opportunity for long-term investors seeking a solid passive income opportunity. The company's turnaround is progressing well, and its dividend is well-supported by its earnings and cash flow. As the company continues to invest in its most profitable brands and improve its operating margins, it should be able to sustain and grow its dividend, providing investors with a steady stream of income for years to come.