Ecolab Hikes Dividend - Analyst Blog

Leading cleaning and sanitation products company Ecolab Inc (ECL) has raised its quarterly dividend to 17.5 cents from 15.5 cents, representing a 13% growth. This lifts the annual dividend to 70 cents per share from the current payout of 62 cents. The revised quarterly dividend is payable on Jan 18, 2011, to shareholders of record as on Dec 21, 2010.

This represents the Minnesota-based company's nineteenth consecutive annual dividend raise, underscoring its commitment to deliver incremental returns to investors leveraging a solid balance sheet, healthy cash flow and earnings stability. The company's previous dividend increase was in December 2009, when it raised the quarterly payout by 11% to 15.5 cents.

Ecolab continues to maintain a quarterly earnings growth streak driven by new business wins, new product introductions and sustained strong performances across Asia-Pacific and Latin American operations. The company remains optimistic about delivering sustainable revenues and earnings growth, backed by improvement in end-market demand, ability to attract new customers and opportunities for greater customer penetration through new product development.

Ecolab caters products and services to the hospitality, foodservice, institutional and industrial markets. It leads in cleaning, sanitizing, pest elimination and food safety solutions with revenues of $6 billion.

To drive growth, Ecolab continues to invest in strategic areas such as, product innovation, healthcare, water and energy and global pest elimination while rationalizing operating costs. The company remains focused on bringing new technologies aimed at reducing food safety risks. Moreover, Ecolab is active on the acquisition front and is exploring opportunities to expand into emerging markets for growth.

Although we are impressed by Ecolab's strong international exposure, we remain concerned about intense competition. The company's U.S. Cleaning & Sanitizing and International division faces stiff competition from Clorox (CLX) and Church & Dwight (CHD). We currently have a Neutral recommendation on Ecolab, which is supported by a Zacks #3 Rank (Hold).

 
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