E Procter & Gamble: Strong Brands Lead To Annual Dividend Increases

Consumer staple giant Procter & Gamble Company (PG) has outperformed the market over the last year. Shares are higher by nearly 13% over this period of time, compared to the less than 8% return for the S&P 500.

The company also continues to reward long-term shareholders with dividend increases each year like clockwork. P&G has increased its dividend each year for over 60 consecutive years, placing it on the exclusive list of Dividend Kings. Its premier brand portfolio and long history of dividend growth also make it an attractive pick for institutional investors. For example, P&G is a top 10 holding for Alkeon Capital Management.

This article will discuss how P&G has navigated the current economic conditions while continuing to generate positive returns for shareholders.

Quarterly Results

Procter & Gamble reported results for the fourth quarter and fiscal year 2020 on 7/30/2020. Revenue increased 3.5% to $17.7 billion, $730 million above what the analyst community had expected. Adjusted earnings-per-share increased $0.16, or 16%, to $1.16, $0.15 ahead of estimates. For FY 2020, revenue improved 5% to $71 billion. Adjusted earnings-per-share increased 13.3% to $5.12.

Organic growth was 6% for the year, the largest year-over-year growth increase since 2006. Procter & Gamble had expected organic growth of 3% to 4% at the start of the year. Growth was wide-ranging as nine out of 10 global product categories had organic sales growth for the full year.

Fabric & Home sales were the highlight for the quarter. Organic sales were up 14% due to an 8% increase in volumes, 4% improvement in mix, and 2% higher pricing. Laundry and fabric enhancers in both North America and China contributed a significant amount to results. Europe was down slightly due to customer de-stocking related to COVID-19.

Beauty grew 3%, primarily due to volume gains. Hair Care was strong in North America while Personal Care experienced double-digit increases in Great China. Organic sales for Grooming were down 1% while volumes fell 4% in Q4 related to a reduced number of shaving incidents related to the COVID-19 pandemic.

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William K. 1 week ago Member's comment

P & G is certainly a good example of making a long string of good choices can lead to. And much like well managed mutual funds, adequate diversification usually assures that there will be more winnings than losses.

Probably a deep investigation into the mechanism of making choices at P&G would reveal that there is a lot of information considered before choices of any great importance are made. Most damage to organizations comes from poorly informed decisions that could have been avoided by having adequate information.

It may also be that there is a more conservative management attitude that avoids a lot of risks based on uninformed guesses.

Backyard Hiker 2 weeks ago Member's comment

Interesting, I would have thought $PG products would do well across the board during COVID-19. Hadn't thought how some products like shaving would actually be down as more people stay home and don't bother shaving.