Procter & Gamble Delivers 40% One-Year Total Return, Boosts Dividend 63 Consecutive Years (PG)

In addition to the steadily rising dividend distributions over the past 63 consecutive years, the Procter & Gamble Company (NYSE:PG) has also delivered robust asset appreciation for a combined total return of nearly 40% over the past year.

Procter & Gamble outpaced one-year capital gains from all four of its competitors in the major household and personal care product manufacturers segment — Church & Dwight (NYSE:CHD), Clorox (NYSE:CLX), Colgate-Palmolive (NYSE:CL) and Kimberly-Clark (NYSE:KMB). Additionally, Procter & Gamble enhanced its share price more than 13% since the beginning of 2019, which trailed only slightly behind Colgate-Palmolive’s 14% year-to-date gain.

A share price decline of more than 25% in the first four months of 2018 drove P&G’s 50-day moving average below its 200-day counterpart. However, the shareprice rebound during the first half of the trailing 12-month period, supported a steady recovery of the 50-day moving average. The 50-day average broke above the 200-day average in early September 2018 and continues to rise further above its long-term equivalent.

Furthermore, since the 50-day average broke above the 200-day average in September, the share price remained above both averages except for two brief dips below the 50-day average — one in October 2018 and the other from late December 2018 to early January 2019. The Procter & Gamble share price has been firmly above the 50-day moving average since January 23, 2019.

Financial Results

On January 23, 2019, Procter & Gamble reported the financial results for the fiscal second-quarter 2019. Net sales of $17.4 billion were even with the same period the prior year. Excluding all impact of acquisitions, divestitures and foreign exchange, organic sales increased 4% year over year. Mostly because of the Tax Cuts and Jobs Act (TCJA) impact, net earnings increase 31% over the prior year to $1.22 per diluted share. Adjusted earnings per share (EPS) of $1.25 were 5% higher year over year, or 13% on a currency neutral basis.

The company shared its strong financial results by returning nearly $2.6 billion of its cash to shareholders. The shareholders received approximately $800 million through the company’s current common stock repurchase program and nearly $1.9 billion through dividend distributions

The Procter & Gamble Company (NYSE:PG)

Headquartered in Cincinnati, Ohio, and founded in 1837, The Procter & Gamble Company provides branded consumer packaged goods globally through five business segments. With a 32% share of revenues, Fabric & Home Care is the largest business segment. This segment provides fabric and laundry care, air care and dish care products, as well as professional and surface care products under the Ariel, Downy, Gain, Tide, Cascade, Dawn, Febreze, Mr. Clean and Swiffer brands. The second largest business segment — Baby, Feminine & Family Care with a 27% share — offers baby wipes, diapers, adult incontinence and feminine care products, paper towels, tissues and toilet paper under multiple brands, including Luvs, Pampers, Always, Bounty and Charmin.

The Beauty segment offers conditioners, shampoos, styling aids, skin and personal care products under several global brands, including Head & Shoulders, Pantene, Olay and Old Spice. Next, the Grooming segment provides blades, razors and hair removal appliances, as well as other shave care products under the Braun, Fusion, Gillette, Mach3, Prestobarba and Venus brands. Lastly, the Health Care segment offers Crest, Oral-B, Metamucil, Prilosec and Vicks branded oral care, gastrointestinal, respiratory and other personal health care products.

Dividends

Procter & Gamble has been a Dividend Aristocrat for nearly four decades. Furthermore, having boosted its annual dividend for more than 50 consecutive years, Procter & Gamble is one of just 16 companies also eligible for the much more exclusive Dividend King title. Even within these exclusive groups, Procter & Gamble’s current streak puts the company in a two-way tie with the Dover Corporation (NYSE:DOV) as the only two S&P 500 companies with 63 years of consecutive dividend boosts.

The most recent dividend hike raised the quarterly dividend 4% from the $0.717 payout in the previous period to the current $0.746. This new quarterly amount is equivalent to a $2.98 annualized dividend payout and a 2.8% forward yield. Proctor & Gamble’s current yield is nearly 56% above the 1.83% average yield of the entire Consumer Goods sector, as well as 40% higher than the 2.02% simple average yield of the Personal Products industry segment.

Proctor & Gamble has advanced its dividend payout amount significantly after more than six decades of annual hikes. Just over the past two decades, Proctor & Gamble advanced its annual payout more than 540%, which corresponds to an average annual growth rate of nearly 10%. The company will distribute next round of dividends on the May 15 pay date to all shareholders of record before the April 17, 2019, ex-dividend date.

Share Price

The share price entered the current 12-month period on the tail end of a 27% decline that began in January 2018. Therefore, the share price reached its 52-week low of $70.94 on May 2, 2018, or just two weeks into the trailing 12 months. However, after the downtrend ended, the share price reversed direction and has been advancing with minimal volatility — aside from the two brief blips mentioned earlier. Since rising above its previous all-time high in late January 2019, the share price has reached 18 new all-time highs before peaking at $104.97 on April 8, 2019.

After peaking, the share price leveled off and closed on April 11, 2019, at $104.75. This closing price was nearly 34% higher than one year earlier and almost 48% higher than the 52-week low from May 2018. This level of asset appreciation combined with the company’s rising dividend income distributions to deliver a 37.6% total return over the past 12 months. While the early-2018 share price drop limited total returns over the past three years to less than 36%, the five-year total return was nearly 47%.

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.