The company increased its quarterly dividend by 6% to 79.07 cents/share. This dividend increase will mark the 64th consecutive year that this dividend king has increased its dividend. The new quarterly dividend of 79.07 cents/share is almost exactly 6% higher from the prior dividend of 74.59 cents/share. Fractions make it possible to get even dividend raises on a percentage basis.
During the past decade, the company has managed to increase dividends at an annualized rate of 5.60%.
Source: Press Release
This is the second dividend increase for me today, after dividend king Johnson & Johnson (JNJ) hiked distributions by 6.30%. Both companies are dividend kings, and there are only 28 such companies in the US.
This is also the 130th consecutive year that P&G has paid a dividend since its incorporation in 1890. The dividend demonstrates the company's commitment to rewarding long-term shareholders with cash dividends. The track record is undeniably a testament to the resilience of the P&G's business model, and the fact that it is relatively immune from recessions.
Procter & Gamble also moved its earnings release to April 17th. The company is expected to generate $4.96/share in earnings in 2020, however this could be subject to a downward revision. That being said, the core business is very stable, which means that long-term earnings power should not be affected. Based on forward earnings, it appears that the forward dividend payout ratio is a little lower than 64%, which means that the dividend is sustainable.
While I applaud this dividend hike, I do not like the fact that earnings per share did not go anywhere since hitting a high of $4.26/share in 2009. This puts a limit to dividend growth. As a result, I have mostly been a holder of the stock, and haven't added to my position since perhaps the first half of the 2010s.
At the current price of $120.96/share, the stock seems overvalued at 24.40 times forward earnings. P&G may be worth a second look on dips below $99/share.
Relevant Articles:
- Dividend Kings List for 2020
- Johnson & Johnson (JNJ) Hikes Dividends By 6.30%
- Procter & Gamble Raises Dividends for 61st Consecutive Year in a Row
- Lindsay Corporation Hikes Dividends