With Colgate-Palmolive shares down 15% this year even as the bull market roars, investors are facing a harsh reality: the famed “Dividend King” label offers less protection than ever. The stock’s payouts haven’t kept up with inflation and core growth is stalling, forcing a fundamental re-evaluation of its place in defensive portfolios.
For decades, Colgate-Palmolive (NYSE: CL) has been synonymous with defensive growth and relentless dividend increases—a pillar for income investors and retirees. But with shares dropping 15% year to date despite a surging S&P 500, the market is sending a clear signal. Simply put, historical consistency can’t substitute for real growth and inflation-beating yield.
Colgate’s Glittering History: Defensive Returns, Consistent Dividends
Since 2000, Colgate-Palmolive investors have watched their initial $10,000 grow to over $35,000 in capital gains, along with annual dividends now topping $1,200—a testament to the resilient power of household brands. In total, shares have delivered a 352% return, while the dividend itself has surged a stunning 558% over 25 years [The Motley Fool].
This stability made Colgate a quintessential “safety stock” during market turmoil. In the depths of the Great Recession, the company’s share price shed just 10%, when broader indices plunged over 30%. Strong brands, global reach, and unmatched distribution kept revenue and profits remarkably resilient.
- Dividend King Status: 62 consecutive years of annual dividend increases—placing Colgate among just 55 companies in an elite group out of more than 54,000 publicly traded firms [The Motley Fool].
- International Reach: Over 80% of revenues generated outside the United States, unmatched in its consumer segment.
2025: A Wake-Up Call in the Land of the Kings
Despite the reputation, recent years have been sobering. Colgate’s 5-year performance paints a stark picture: shares are down 7%, even as the S&P 500 nearly doubled. In 2025, a 15% decline unfolded in the middle of a roaring bull market, punctuated by tepid growth and macro headwinds.
- Inflation-Capped Dividends: Annual dividend hikes since 2020 totaled just 18%—significantly trailing the 25% rise in U.S. inflation.
- Purchasing Power Risk: These “token” raises mean real income for shareholders is falling, eroding the traditional safe-haven allure.
For income investors, this seemingly reliable payout now faces a triple threat. The company’s “officially” higher dividend offers less real-world purchasing power, especially as everyday costs climb for retirees and risk-averse portfolio holders.
Why Is Colgate Struggling Now? Dollar Strength, Weak Organic Growth, and Mounting Debt
Colgate’s global reach has long been an asset, but in today’s environment, it’s also an Achilles heel. As the U.S. dollar strengthens, nearly 81% of Colgate’s international sales are converted at less favorable rates—shrinking reported earnings and making organic growth harder to sustain.
- Organic Revenue: Only 1.2% growth in the first nine months of 2025, even after stripping out currency impacts and one-off transaction effects.
- Regional Weakness: The largest division, Latin America, saw an 8% sales drop with operating profits falling year-over-year in every region except Europe and Africa.
The dollar’s path remains deeply uncertain. Interest rate cuts—currently priced at a 65% likelihood for December—may weaken it, but no guarantee exists. Meanwhile, Colgate enters this environment with a debt-to-equity ratio of 6.8: $8.42 billion in debt versus just $1.47 billion in cash. This is far above what is typically considered healthy for a company in its category. Analysts generally look for ratios under 2.0 as a sign of financial flexibility.
What Should Investors Watch Now?
Investors should reframe their Colgate thesis around these key questions:
- Will organic profit growth reaccelerate in 2026 after the current slump?
- Can Colgate sustainably raise dividends above inflation in the next economic cycle, or has payout growth structurally stalled?
- Does the current yield (2.7%) adequately compensate for stagnant core earnings and currency risks, considering alternative blue-chips?
- Is the company’s elevated leverage likely to crimp financial flexibility during the next downturn?
Bulls vs. Bears: The Portfolio Debate for 2025
Colgate loyalists argue that reputation, pricing power, and global diversity will stabilize returns even in tough conditions. The company helped its investors avoid disastrous drawdowns in 2008–2009 and continued raising the dividend without fail for 62 years despite all macro shocks.
Yet the structural reality is hard to ignore. Both inflation and the strong dollar have created a situation where the famed “Dividend King” moniker doesn’t guarantee inflation-beating income. The company’s payout growth now lags cost-of-living increases, putting stress on retirees especially.
- Bear Case: Underwhelming 2025 results suggest near-term downside still exists if the economy or rates wobble; payout hikes may remain minimal as earnings stagnate.
- Bull Case: The 2.7% yield is still more than double the S&P 500 average, offering some insulation for cautious income seekers.
The Bottom Line: Time for a Fundamental Reset?
Colgate-Palmolive’s storied history and 62-year dividend streak remain intact, but its real-world defense against inflation, currency swings, and mounting debt has weakened. A swift return to profit growth is essential for the company to earn its place as a defensive anchor going forward. Otherwise, income investors have strong reasons to consider new alternatives among blue-chip dividend payers with healthier fundamentals and better real-yield prospects.
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