PG Not Looking Pretty

[Kerim]

The 3 percent dividend raise is better than nothing, I guess. And we should not have expected much, I suppose, given that PG's metrics are not looking good. Earnings have gone nowhere since the great recession, and the continued raises has pushed the payout ratio to nearly 80 percent. I'm not sure if they have any tricks up their sleeve, but unless they can get earnings moving again, dividend raises are going to be paltry at best, if not discontinued. Am I overreacting?

[hendi_alex]

The strong dollar is likely a significant headwind.

[DividendDragon]

(04-18-2015, 05:38 PM)Kerim Wrote: The 3 percent dividend raise is better than nothing, I guess. And we should not have expected much, I suppose, given that PG's metrics are not looking good. Earnings have gone nowhere since the great recession, and the continued raises has pushed the payout ratio to nearly 80 percent. I'm not sure if they have any tricks up their sleeve, but unless they can get earnings moving again, dividend raises are going to be paltry at best, if not discontinued. Am I overreacting?

I read that they were selling off many of their beauty brands at present that could raise around $12bn so I can't see them struggling to pay dividends in the near future. Looking longer term it wouldn't suprise me to see them rebasing their dividend if their 'growth' remains as poor as it is at present.

The streamlining of the business through selling off the underperforming brands will help PG decrease costs and the capital will probably be used to buyback shares. Whether this works in the long term is another question.

I think ULVR looks a lot healthier at present.

I'm tempted to buy at present but the strong $ is holding me off.

[crimsonghost747]

The strong USD has been a major headwind and I personally think that this situation will continue. However they are working on shedding some of the non-profitable and low-margin products and concentrating on a much more smaller core portfolio of those brands that actually bring in the cash. This will lower expenses and the cash received from the sale of some of those assets will most likely be used for share buybacks and lowering debt.

The payout ratio has gotten pretty high but unless the currency situation gets a lot worse I think their dividend is safe. Just don't be expecting any 10% increases like we have seen some of the past years, 2-5% seems more likely for the next couple of years.

[Dividend Watcher]

I agree, the dividend increase was pathetic. However, look on the bright side. It was marginally greater than inflation, products P&G makes are still great (although some may be overpriced, IMO) and they are still shuffling execs around to find the right people for the right positions. Currency has certainly played its role in this but still it's a management problem.

Every company has rough spots and large companies, like P&G, take what seems like forever to to turn around. It if continues for a few more years, I'll move on but until then I'll vote 'No' on 'say on pay' and against all the board and be patient.

ETA: I seem to recall PEP's dividend growth rate kept slowing down and then we got two double-digit increases in a row. Likewise, MMM.

I'm waiting for the price to drop into the 70's to add more to my wife's portfolio but I still think they'll be fine in a few years.

[rayray]

Another large company having some issues is Walmart, supposedly, the Walmart in Livingston, Texas closed and there could be a few others to follow. I'm not sure why they closed, if there was some other issue, maybe with the property itself? I know the Walmart's and the Sam Clubs in my area leave a lot to be desired, dirty and empty shelves and extremely cheap products. I bought some blue tape and it was so poor in quality it was useless, along with some other issues I had with them as a paying customer, I never went back, it's been a few years, 2007 maybe 2008. I think about this every time I want to invest in the company. Still haven't pulled the trigger.

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Okay, the Lake Livingston Walmart is closing for 6 months due to renovations.