2022 Week 24: Procter & Gamble (NYSE: PG)

Portfolio Update

The FiveTwenty portfolio received $105.75 in dividends in the past week. ADM, JNJ, and WBA paid their quarterly dividends during the week.

Past Week Dividend$105.75
Current Quarter Dividend (Q2 2022)$904.36
LifeTime Dividend$4,189.03
Estimated Annual Dividend$5,458.83
Dividend Scorecard

The capital allocation for the week of 06/12/2022 to 06/18/2022 will be used to add to our position in Procter & Gamble (NYSE: PG)

PG – Position Update

Since our last check-in on PG in week 20 of 2021, the company reported Q4 and full year 2021 earnings on 07/30/2021, Q1 2022 earnings on 10/19/2021, Q2 2022 earnings on 01/19/2022, and Q3 2022 earnings on 04/20/2022. In addition, the share price increased 2.1% from $138.01 to $141.95.

TTMPrev. Update10-year median
Dividend Streak66 years65 years
Yield2.48% (MRD 2.57%)2.35% (MRD 2.52%)2.99%
Payout Ratio61.5%156.94%2
P/E24.77124.252
Entry Criteria Scorecard

1 computed using TTM EPS of $5.73 as of Q3 2022.
2 computed using TTM adjusted EPS of $5.69 as of Q3 2021.

Q3 2022 earnings report

Did PG’s latest earnings report raise any warning flags?

In Q3 2022, PG continued to grow revenue, earnings and EPS. All 5 business segments recorded net sales growth compared to Q3 2021. Health Care lead the way with 13% growth, while the Beauty segment was the laggard with a 2% growth. Overall, revenue grew 7%, net income increased 3%, and EPS were 6% higher compared to Q2 2021.

Revenue
(in millions)
Net Income
(in millions)
EPS
.
Q3 2021$18,109$3,269$1.26
Q3 2022$19,381$3,355$1.33
% Change7%3%6%

Additional noteworthy developments during the quarter:

  • On 04/12/2022 PG declared a quarterly dividend of $0.9133 per share payable on 05/16/2022 to shareholders of record as of close of business on 04/22/2022. This dividend increase marks the 66th consecutive year that PG has increased its dividend.

Looking ahead, PG raised fiscal 2022 guidance to 3-4% all-in sales growth and 4-5% organic sales growth. At the same time to company confirmed EPS growth of 6-9%. In addition, PG expects to return over $18 billion in cash to shareholders in the fiscal year by paying out over $8 billion in dividends and approximately $10 billion for share repurchases.

Thesis

Why are we adding to our position in PG?

PG continued to show steady growth in the first 3 quarters of FY 2022. Therefore, we continue to believe in the strength of its business and the safety of the dividend payout.

In addition, due to the wide market selloff in recent weeks the PE and yield valuation of the company its back to values where we feel comfortable acquiring more shares.

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