The Dividend Machine: Procter & Gamble (PG)

Procter & Gamble (PG) has paid a dividend for 120 consecutive years, and is likely to do so for the next 120.

If ever there was a company which could be held up as the poster-child for dividend investing it would be industrial giant Procter & Gamble (PG).
Procter & Gamble (PG) has been paying a dividend for 120 consecutive years and has increased its dividend for 54 consecutive years at an annual compound average rate of approximately 9.5%. This kind of track record makes a mockery of all other forms of investing with proof that your money can work hard for you as a dividend investor.
The company which proudly proclaims that its products are used by 4.2bn of the 6.5bn people on the planet has representation in more than 180 countries around the globe.
For investors who believe in the "softer" side of investing, Procter & Gamble (PG) has also worked hard to position itself as a stock which "touches the lives" of its consumers. There is a strong emphasis on sustainability within the group and this is driven by management who are very vocal on how the company and its brands are viewed.
Reporting first quarter earnings for the year, net sales increased 2% to $20.1bn and a quarterly dividend of $0.4818 was declared. This leaves the company trading on a price to earnings (PE) multiple of 17 times earnings and a 2.9% dividend yield.
Procter & Gamble (PG) shares have traded in a tight band of between $60 and $64 over the last 12 months. The high PE multiple would indicate that investors are continuing to reward quality counters with long-term track records.
The quarter was a good start to the fiscal year. The company maintained top-line momentum and delivered profitable market share growth. Market share has increased in all geographic regions compared prior year, and was equal to or higher in 13 of the top 17 countries and for 17 of Procter & Gamble (PG) 23 billion-dollar brands.
Operating cash flow for the quarter was $2.5bn with the company repurchasing $3bn worth of shares during the quarter and returning another $1.4bn of cash to shareholders as dividends.
Guidance from management is that earning growth is likely to be muted in 2011 growing between 3 and 5%.
While it could be argued that Procter & Gamble (PG) is expensive relative to some of its peers, the old argument is that quality stocks are rewarded with better ratings.
With your dividends growing at nearly 10% per annum, cash flows being strong and 54 years of consecutive increases there is much to keep dividend investors interested. If you are nervous about what the market is likely to do in the near-term then stick with quality stocks like Procter & Gamble (PG) to see you through the rocky times.

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