Markets
PG

Procter & Gamble (PG) is a Top Dividend Stock Right Now: Should You Buy?

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show tha t dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Procter & Gamble in Focus

Based in Cincinnati, Procter & Gamble (PG) is in the Consumer Staples sector, and so far this year, shares have seen a price change of 6.01%. The world's largest consumer products maker is currently shelling out a dividend of $0.72 per share, with a dividend yield of 2.94%. This compares to the Soap and Cleaning Materials industry's yield of 2.41% and the S&P 500's yield of 1.96%.

Looking at dividend growth, the company's current annualized dividend of $2.87 is up 3% from last year. Over the last 5 years, Procter & Gamble has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.80%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. P&G's current payout ratio is 67%, meaning it paid out 67% of its trailing 12-month EPS as dividend.

PG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $4.46 per share, with earnings expected to increase 5.69% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Procter & Gamble Company (The) (PG): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

PG

Other Topics

Investing Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More