Procter & Gamble (PG) Dividend Stock Analysis

Procter & Gamble Dividend

The Procter & Gamble dividend has been paid every year since 1891 and increased for 68 consecutive years; qualifying the company as a Dividend King, Dividend Aristocrat, and Dividend Champion.

Current Dividend Annualized: $4.03

Procter & Gamble (PG) Intrinsic Value – Margin of Safety Analysis            

(updated November 2024)

Normalized Diluted Earnings Per Share (TTM): $5.80
Free Cash Flow Per Share (TTM): $6.42
Cash Flow From Operations (CFO) Per Share (TTM): $7.79

Estimated Intrinsic Value: $122

Target Buy Price Based on Required Margin of Safety =  $122
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $171
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: A

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade: A 

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade: A

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 9/30/24

AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None
Global Aggressive Income (GAI) – None

Company Description

Sector: Consumer Defensive
Industry: Household & Personal Products

Procter & Gamble (PG) provides branded disposable consumer packaged goods for our daily needs. The middle class is the company’s primary target market.

PG markets its products in over 180 countries through mass merchandisers, grocery stores, membership club stores, drug stores, and department stores among others.

The company divides its products into 5 segments:

Fabric and Home Care (32% of sales) offers products such as Ariel, Downy, Gain, Tide, Cascade, Dawn, Febreze, Mr. Clean, and Swiffer, etc.

Baby, Feminine and Family Care (28% of sales) offers products such as Luvs, Pampers, Always, Tampax, Bounty, Charmin, etc.

Beauty, Hair and Personal Care (18% of sales) offers products such as Head & Shoulders, Pantene, Rejoice, Olay, Old Spide, Safeguard, SK-II, etc.

Grooming (11% of sales) offers products such as Braun, Fusion, Gillette, Mach3, Prestobarba, Venus, etc.

Health Care (11% of sales) offers products such as Crest, Oral-B, Prilosec, Vicks, etc.

SWOT Analysis

Strengths

P & G is a master at building brands (over 300 globally); with competitive advantages in distribution and economies of scale (efficiency) in reaching retailers, and understanding consumer needs. No one invests more in market research. Their diversified portfolio of disposable consumer products is unmatched, including 21 brands with 1 billion or more in annual sales. They are a global leader in innovation.

Weaknesses

Defending so many brands at one time is difficult. Fake products, generics, and competition from rivals means boosting brands and maintaining market share is expensive. P&G has to spend billions of dollars (approx. 9 billion annually) in advertising to build and maintain their brands.

Opportunities

Procter & Gamble makes products that can be used and disposed of anywhere in the world. World-wide increased penetration has almost no limits.

PG is making a concerted effort to renew growth and revitalize its profitability. This effort includes discarding over 100 brands that were unprofitable or dragging down profit margins.

Threats

Deflationary pressures brought about by intense competition and pandemics. On the other side, inflationary pressures from supply chain problems and general price increases can squeeze margins. There are always competitors who provide similar products, both branded and unbranded, that can eat into market share.

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.