We received a payment from Procter & Gamble (PG) in the amount of $15.28 (22.829 shares X 66.95 cents per share). This is the 4th consecutive dividend to be paid at 66.95 cents. We are expecting dividends from the company to increase by the next quarter. How are we comfortable that there will be a dividend increase by next quarter? We need to check and to understand the dividend behavior of the company. Let’s start first by simply knowing about Procter & Gamble (PG).
Since 1890, Procter & Gamble (PG) has been paying dividends for more than 120 years!!! (126 years to be exact!) and it has increased its dividends for +60 consecutive years (which makes P&G a dividend champion). In essence, it gives us comfort that P&G has a good track record of providing dividends with an increase! The company has operations in 70 countries and delivers consumer products like Ariel, Downy, Ambi Pur, Gillette, Vicks, Head & Shoulders etc etc (basically look around your house and you’ll notice their products) thus, the company is a force to reckon in the fast moving consumer goods (FMCG) industry. Let’s take a closer look about their dividends.
The Dividend Payout Ratio is 0.80. By theory, it is considered as too high, however, if we look at the historical trend, 0.80 payout ratio is actually down from 0.90. It seems to be continuing in a downward trend so most likely we will still be expecting an increase in the future.
The dividend yield for P&G is registered at +2.9%. As compared to mid-2016, the yield is on a downtrend but if we look in the historical figures, +2.9% isn’t really bad. It is actually at a range between +2.5% to +4% and this behaviour has been going on since 2009. So it gives us a relief that based from history, dividend increase had happened at this range and it will still happen in the near future.
The dividend growth rate have decrease if you compered the 5yr growth rate of +5.8% (meaning annual growth per year for the past 5 years… if you bought their stock five years ago and held it until now, then it grew +5.8% annually) and the 1 yr growth rate of +3.2% (if you just bought their stock last year, it grew +3.2%). As mention earlier, Procter & Gamble (PG) has a good track record of increasing dividends for the past 6 decades. What is really likable about P&G is that even though dividend growth can be small, the dividends are stable and consistent. These qualities make it a dividend champion.
So there, we are happy with the dividends and we are looking forward to Procter & Gamble (PG) dividend payments in the next quarter.