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Procter & Gamble (PG) is a Top Dividend Stock Right Now: Should You Buy?
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 that 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 - Free Report) is in the Consumer Staples sector, and so far this year, shares have seen a price change of -1.72%. The world's largest consumer products maker is paying out a dividend of $0.79 per share at the moment, with a dividend yield of 2.31% compared to the Soap and Cleaning Materials industry's yield of 1.87% and the S&P 500's yield of 1.34%.
In terms of dividend growth, the company's current annualized dividend of $3.16 is up 4.4% 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 4.04%. 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 56%. This means it paid out 56% of its trailing 12-month EPS as dividend.
PG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $5.66 per share, with earnings expected to increase 10.55% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Procter & Gamble (PG) is a Top Dividend Stock Right Now: Should You Buy?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 that 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 - Free Report) is in the Consumer Staples sector, and so far this year, shares have seen a price change of -1.72%. The world's largest consumer products maker is paying out a dividend of $0.79 per share at the moment, with a dividend yield of 2.31% compared to the Soap and Cleaning Materials industry's yield of 1.87% and the S&P 500's yield of 1.34%.
In terms of dividend growth, the company's current annualized dividend of $3.16 is up 4.4% 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 4.04%. 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 56%. This means it paid out 56% of its trailing 12-month EPS as dividend.
PG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $5.66 per share, with earnings expected to increase 10.55% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).