Procter & Gamble, known mostly as PG, announced their new CEO and predicted solid earnings ahead even though most of the commodities used to make its wide variety of products are increasing in price.
PG currently trades around $140 per share, which is the top of its V-shaped chart from the last 12 months. At this price PG offers a 2.46% annual dividend. This is way more than any of your bank accounts, and comes from a stock that really isn’t going anywhere, up or down, fast.
Here is the best part. “Activist shareholder” Nelson Peltz is stepping down from the PG board after the company was able to refuse his proposals to break up the company and move its headquarters in a bid to make more money for himself and other short-term shareholders, without regard to the company’s future, or long-term shareholders. Although Peltz never prevailed on any of his major proposals, the fact that he is stepping down indicates that he is done trying to leverage his “large” position of stock into moves that might not be in the best long-term interests of the company.
In all of this commotion, the company also named a new CEO. Jon Moeller is a long-time company insider. Moeller said he does not expect any major strategy changes as he takes over.
The combination of these two items means that investors can properly judge the management of PG when making investment decisions without worrying that there are major changes coming.
Is Procter & Gamble Stock a Good Investment Now?
Our above analysis indicates that Procter & Gamble stock CAN BE a buy and a good investment right now. Before going there it is important to understand the investment.
PG is not going to soar. PG is not a stock you buy for capital appreciation. Sure, over the years, PG steadily rises, which makes it a great long-term investment for investors who aren’t going to panic about inevitable downturns when economists and stock analysts fawn over “lower consumer spending.” With its array of products, the only real danger to P&G’s stock price over the long term is incompetent management focused on short-term bonus goals. Otherwise, the company will rise and fall with consumer spending while drifting upward like the broad market over time. Think of P&G stock as a 10-year bond that you don’t plan to sell, and you won’t be disappointed.
As an added sweetener, according to the Procter & Gamble investor relations page, the company has 64 consecutive dividend increases. That means your dividend won’t stay at 2.45%-ish over those next 10 years that you plan to hold it. I’d prefer even more dividend increases and a lot less stock buybacks, but it’s nothing to get in a twist over.
So, is it a buy now?
Well… I can’t help but feel a little greedy right here and wish that if I were going to buy P&G that I would have snapped it up back in that early year slump in the 130s, or even 120s. Looking at a solid, very basic, stock with long-term appreciation and a 2.46% yield I should be more excited, but I just can’t get there. That being said, it would in no way be a stretch to say, “You fool! Get that yield and kick back and relax knowing P&G isn’t going anywhere without a loud crash and a lot of bangs.”
PG gets a “go ahead and buy it, but I’m not going to right now”, rating.
About the Author
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. At the time of publication, Mr. Nelson owned a tiny bit of PG stock due to some investing apps that he is trying out, however, that may change at any time without notice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.