Monday, May 19, 2014

PG Stock Analysis -- The Procter & Gamble Company

The Procter & Gamble Company is also one of the companies that belong to both lists of dividend champion and dividend aristocrat.

Sound financial fundamental


Key points:-

1) Shares are maintained at around 3,000 mil. There is slight down trend in recent years, but not much. I like it because if shares don't change much over time, earnings per share are more solid data to reflect net income.  +

2) Free cash flow are positive and kind of stable.  +

3) Dividends increase year over year.  +

4) Payout ratio increase in recent years.  It would be preferred to maintain it within 60%.

I read this company's recent quarterly conference script.  The company's focus is more on organizational efficiency to save cost. 

Overall, this company is sound and performance is mainly affected by macro consumer market.

Annual dividend review 

Key points:-

1) In the past 43 years, only one year dividend decrease (2003) from previous year, which is because a sudden dividend increase at 55% in year 2002 from 2001.

2) Dividend growth rate is pretty stable at 10% year over year.  

3) With current initial yield at 3.2%, and annual dividend growth at 10%, it will take around 13 years to make a 10% annual return.  Pretty awesome!

Entry point

 My entry point is set at $76.  I plan to purchase 50 shares when market price dips around my target entry point.

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