Procter & Gamble: We Expect Solid Returns From This Dividend King Ahead

Procter & Gamble (PG) is one of the largest consumer goods companies in the world. This giant with a long and successful history has turned into a well-liked income stock among retail investors, due to its stability and its track record of raising its dividend for more than fifty years in a row.

Procter & Gamble should continue to produce solid total returns and consistent dividend growth under the helm of CEO David Taylor, but due to its above-average valuation we believe that investors should wait for slightly better entry prices before establishing a position.

Company Overview

Procter & Gamble was founded in 1837 and is headquartered in Cincinnati, Ohio. The company operates through the following segments: Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. Its portfolio includes major global brands such as Pampers, Tide, Ariel, head & shoulders, Gillette, Oral-B, and many more.

PG 2018 Overview

Source: Procter & Gamble investor presentation

Procter & Gamble is well diversified across its different segments, with none of its operating units providing more than a third of all revenues. Geographically, less than half of the company’s sales are made in North America, with the rest of the world being responsible for more than half of Procter & Gamble’s revenues. A large portion of ex-US revenues makes Procter & Gamble somewhat vulnerable versus currency rates (a strengthening dollar is a headwind for reported results), but on the other hand Procter & Gamble is not dependent on one single market to a large degree.

Procter & Gamble has reported its most recent quarterly results on October 19. The company generated revenues of $16.7 billion during Q1 (fiscal 2019), which was marginally more than Procter & Gamble’s revenues during the previous year’s quarter. Organic net sales growth, which excludes the impact of currency rates as well as the impact of acquisitions and dispossessions, was quite solid, at 4%. Procter & Gamble also earned $1.12 on a per-share basis, which was 3% more than during the previous year’s first quarter. Overall results were solid, and better than what the analyst community had forecasted, but Procter & Gamble’s Q1 results were not overwhelming.

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