Key Takeaways
- Campbell’s cut its quarterly dividend 36% to $0.25 a share on Sept. 3, 2026, leaving it with a 5.3% yield against Clorox’s 6.1%.
- Clorox paid out 149% of its free cash flow in dividends over the twelve months to June 30, 2026, against 69% for Campbell’s over the twelve months to Aug. 2, 2026.
- Analysts expect those ratios to fall to 71% and 40% in fiscal 2027, and Clorox’s figure depends on its free cash flow more than doubling.
- Clorox expects fiscal 2027 sales to rise 13% to 14% with its GOJO acquisition, while Campbell’s expects its sales to fall 2% to 4%.
On Sept. 3, Campbell’s (CPB) cut its quarterly dividend 36%, to $0.25 a share, so it could pay down debt faster.
A month earlier, Clorox (CLX) had gone the other way: on July 31, it raised its quarterly dividend to $1.25 from $1.24. On its Aug. 3 earnings call, CFO Luc Bellet said “our commitment to support the dividend has not changed.”
Both stocks still yield over 5%. So which is the better high-yield dividend stock?
| Metric | Clorox (CLX) | Campbell’s (CPB) |
|---|---|---|
| Dividend yield | 6.1% | 5.3% |
| Annual dividend | $5.00 a share | $1.00 a share |
| 5-yr dividend growth | 2.0% a year (fiscal 2021–2026) | 1.9% a year (fiscal 2020–2025, before the cut) |
| Dividend record | Raised every year for a decade (company’s count) | Cut 36% on Sept. 3, 2026 |
| Cash dividend payout ratio (TTM) | 149% | 69% |
| Cash dividend payout ratio (fiscal 2027 consensus) | 71% | 40% |
| Net debt/EBITDA (LTM) | 4.29x | 3.44x |
Clorox is betting on a rebound
Clorox’s fiscal 2026, the year ended June 30, 2026, was rough. Net sales fell 5% to $6.72 billion and adjusted EPS fell 28% to $5.53. Free cash flow came to $405 million against $602 million of dividends, a risky 149% payout.
Free cash flow covered the dividend easily through fiscal 2021. It then fell short in three of the last five years.
Management says the shortfall won’t last. Bellet called the payout “a bit elevated, but we see this as something more transitory as we rebuild our gross margin and not something structural.”
Clorox expects fiscal 2027 sales to rise 13% to 14%, with about 9.5 points of that from the GOJO acquisition. It expects organic sales to grow 3.5% to 4.5% and adjusted EPS of $5.70 to $6.00. Analysts expect $881 million of free cash flow, which would bring the payout down to a manageable 71%. (Four analysts make that estimate, and last year’s final consensus missed the actual by 18%.)
The main risk is that the rebound doesn’t come. CEO Linda Rendle expects “the operating environment to remain challenging, with continued cost volatility and a value-seeking consumer.” Even Clorox’s operating cash, $612 million in fiscal 2026, barely covered the dividend. Debt is about $5.1 billion after the GOJO and Glad deals, and S&P cut it to BBB in February. Bellet said it structured its debt to be repaid from free cash flow over the next 12 to 18 months, the same cash that pays the dividend.
Campbell’s put its balance sheet first
Campbell’s board faced the same pressures and made the opposite call.
In fiscal 2026, the year ended Aug. 2, 2026, net sales fell 5% to $9.7 billion and adjusted EBIT fell 21% to $1.2 billion. The dividend cut frees about $170 million a year, which Campbell’s plans to put toward debt. CFO Todd Cunfer is aiming for leverage of about 3x, down from 4.3x on the company’s own count on Sept. 3. On Sept. 23, Moody’s cut it to Baa3, the lowest investment grade, with a negative outlook.
Coverage was never Campbell’s problem. Free cash flow covered the dividend in every year of the last decade. It did slide from $1.1 billion in fiscal 2020 to $678 million in fiscal 2026, while dividends paid rose from $426 million to $470 million.
That works out to a comfortable 69% payout over the trailing twelve months, and a very safe 40% on analysts’ fiscal 2027 estimates.
The risk is that the business is still shrinking. Campbell’s expects fiscal 2027 sales to fall 2% to 4% and adjusted EPS of $1.65 to $1.80, down 17% to 24%.
So which dividend wins?
Clorox is the better high-yield dividend stock. On $10,000 today, it pays $610 a year against $530 from Campbell’s. At each company’s 5-year growth rate, the gap widens: about $730 from Clorox in year 10 (a 7.3% yield on your cash) against about $629 from Campbell’s (6.3%), even at its pre-cut rate.
Campbell’s has a real case: its dividend is far better covered. At its 4.1% raise in fiscal 2025, its income would pass Clorox’s around 2032. But that raise came before the cut, and the company is now putting debt first while guiding to another year of falling sales. Its dividend is safe today because shareholders have already taken the hit.
Clorox kept raising its dividend through three years when free cash flow fell short, and its guidance points to a business growing back into the payout. It’s a bet on a stretched balance sheet, but that’s the check I’d rather count on.
Of course, that depends on free cash flow more than doubling in fiscal 2027. If Clorox’s gross margin doesn’t rebuild, that 149% payout won’t look “transitory” for long.
So what is Clorox stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
