Colgate Stock Is an Antidote to AI-Dominated Markets. Why It’s Worth Buying Now.

Colgate is one of the most popular oral care brands in the U.S.—and it gets nearly half its sales from higher-growth developing markets. (Gabby Jones/Bloomberg)

The household-goods sector giant has fallen over the past year, but its moment could be coming.

CL

Colgate-Palmolive Co.

1-Year Price Chart

Created with Highstock 2.1.8

$78.08

as of market close October 16, 2025

Market Cap

$63.8 B

NTM P/E

20.8

Div Yield

2.7%

Beta

0.45

52 Week Range

$76.68

$101.89

Toothpaste doesn’t excite Wall Street the way artificial intelligence does, but shares of Colgate-Palmolive can still leave investors with that minty fresh feel.

Colgate, a longtime leader in household products, dates back to the early 19th century. It has an attractive portfolio of brands, including Colgate toothpaste, Palmolive and Ajax cleaners, and Hill’s brand pet food. But with technology names dominating the stock market, such staples have gone out of style. Colgate has suffered through a rocky 12 months, during which its shares have fallen over 20% to $79, leaving the stock back where it traded five years ago. It doesn’t help that growth has slowed in 2025.

But there’s a case to be made for Colgate-Palmolive, the world’s top toothpaste maker. Not only is Colgate one of the most popular oral care brands in the U.S., it also gets nearly half its sales from higher-growth developing markets, the highest percentage among its U.S. peers, which should help its growth pick up again in 2026. And in a market dominated by technology, Colgate’s stable business and solid dividend make it the perfect antidote if the AI trade goes bad.

“Colgate is one of the highest-quality companies we cover,” says Evercore analyst Robert Ottenstein, who has an Outperform rating and $100 price target on the stock. “It has strong management, largely strong and improving market positions, and attractive categories.”

It’s easy to forget just how ubiquitous Colgate is. The company is the global leader in toothpaste, with a 41% market share, and it’s also No. 1 in manual toothbrushes and liquid hand soap. Oral care accounts for over 40% of Colgate’s global sales, and there is little private-label competition in that sector. Pet nutrition, dominated by the Hill’s brand, makes up 22% of sales.

That combination helped Colgate deliver impressive annual organic sales growth averaging about 7.5% from 2022 to 2024, and lifted its shares to a record high of $108.77 just over a year ago. Unfortunately, business has slowed this year, with organic sales expected to grow at about 2%, while earnings per share are also projected to grow just 2% in 2025 after rising 11% last year. The slowdown is an industrywide problem and is depressing all the major household-products stocks, including Colgate, Procter & Gamble, and Clorox.

But if 7.5% organic sales growth is possibly a thing of the past, 2% is likely too low. The Colgate bull case is that the company can get back to its goal of 3% to 5% annual organic sales growth in 2026 and produce mid- to high-single-digit EPS growth.

Some of that growth will come from Colgate’s lesser-known pet-food business. Geared toward dogs, Hill’s has generated steady growth in sales and profits from products marketed exclusively in veterinarian offices and what it calls “scientific formulas” sold mainly at pet specialty stores. The U.S.-focused brand has been capacity constrained and offers growth opportunities in cat food. “It’s a terrific business,” Ottentstein says.

The rest will have to come from overseas. Operating in over 200 countries, Colgate entered Brazil, Mexico, and the Philippines in the 1920s and India in the 1930s. Colgate is the Coca-Cola of household products, generating most of its profits outside the competitive U.S. market. Colgate’s premium Total toothpaste brand is a big seller—especially so, as incomes rise.

“There are favorable demographics and premiumization trends,” says Citi analyst Filippo Falorni of the developing world. “It’s hard to compete with Colgate because it has been entrenched in these markets for decades.”

The numbers back him up. While Colgate trails Procter & Gamble, the maker of Crest, in the U.S., with less than 20% of the oral care market, it has a nearly 50% share in Latin America. That region is Colgate’s largest and most important division.

Colgate also is the toothpaste leader in India, where it’s the No. 1 oral-care brand with three times the market share of the No. 2 player.

With its Bright Smiles, Bright Futures program, Colgate has emphasized the importance of oral care to nearly two billion schoolchildren in the developing world over the past 25 years. It seeks to build brand loyalty by distributing its oral care products free to kids.

Prabha Narasimhan, the general manager of Colgate’s India business, said earlier this year that oral care has “tremendous” growth potential there. In urban India, 80% of people don’t brush twice a day, and in rural areas, only half brush daily, she said. There is a similar opportunity of more frequent brushing throughout the developing world. Colgate’s India business trades publicly and has a market value of $7 billion, with Colgate owning about half the stock.

Advertising is important in the industry, and Colgate doesn’t skimp on it, spending 13.5% of sales on ads, up from about 10.2% in 2018.

Colgate stock offers a secure and modest dividend yield of 2.7%. The company has lifted its payout for 62 straight years—making it one of a few dozen so-called Dividend Kings with at least 50 straight years of payout boosts. It has paid a dividend for 130 years.

The dividend has risen at a 4% rate in the past decade, and a similar increase, to an annual rate of $2.16 a share, is a good bet in early 2026, and would result in a 2.8% yield.

While Colgate shares are rarely a bargain, the stock now looks reasonably priced at 20 times projected 2026 earnings of $3.89 a share—below its 10-year average price/earnings ratio of 23. The company generates about $20 billion in annual sales and has a market value of more than $60 billion.

Wall Street has passed over household staples stocks like Colgate in favor of internet “staples” like Amazon.com, Meta Platforms, and Alphabet. But the former are truly the anti-AI trade. That means Colgate often appreciates little—or even declines—when tech stocks are roaring, and advances on bad days for the overall market and the Nasdaq. If the AI trade fizzles, it could outperform.

Tech may be sizzling, but there’s always a place in a portfolio for a staple like Colgate.

Write to Andrew Bary at andrew.bary@barrons.com