7 Point Procter & Gamble Dividend 2019 Guide (*Expert Analysis*)
Laundry detergent, toothpaste and razor blades. Dish soap, paper towels and cough drops.
Not exactly sexy stuff. You won’t hear the talking heads on CNBC get excited about the companies that make consumer staples. They’d rather get all hot and bothered about Internet stocks that don’t really make anything and generate no earnings.
But here’s the thing about consumer staples companies: in good years they perform well and in bad years they’re typically stable. It’s a Warren Buffett truism: invest in companies that provide products and services that people actually need.
Looking to protect your nest egg from mounting risks but still want to stay in the game and reap profits? Consider investing in best-of-breed consumer goods companies that also pay high dividends.
Along those lines is Procter & Gamble (NYSE: PG), one of the “bluest of the blue chips” in the consumer staples sector.
With a market cap of $246.5 billion, Procter & Gamble is a consumer brands powerhouse, with a portfolio of trusted products such as Tide, Bounty, Charmin, Dawn, Ivory, Cheer, Olay, Gillette, Crest, Vicks, Oral-B, Head & Shoulders, Pepto-Bismol… the list goes on and on. Madison Avenue has turned these brands into icons.
The colorful labels of the company’s brands are familiar sights to consumers as they walk down the supermarket aisle. They’re all blockbuster sellers and enjoy enormous “mind share” around the globe.
As a cyclical consumer goods play, the stock of Cincinnati-based Procter & Gamble is a shrewd bet for capital appreciation as the economy continues to (albeit fitfully) expand. But is P&G an appealing dividend play as well, suitable for conservative income investors? Let’s find out.
Does Procter & Gamble Pay Dividends?
Yes, Procter & Gamble pays dividends. In fact, P&G is a “Dividend Aristocrat.”
To earn the honorific of S&P 500 Dividend Aristocrat, a company must have boosted dividends for at least 25 years. Specifically, the company must have a managed dividend policy that increased its dividend every year for those 25 years.
Dividends, by the way, are distributions of company earnings to shareholders. They’re a “reward” to people who hang on to the company stock.
Typically, dividends are approved by the board of directors. However, shareholders also have a say.
Dividends are paid from quarterly profits. The amount of profit left over after the distribution of dividends is classified as retained earnings.
If you own a stock that pays dividends, you’ll receive those dividends as cash payments deposited directly to your brokerage account.
What Is Procter & Gamble’s Dividend?
The board of Procter & Gamble just declared a quarterly dividend of $0.717 per share. That amounts to an annualized dividend of $2.868 per share.
The dividend was payable on February 15, 2019 to shareholders on record as of January 16, 2019.
The ex-dividend date was January 17, 2019. That means you must have owned the stock prior to that date to be eligible to receive the February 15 dividend.
What Is Procter & Gamble’s Dividend History?
Here’s some good news for Procter & Gamble shareholders: the company has paid dividends since 1890. No, that’s not a typo. Further, the company has increased its dividends every year for the past 62 years.
P&G’s payout ratio is an ample 64.9%. Free cash flow, from which dividends are paid, amounted to $11.1 billion in 2018, an increase from $9.3 billion in 2017.
These qualities make P&G a solid defensive stock. It’s got a great track record in terms of income and appreciation.
Keep in mind, though, that past performance is no guarantee of future results. Poor economic conditions or bad decisions by management in the future could jeopardize the company’s ability to increase dividends every year.
However, if history is any guide, Procter & Gamble will continue to increase its dividends. Capital appreciation is in the cards as well. Over the past 12 months, P&G’s stock price has risen a robust 23.2%, compared to a paltry 0.3% for the S&P 500.
What Is Procter & Gamble’s Dividend Yield?
Procter & Gamble’s annual dividend yield is 2.9%.
You can calculate that yourself. Just divide the annual dividend by the share price.
However, the yield changes every day with the stock price. Although it usually won’t move much, it’s best to check the latest data.
When Is Procter & Gamble’s Dividend Payout Date(s)?
The last dividend date for Procter & Gamble was February 15, 2019.
The company has a history of paying dividends in the middle of February, May, August, and November of each year.
You can assume that the ex-dividend dates for each of those payouts will be about a month before the dividend dates.
Will that affect the stock price? It might.
Investors know that they need to purchase the stock before the ex-dividend date if they want the payout. As a result, their increased demand could push the stock price higher.
Sometimes, though, the stock price drops on the ex-dividend date itself. That’s because there’s no incentive by income-oriented investors to make a quick purchase.
Since Procter & Gamble has a long track record of paying dividends and also increasing them every year, you can expect the stock to remain popular with long-term investors.
Will Procter & Gamble’s Dividend Increase In 2019?
It’s almost a foregone conclusion that P&G will raise its dividend yet again in April. However, that decision is up to the board of directors.
But history tends to repeat itself. Since the company has such a long history of raising dividends, it will likely do so again.
Recently, shares of Procter & Gamble hit a new high. While that’s great news for investors who hold the stock, it also means that the dividend yield will drop.
Remember, the dividend yield is a function of the stock price. So even if the board approves a dividend increase, it might look like a small increase if you compare last year’s yield with this year’s.
That’s something to keep in mind if you’re looking for an investment that gives you a decent income relative to the stock price.
That said, Procter & Gamble is a global colossus with superb cash flow, as the following video demonstrates. The company’s long-term growth prospects seem to ensure a safe and growing dividend.
Will Procter & Gamble’s Dividend Be Cut In 2019?
That’s highly unlikely. Of course, American corporate titans can run into trouble, which in turn threatens their once-safe dividends.
Procter & Gamble generates roughly two-thirds of its revenue from overseas, which means currency devaluations in other countries exert a particularly harsh effect on the company’s pricing power and hence earnings.
However, in addition to its long history of growing dividends, P&G isn’t facing significant headwinds at this time.
In fact, Procter & Gamble recently announced that it’s adding 500 employees on the West Coast. That’s a sign that the company is growing. P&G also recently launched a new hair care brand. That tells you its research and development is strong.
The company also is socially responsible, which earns it good media coverage and speaks well of the integrity of management. P&G recently joined an effort to ban animal testing for cosmetics.
The specter of recession throughout the euro zone, combined with a possible slowdown in the U.S., could impose hurdles for P&G. But to the company’s credit, it has been slimming down by selling off underperforming divisions and brands, in an attempt to be a leaner company.
The company has sold off more than 100 brands, to focus its marketing and distribution resources on about 80 core, bestselling brands that make up roughly 90% of sales. Notably, the company dumped the Duracell brand and jettisoned the battery business.
As the recovery enters its “late stage,” consumer staples stocks such as Procter & Gamble are smart bets. Indeed, sector rotation is underway, as investors transition from momentum “story stocks,” such as the over-hyped Internet darlings, toward reasonably valued dividend-paying stalwarts that offer stability.
Within this paradoxical backdrop of continued economic recovery and market turmoil, investors who seek both growth and downside protection should stick with large-cap, multinational companies such as Procter & Gamble that make products with enduring appeal.
Procter & Gamble is in the vanguard of dividend-paying stocks that will see their fortunes rise and their dividends grow in coming quarters. Don’t get spooked by market volatility and the hyperventilating newscasters on cable television. Instead, get peace of mind from this “Steady-Eddy” dividend payer.
John Persinos is the managing editor of Investing Daily.