Procter & Gamble: Still Cleaning Up After 180 Years

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Income investors typically look for stocks with high yields to add to their portfolios. That’s fine if you need strong cash flow right now. 

But those with a longer time horizon should consider companies with a more modest current yield but a history of annual dividend increases. This month’s Top Pick falls into that category.

Cincinnati-based Procter & Gamble (PG) is a giant in the cleaning products business as well as personal health care and grooming. The odds are your bathroom, kitchen, and laundry are stocked with P&G products.

The long list of brands includes Tide, Bounce, Pampers, Downy, Bounty, Charmin, Always, Tampax, Gillette, Head & Shoulders, Herbal Essences, Old Spice, Pantene, Cascade, Febreze, Oral-B, Mr. Clean, Crest, Scope, Vicks, Ivory, and Secret.

And that’s just scratching the surface. How many of these products do you buy regularly? P&G supplies products that people need no matter what’s going on in the world: toilet paper; soap; feminine hygiene; toothpaste; diapers — there will always be a demand for these things. This makes the company relatively recession-proof.

The stock will dip during market plunges, but it always recovers and moves on to new highs. That provides stability for your portfolio. From an income perspective, the company has a long history of annual dividend increases, going all the way back to 1988.

P&G just recently reported results for the second quarter of its 2021 fiscal year, covering the three months to Dec. 31. Net sales for the period were $19.7 billion, an increase of 8% over the prior year. Diluted net earnings per share were $1.47, an increase of 4% year-over-year.

P&G raised its sales growth outlook for fiscal 2021 from a range of 3%-4% to a range of 5%-6% over the prior fiscal year. The company said it now expects fiscal 2021 GAAP diluted net earnings per share growth in the range of 8%-10%.

The share price may decline in times of market dips. That happened last March, when it fell as low as $94.34. Based on the history of the stock, those occurrences should be treated as buying opportunities.

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