Colgate Palmolive (CL-N)

It has amazing pet food and toothpaste businesses, but pays only a 2.37% dividend yield, far below current bond yields. Could go even lower.

The problem is that following a multi-decade interest rate decline, a rise in interest rates going forward will impact this as it is viewed as a bond proxy. It is an interest rate issue. This is not the time to step in right now.

He is avoiding staples right now. They are trading very, very rich. This company has had a negative earnings revision and are really struggling in some of their core categories with pricing pressures and volume. Not a lot of positive things to say about this. He would be moving on to a different sector, on the view that we will be seeing higher rates. This is not a “Growth” story, it is a “how do we save the ship” story.

Bristol-Myers (BMY-N) or Colgate (CL-N)? These are both very good companies and you are probably getting decent yields on both. The dividend growth is not high enough to be in his funds. Dividend yield of 2.2%.

Probably one of the better staple companies. In July it had a big Venezuelan devaluation which resulted in a sharp drop in earnings. This was followed by the currency earnings drag. You are going to probably see some pullbacks and corrections in valuations, but longer-term this is a very good story if you have a multi-year view on the company.

A consumer brand business. The issue is that 80% of revenue is from outside of North America. 21 times earnings and a good dividend yield. Another issue is that they have good brand loyalty but they are known for their toothpaste. He would prefer they sold off Hills, the veterinary business. This company performs well over the long term so if you have a long time horizon then buy on a pull back. They increase dividends regularly.

It is a company that makes things you need to buy. Compared to UL-N they have been held back. People have been wanting to stick to domestic markets. Prefers this one.

A great company, but has a high multiple, at the high end of these consumer type companies. Prefers PG-N, who are making some changes and getting rid of some products and buying back some of their shares. These companies need to re-think their product line and rationalize it. CL-N is a well run company, but you pay a higher multiple.

Consumer stocks have done really, really well. This stock has been subject to takeover speculation. This type of company is viewed as likely consolidation partners in a very, very low inflationary environment. They are good, solid, well run companies with tremendous marketing teams behind them. The big theory was always that the next big growth was going to be in emerging markets. To some extent, we have seen that in this company. As these markets develop, we are starting to see new competitive entrants from the countries themselves. You are already in a low margin product where you are trying to push as much volume out the door as you possibly can. Well-run company, but not a lot of pricing power anymore.