In the consumer staples sector, Procter & Gamble (NYSE: PG) reigns supreme. Many investors tend to view P&G as the best option in that space, since it is a huge company with a market capitalization of more than $200 billion.dividend-stock

But there may be an even better option than P&G. Clorox Co. (NYSE: CLX) has significantly outperformed its larger competitor. Clorox stock is up 23% in the past year. In fact, Clorox has outperformed P&G by 37 percentage points over the past year.

Clorox has generated fantastic returns for shareholders for the past several years, thanks to its strong earnings growth and excellent product portfolio. As a result, investors may want to view Clorox as the top consumer staples stock.

A Portfolio of Strong Brands

The first advantage Clorox has is a very efficient and focused product portfolio. The company is much smaller than bigger rivals like P&G, but it maintains a streamlined business model, focusing only on top global brands. For example, 80% of Clorox’s portfolio is comprised of products that hold either No. 1 or No. 2 brands in their respective categories.

Clorox’s brand portfolio includes cleaning products like its namesake bleach and disinfectant wipes, household brands including Kingsford, Glad and Fresh Step, as well as lifestyle brands like KC Masterpiece, Hidden Valley and Brita.

While P&G is busy trying to divest a number of its slow-growth brands, Clorox made the strategic decision to not overload itself with brand acquisitions in recent years. This has resulted in a high degree of efficiency.

To that end, Clorox has delivered $100 million or more in cost savings each year since 2003. Its lean operating and cost structures have resulted in significant free cash flow. The company has maintained a 13% free cash flow margin, as a percentage of sales, over the past decade.

Clorox Cleaned Up Last Quarter

Clorox reported 3% sales growth last quarter, or 6% sales growth excluding the effects of currency, thanks once again to its excellent brand portfolio. Six of its eight U.S. retail businesses gained market share against the competition last quarter.

In addition to its strong brand portfolio, another reason why Clorox’s results are holding up so well this year is that the company is not as exposed to the foreign exchange markets as bigger companies like P&G. For example, Clorox derives only 19% of its revenue from outside the United States. This focus on the U.S. has shielded the company from the brutal effects of the rising U.S. dollar over the past year.

Meanwhile, Clorox’s earnings per share from continuing operations rose 20% last quarter, year-over-year. This was due to its revenue growth, as well as 3% growth in shipment volumes. Each of Clorox’s domestic businesses performed exceptionally well last quarter. Its cleaning, household and lifestyle brands posted 6%, 5%, and 7% sales growth, respectively.

For the full year, Clorox expects 3%-4% growth in constant-currency sales, as well as $4.68-$4.83 per share of profit. That would result in as much as 6% earnings growth in fiscal 2016, which would represent another year of steady growth.

Longer term, Clorox expects its strategy of strict cost controls and industry-leading brands to propel significant growth over the next several years. Its financial targets include 3%-4% sales growth and 25-50 basis points of earnings before interest and taxes (EBIT) margins per year through 2020.

A Great Dividend Growth Pick

Clorox has richly rewarded shareholders over a very long period of time. The company calculated that over the 20-year period ending June 30, 2015, Clorox delivered a total shareholder return of 954%. This was far greater than the S&P 500 index, which produced a 734% total return in the same period.

Thanks to its steady revenue and earnings growth over many years, Clorox is a premier dividend growth stock. The company is also a Dividend Aristocrat. Total annual dividends paid to Clorox shareholders have increased each year since 1977.

Clorox currently yields 2.5%, which is a higher yield than the S&P 500 as a whole. With strong revenue and earnings growth, Clorox is a solid dividend stock that should have no trouble keeping its dividend growth streak alive for many years to come.

Clorox has a streamlined business focus that is yielding big returns for its shareholders. It provides investors with excellent stock price appreciation as well as a competitive dividend. Clorox remains a good pick for dividend investors.

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Published by Wyatt Investment Research at