PG’s annual dividend increase for 2017 was $0.0201, bringing the quarterly dividend to $0.6896 from last years $0.6695. Good for a 3% YOY change. This brings the yield to 3.20% based on the $86.26 closing price. This increase falls just short of my projected $0.0205 projected increase or 3.05% for the year.
PG Dividend History:
PG has increased it’s dividend for 60 straight years. As a dividend payer, it’s at the top of the food chain as far as the aristocrats are concerned. However in recent years, the rate of the increase has slowed, not even keeping pace with my conservative long term inflation rate of 4%. However, going back to 2003, the dividend has grown at a rate of 8.31%, not bad for rewarding long term investors. Still, with the recent slowdown in the dividend growth, the last 15 years has rewarded investors by growing the dividend a total of 203%.
PG vs S&P500:
Coinciding with the recent 3 years of slow dividend growth, PG has recently also underperformed the S&P500. The last 2 years in particular has seen PG trail the S&P500 as it has been stuck in the 80’s pricing. A strong dollar and pricing from generics has hurt earnings. However the company has sold off product lines in an effort to get back to stronger growth.
PG Key Stats:
Market Cap: $220 Billion
PE Ratio: 15.86
Dividend Yield 3.20%
Profit Margin: 23.14%
Total Cash: 14.33 Billion
Total Debt:30.41 Billion
Payout Ratio: 74.80%
With low earnings growth and a payout ratio of 74%, we can see why the dividend growth has been muted in recent years. However, looking at the PE ratio in a market with lofty valuations, the PE for PG is actually respectable in this gravity defying market.
If I was adding money in this market which has become tough to find value, PG actually looks respectable as a buy. However, I can’t help but feel like the market is due for some sort of pull back. While PG trades at a decent in this market where you could do much worse, I would hold off on PG at the moment and wait for further pullback. Around the $80 price, I’m having a field day, but at todays price of 86, the stock is kind of in no mans land, trading in the middle of a range it’s been stuck in for a while. Things that can help earning growth for PG would be a weakening dollars, which hasn’t happened stubbornly. If you’re a super long term holder like me, there are no worries. Just collect your decent yield and wait for the growth to come back. For someone looking to open a new position, hold off for the time being.Follow me on the social medias: