Procter & Gamble (PG) Rewards Shareholders with a 2.5% Dividend Increase

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Earning dividends from stock is one of the easiest (and laziest) ways to generate sustainable income.

As long as you invest in top dividend paying companies … you are most likely going to get a pay raise every year. This pay raise is handed out by the companies you own in the form of annual dividend increases.

How sweet is that? Just sit back and earn a solid income from not doing much work at all?

Of course, you do need to put in some time researching what stocks to buy and monitor them periodically once you own them. But other than that … it is the easiest income you will probably ever make.

This is why my family has been investing in dividend stocks for the past 9 years. We currently own over 30 stocks that pay dividends and most of them give us a raise every single year!

Just this year, we have seen several of the companies we own give us awesome raises. One company gave us a 21% increase alone!

The most recent dividend increase (or raise) from a stock we own was from Procter & Gamble (PG).

PG Shareholders Get a 2.5% Raise

Procter & Gamble (PG) recently announced an annual dividend increase. The company has been consistently raising annual dividends for over 60+ years … which is truly amazing!

Company shareholders will now receive $0.6896 in quarterly dividends for each share they own … instead of $0.6725 paid last quarter. This increase comes in below our desired dividend growth rate of at least 6%.

The latest increase bumps the annual dividend for PG up to $2.76 per share compared to $2.69 last year.

Overall, that is a 2.54% increase in dividend income.

How Much Extra Income?

We currently own 18.727 shares of PG in our Money Sprout Index.

This latest dividend increase has pushed our 12 month forward dividend income for PG up to $51.66, compared to $50.38 last quarter.

That is an annual dividend income increase of $1.28 – (not much but it is an increase to our income).

Even though we increased our income by less than $2 a year, this is a reminder our dividend portfolio is constantly growing every single day … without any extra work from us..

Dividend Growth for PG

We have owned shares of Procter & Gamble for 7 years … which makes it one of our longest held stocks.

Overall, the company has shown the ability to grow their dividend for over 60 consecutive years. However, the growth rate has slowed recently.

Take a look at the annual dividend payments since 2010 –

  • 2010 – $1.885
  • 2011 – $2.057
  • 2012 – $2.211
  • 2013 – $2.367
  • 2014 – $2.532
  • 2015 – $2.632
  • 2016 – $2.671
  • 2017 – $2.741 (projected)

Note – The 2017 dividend has been adjusted to reflect a dividend increase after the first quarter.

As you can tell from the numbers above, PG dividends have been raised consistently over the past several years.

Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Procter & Gamble has fallen short of maintaining a dividend growth rate above the 6% (or higher) that we look for in a stock.

Here are a few average growth rates for shares of Procter & Gamble

  • 1 Year DGR – 2.62% (2016 to 2017)
  • 3 Year DGR – 2.68% (2014 to 2017)
  • 5 Year DGR – 4.42% (2012 to 2017)
  • 7 Year DGR – 5.53% (2010 to 2017)

Note – We calculated the 7 year DGR as that is how long we have owned shares in PG.

Based on holding our shares for 7+ years now, we are earning a yield on cost of 5.39%. That is a great yield that continues to grow as the company raises its dividend every year.

Procter & Gamble – Buy, Sell, or Hold?

Back in April 2010, we purchased 15 shares of Procter & Gamble for $63.88 per share. That is the first and only purchase we made in the company … although we have added several shares through DRiP.

Since that time, we have earned $279.37 in dividends from the company!

Here are a few stats from owning stock in Procter & Gamble for the past 7 years-

  • Total Investment – $958.20
  • Shares Purchased – 15.0
  • Dividends Earned – $279.37
  • DRiP Shares – 3.727

To date, we have earned back 29% of our original investment … just in dividends! That just goes to show you the power of holding on to quality dividend paying companies.

At the time of this writing, PG does not meet our stock screen criteria based on the following metrics –

  • Current Yield – 2.98%
  • Payout Ratio – 77.40%
  • P/E Ratio – 25.97

The company meets the current yield requirement of being greater than (or equal) to 2%. However, the payout ratio is much greater than 60% and the P/E ratio is well above 20 – which we look for.

Based on a high payout ratio, we have PG as a HOLD. While Procter & Gamble has been a solid rock in our portfolio for many years … we can’t justify adding new money in the company. The dividend growth has slowed and the payout ratio is well above 60.

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – PG. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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