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Should You Buy Shares in the Super-Safe Dividend King Stock That Expects to Return at Least $16 Billion to Shareholders in Its Fiscal 2025?
PGP&G(PG) The Motley Fool·2024-10-26 07:24

Core Viewpoint - Procter & Gamble (P&G) is recognized as a leading Dividend King, having increased its dividends for 68 consecutive years, and has returned over 147 billion to shareholders in the last decade, making it an attractive investment for those seeking reliable income streams [1][9]. Financial Performance - P&G reported a 12% increase in diluted net earnings per share (EPS) for the first quarter of fiscal 2025, with expectations of 2% to 4% sales growth and 10% to 12% diluted net EPS growth compared to 6.02 in fiscal 2024 [3][5]. - The company plans to return 16billionto16 billion to 17 billion to investors, including 10billionindividendsand10 billion in dividends and 6 billion to 7billioninstockrepurchases,reflectinga77 billion in stock repurchases, reflecting a 7% increase in dividends announced in April [2][5]. Sales and Volume Growth - Organic sales growth was only 2%, with flat volume growth, indicating challenges in returning to volume growth despite strong pricing power amid inflation [3][4]. - P&G's product mix showed negative trends in beauty and grooming categories (-3%) and flat performance in baby, feminine, and family care, while healthcare grew by 4% [3][4]. Capital Return Program - Over the past decade, P&G has consistently returned capital to shareholders, with a total of 147.8 billion returned, which exceeds the combined market caps of Nike and Dollar General [5][7]. - The company has increased its dividend by over 56% in the last decade, although its current dividend yield stands at 2.4% due to strong stock performance [8][9]. Valuation and Investment Considerations - P&G's current price-to-earnings (P/E) ratio is 29.3, above its historical median range of 25.5 to 26.3, indicating that investors are paying a premium for quality [10]. - Despite weak sales growth, P&G continues to grow earnings and return significant capital to shareholders, making it a solid long-term investment option [10].