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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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
Headquartered in Cincinnati, Procter & Gamble (PG - Free Report) is a Consumer Staples stock that has seen a price change of 0.63% so far this year. The world's largest consumer products maker is currently shelling out a dividend of $0.75 per share, with a dividend yield of 2.37%. This compares to the Soap and Cleaning Materials industry's yield of 2.38% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.98 is up 2.9% 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 2.99%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. P&G's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PG expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $4.99 per share, representing a year-over-year earnings growth rate of 10.40%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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
Headquartered in Cincinnati, Procter & Gamble (PG - Free Report) is a Consumer Staples stock that has seen a price change of 0.63% so far this year. The world's largest consumer products maker is currently shelling out a dividend of $0.75 per share, with a dividend yield of 2.37%. This compares to the Soap and Cleaning Materials industry's yield of 2.38% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.98 is up 2.9% 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 2.99%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. P&G's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PG expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $4.99 per share, representing a year-over-year earnings growth rate of 10.40%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).