Best Dividend Stocks: Procter & Gamble (NYSE:PG)
By: Ned Piplovic,
With 63 consecutive annual dividend hikes and a double-digit-percentage total annual return, the Procter & Gamble Company (NYSE:PG) has earned its place among the best dividend stocks currently on the market.
Each individual investor might have a slightly different definition of what are best dividend stocks. This approach should not surprise anyone. Different investors have different investing targets, work on strategies with different time horizons and use different tactics to reach their ultimate investing goal.
However, before individual investors focus on finding the specific best dividend stocks for their individual portfolio, most investors will use a few general criteria to identify a small group of securities. From this group, investors will pick the one or two individual equities that have the highest potential of becoming the best dividend stocks for their specific portfolio.
The three main general criteria for identifying best dividend stocks are long-term asset appreciation, an extended record of annual dividend hikes and a robust dividend growth rate. Sporadic share price fluctuations might shake investor confidence in the P&G stock over the short term. However, the company has delivered reliable long-term returns and astute investors see occasional share price declines as opportunities to extend their stock position at discounted prices.
Procter & Gamble performance meets all three requirements. The stock has been rising steadily for more than a decade, the company boosted its annual dividend for the past 63 consecutive years and managed to maintain an average annual dividend growth rate of 8.3% over the past two decades. These robust performance metrics stem from strong operational fundamentals, and P&G continues to deliver results every quarter.
Best Dividend Stocks: P&G Financial Results
On April 23, 2019, Procter & Gamble reported the financial results for the fiscal third-quarter 2019. While total sales advanced only 1% to $16.5 billion, organic sales for the quarter advanced 5% year over year on 2% higher volumes.
Net earnings increased 9% over the same period last year to $2.75 billion or $1.04 per diluted share. The adjusted earnings per share of $1.06 outperformed the Wall Street analysts’ expectations of $1.03 by nearly 3%. The company also returned more than $3 billion of its cash to shareholders — $1.9 billion as dividend distribution and an additional $1.3 billion as common stock repurchases.
The Procter & Gamble Company (NYSE:PG)
Headquartered in Cincinnati, Ohio, and founded in 1837, The Procter & Gamble Company provides branded consumer packaged goods globally through five business segments. With a 32% share of revenues, Fabric & Home Care is the largest business segment. This segment provides fabric and laundry care, air care and dish care products, as well as professional and surface care products under the Ariel, Downy, Gain, Tide, Cascade, Dawn, Febreze, Mr. Clean and Swiffer brands. The second largest business segment — Baby, Feminine & Family Care with a 27% share — offers baby wipes, diapers, adult incontinence and feminine care products, paper towels, tissues and toilet paper under multiple brands, including Luvs, Pampers, Always, Bounty and Charmin.
The Beauty segment offers conditioners, shampoos, styling aids, skin and personal care products under several global brands, including Head & Shoulders, Pantene, Olay and Old Spice. Next, the Grooming segment provides blades, razors and hair removal appliances, as well as other shave care products under the Braun, Fusion, Gillette, Mach3, Prestobarba and Venus brands. Lastly, the Health Care segment offers Crest, Oral-B, Metamucil, Prilosec and Vicks branded oral care, gastrointestinal, respiratory and other personal health care products.
Best Dividend Stocks: P&G Dividends
The company’s current $0.7459 quarterly distribution is 4% higher than the $0.7172 payout from the same period last year. This new quarterly amount is equivalent to a $2.98 annualized dividend payout and a 2.7% forward dividend yield. Proctor & Gamble’s current yield is nearly 44% higher than the 1.91% simple average yield of the overall Consumer Goods sector, as well as 32% above the 2.07% average yield of the Personal Products industry segment.
Proctor & Gamble has not missed a quarterly distribution since initiating dividend payouts 129 years ago. Just over the past two decades, Proctor & Gamble enhanced its total annual dividend distribution amount five-fold. This level of steady advancement corresponds to an average growth rate of 8.3% per year.
With its record of 63 consecutive annual dividend boosts, Procter & Gamble has been a Dividend Aristocrat for nearly four decades and a Dividend King for a dozen years already. However, even within these exclusive groups of only 57 Aristocrats and just 13 Kings, Procter & Gamble’s current streak of dividend payouts is second to none, literally. The company shares the honor of having the longest dividend hike streak with just one other company — the Dover Corporation (NYSE:DOV).
Best Dividend Stocks: P&G Share Price
The share price entered the current 12-month period just as the trend reversed from a 25% decline in early 2018 into the current uptrend. After just one week, the share price passed through its 52-week low of $75.84 on June 18, 2018, and headed higher. With just three minor pullbacks in its way, the share price gained more than 43% before closing at the end of trading on June 10, 2019, at $108.72. This closing price marked the company’s new all-time high. In addition to reaching a new peak, the June 10 closing price was 40% higher than it was one year earlier. However, because the 25% decline in early 2018 resulted in a strong recovery, this 40% gain over the trailing 12 months was higher than the 36% share price advancement over the past five years
A share price decline in 2015 limited the total return over the past three years to 42%. With the strong share price recovery since April 2018, P&G delivered a total return of 47.4% over the past year. However, while the asset appreciation over the past 12 months outpaced the three-year capital gains, the additional dividend distributions drove the total return over the past five years past the one-year total return to 53%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.