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Procter & Gamble:
Blue-Chip Dividend King

Venerable Cincinnati-based household goods titan Procter & Gamble (PG) manufactures a huge variety of consumer packaged goods, which are marketed and sold in more than 180 countries. It employs 99,000 individuals, has a market capitalization in excess of $310 billion, and has been a component of the Dow Jones Industrial Average since 1932. It is also known for increasing its dividend annually for 64 consecutive years, notes Richard Gallagher, Associate Director, Value Line Research.

The consumer products giant has been on a roll of late. Procter & Gamble registered gains across all of its business segments in the December quarter (fiscal year ends June 30th). Strong demand for the majority of its offerings, most notably for cleaning, health, and hygiene products which experienced strong demand under pandemic conditions, drove the strong performance. Price hikes in the home appliances and home care businesses as well as favorable currency effects also supported the good results. In all, earnings were up 15% year to year. Looking ahead, near-term prospects look bright. The elevated demand should continue owing to increased demand for household products in connection with the COVID-19 outbreak. As the year 2021 progresses, the general economic backdrop should improve, which ought to increase consumer spending and be associated with reopening of restaurants, schools, and hotels. Home entertaining should also be expected to trend toward normal.

At P&G, management’s efforts to improve manufacturing and distribution capabilities will likely keep the bottom-line momentum intact. Continuing efforts at product innovation and a more formidable e-commerce presence, will probably push profits higher over the coming years. As for the stock, Procter & Gamble offers conservative appeal. Specifically, the company garners top marks for Financial Strength, Price Stability and Earnings Predictability, along with a Safety™ rank of 1 (Highest). The issue’s dividend yield also is above average.

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