Procter & Gamble Co's Dividend Analysis (2024)

GuruFocus Research

·4 min read

Insights into Procter & Gamble Co's Upcoming Dividend and Financial Health

Procter & Gamble Co (NYSE:PG) recently announced a dividend of $0.94 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-18. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Procter & Gamble Co's dividend performance and assess its sustainability.

What Does Procter & Gamble Co Do?

Since its founding in 1837, Procter & Gamble has become one of the world's largest consumer product manufacturers, generating more than $80 billion in annual sales. It operates with a lineup of leading brands, including more than 20 that generate north of $1 billion each in annual global sales, such as Tide laundry detergent, Charmin toilet paper, Pantene shampoo, and Pampers diapers. P&G sold its last remaining food brand, Pringles, to Kellogg in calendar 2012. Sales outside its home turf represent just more than half of the firm's consolidated total.

A Glimpse at Procter & Gamble Co's Dividend History

Procter & Gamble Co has maintained a consistent dividend payment record since 1957. Dividends are currently distributed on a quarterly basis. Procter & Gamble Co has increased its dividend each year since 1957. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 67 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Procter & Gamble Co's Dividend Yield and Growth

As of today, Procter & Gamble Co currently has a 12-month trailing dividend yield of 2.49% and a 12-month forward dividend yield of 2.51%. This suggests an expectation of increased dividend payments over the next 12 months.

Over the past three years, Procter & Gamble Co's annual dividend growth rate was 6.70%. Extended to a five-year horizon, this rate decreased to 6.00% per year. And over the past decade, Procter & Gamble Co's annual dividends per share growth rate stands at 4.50%.

Based on Procter & Gamble Co's dividend yield and five-year growth rate, the 5-year yield on cost of Procter & Gamble Co stock as of today is approximately 3.33%.

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Procter & Gamble Co's dividend payout ratio is 0.60.

Procter & Gamble Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Procter & Gamble Co's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Procter & Gamble Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Procter & Gamble Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Procter & Gamble Co's revenue has increased by approximately 6.90% per year on average, a rate that outperforms approximately 50.52% of global competitors.

The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Procter & Gamble Co's earnings increased by approximately 4.80% per year on average, a rate that outperforms approximately 46.34% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 7.50%, which outperforms approximately 54.12% of global competitors.

Next Steps

Considering Procter & Gamble Co's consistent history as a dividend king, its forward-looking dividend yield, and the robust payout ratio, the company stands as a compelling candidate for value investors focused on income generation. Coupled with its strong profitability and growth metrics, Procter & Gamble Co appears well-positioned to maintain its dividend payments and potentially increase them in the future. As investors weigh their options, they may ponder whether Procter & Gamble Co will continue its legacy as a reliable dividend payer in the years to come. Will this titan of industry continue to deliver shareholder value through consistent dividend growth, or will market dynamics demand a strategic pivot?

GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circ*mstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.

As an expert in financial analysis and investment strategies, I bring a wealth of experience and knowledge in evaluating the financial health of companies, particularly in the context of dividend payments. My background includes a deep understanding of financial metrics, market dynamics, and the ability to interpret data to make informed investment decisions.

Now, let's delve into the concepts discussed in the article from GuruFocus regarding Procter & Gamble Co's upcoming dividend and financial health.

1. Company Overview:

  • Procter & Gamble Co (NYSE: PG) is a global consumer product manufacturer founded in 1837.
  • Generates over $80 billion in annual sales with a portfolio of leading brands.
  • Operates in various segments, including household and personal care.

2. Dividend History:

  • Procter & Gamble Co has a remarkable dividend history, consistently paying dividends since 1957.
  • The company qualifies as a "dividend king" for increasing dividends annually for over 67 years.

3. Dividend Metrics:

  • Current 12-month trailing dividend yield: 2.49%, and a 12-month forward dividend yield: 2.51%.
  • Annual dividend growth rates: 6.70% (3 years), 6.00% (5 years), and 4.50% (10 years).
  • 5-year yield on cost as of today is approximately 3.33%.

4. Sustainability Assessment:

  • Dividend payout ratio as of 2023-09-30 is 0.60, indicating a sustainable distribution of earnings.
  • Procter & Gamble Co's profitability rank is 8 out of 10, showcasing strong earnings relative to peers.

5. Growth Metrics:

  • Growth rank of 8 out of 10 suggests a positive trajectory relative to competitors.
  • Revenue growth: Approximately 6.90% per year, outperforming over 50% of global competitors.
  • 3-year EPS growth rate: Around 4.80% per year, outperforming 46.34% of global competitors.
  • 5-year EBITDA growth rate: 7.50%, outperforming 54.12% of global competitors.

6. Investment Outlook:

  • Procter & Gamble Co is positioned as a compelling choice for value investors focused on income generation.
  • Strong profitability and growth metrics suggest the potential for maintaining and increasing dividends.
  • Investors may consider the company's legacy as a reliable dividend payer and evaluate market dynamics.

In conclusion, Procter & Gamble Co's consistent dividend track record, coupled with favorable growth and sustainability metrics, makes it an attractive investment option. The article serves as a valuable resource for investors seeking insights into the company's financial health and its potential to deliver shareholder value through consistent dividend growth.

Procter & Gamble Co's Dividend Analysis (2024)
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