Stock Analysis & Ideas

Why Procter & Gamble Stock is Resilient During Volatile Times

Story Highlights

Procter & Gamble is a great stock to consider due to its strong track record of growth, stability, and profitability. The company has increased its dividend for over 65 consecutive years and plans on maintaining this streak. It reports earnings on July 29th, and earnings are likely to beat analysts’ estimates.

Procter & Gamble (PG) is likely a relatively safe investment for many reasons. It has a long history of paying dividends, and its dividend yield is currently higher than the average for companies in the S&P 500 (SPX). Procter & Gamble is also a diversified company, with products ranging from beauty products to household cleaning supplies, reducing the company’s dependence on any one product or category.

Since Procter & Gamble has a strong balance sheet and generates significant cash flow, the stock has been known as a pillar of strength and stability. These factors contribute to Procter & Gamble being a relatively safe investment with an above-average dividend yield. If you’re looking for safety during volatile times, there are few companies as stable as Procter & Gamble.

Procter & Gamble is also a “Dividend King.” It has increased its dividend for 66 consecutive years and currently has an annual yield of around 2.5%. P&G is a very defensive stock, as people will still buy its products even during an economic downturn.

The company has a strong moat due to its many brands that have high customer loyalty. Some of its brands include Gillette, Olay, Pantene, and Tide. P&G also has a history of aggressive share repurchases, which reduce the number of shares outstanding and increase earnings per share. This makes the stock more attractive to dividend growth investors.

While many other companies seem to be slowing down, P&G continues to innovate and dominate the market. As the multinational consumer goods corporation gears up to report earnings on July 29, it is a great time to look into the stock.

Inflation Will Result in Renewed Emphasis on Procter & Gamble

In June, consumer price inflation rose 9.1% – the highest rate since 1981. Understandably, the markets are spooked, and everyone is bringing out their thinking hats. The Fed has increased interest rates three times this year and isn’t done hiking. PG has increased its prices four times this year. While it frustrates some, the prices are still affordable to others.

The company has shifted its focus from expanding its products to selling essentials and creating solutions for in-demand private labels. This is because it knows what makes its customers happy will make them come back for more – no matter how tight things may be at home or work.

Overall, PG has been able to withstand many recessions and World Wars in the past, which means that it will also likely survive this current economic downturn.

Procter & Gamble: A Solid Dividend Payer

As stated earlier, Procter & Gamble has increased its dividend payout for an impressive 66 consecutive years. Given the company’s strong financial position and consistent record of paying dividends, P&G is an ideal choice for income-seeking investors.

The company has been through a major shift in its business model, reaping the benefits of focusing on what it does best. It is now more efficient, and it has greater growth potential than before because its products better align with customer needs, with a focus on essentials.

PG has reaped the rewards of being more efficient with its finances while maintaining high margins and share buybacks that have improved earnings-per-share growth. With a 60% dividend payout ratio, it leaves plenty of room for future increases, which could be low-to mid-single digit amounts annually.

A Great Track Record Heading into Earnings

Procter & Gamble is a company that regularly beats Wall Street earnings estimates. In fact, it has beat EPS estimates every time since July 2015, a record few can match. It’s very focused on its bottom line and on meeting the expectations of its shareholders.

Consensus analyst estimates call for the company to report earnings per share (EPS) of $1.22 in its upcoming earnings. Given its track record, there is a good chance that Procter & Gamble will once again beat earnings estimates. Analysts may even be under-estimating Procter & Gamble’s revenue potential heading into earnings season.

Wall Street’s Take on PG Stock

Procter & Gamble holds a Moderate Buy consensus rating based on three Buys and three Holds. PG shares have an average price target of $156.20, which implies 7.3% upside potential.

Procter & Gamble Has All Its Ducks in a Row

Procter & Gamble has a long history of success. Its products are trusted by consumers worldwide. PG is also a very efficient company, with a well-oiled marketing machine that consistently generates strong profits.

It also pays a growing dividend, which can provide investors with a steady income stream. It appears to be a great choice for those looking to invest in a reliable company with a strong track record of success. As it is about to report earnings soon, look for another earnings beat.


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