Bert’s Recent Buy – Procter & Gamble (PG)

It didn’t take too much arm twisting by Lanny to convince me to add to my stake in Procter & Gamble (PG) this week, especially after he took the first step, backed up his talk, and purchased 10.1 additional shares of the company earlier in the month.  I have no shame in admitting that I followed his lead and purchased shares in the company because let’s be honest, it is a great company!  Time to summarize my purchase of PG this week.

On Tuesday, I purchased 20 shares of PG, adding $53.52 in annual dividend income to my portfolio.  With this purchase, I now own 51.4982 shares of the consumer stock giant that will produce $137.91 in annual dividend income to my portfolio.  This is my first purchase of the 2017 and the first time I have stepped off the sidelines since I initiated a position in Realty Income in November 2016.  Man is it exciting to be back in the game!   As I mentioned earlier, Lanny has covered this stock a lot recently on our website, so I don’t want to spend the rest of the article repeating everything he covered in his purchase article and his Stocks To Look Forward To in 2017 article.  It was a major influence on my decision and I am very lucky to have someone like him to push me into the deep end at times.   But here are some of the reasons why I purchased 20 more shares of PG

  • We all know this market has been hot lately and the S&P 500’s P/E Ratio is at a level I personally have never seen before (Remember – I’m 27, so I’m sure there are plenty of earlier examples of the market reaching insane levels. Just not when I was actively participating in the market).  With few values out there, one of the industries I have found some value compared to the market is the Consumer Goods market.  PG’s P/E ratio may not be low by any standards, it is below the current market place, which means that it passes Screener #1 of the Dividend Diplomats Stock Screener.
  • I love the fact that PG is a Dividend Aristocrat.  Lanny and I have been talking a lot about how there have been many companies with stagnant dividend growth rate.  PG’s dividend growth rate of late isn’t going to set any records, but I like the fact that the company still continues to increase their dividend.  I’m hoping for a larger increase in April and I cannot wait to see what they have in stock for us.

  • This one point may sound weird, but I was not happy with the size of my position and I wanted to increase my stake in this stock.  We talk often how this is one of our five foundation dividends stocks for a portfolio.  I’ve been trying to build less larger positions recently versus more small positions recently.  While I’m not quite doubling my position in PG, I will not own over $4,300 in the company and PG will be the third largest individual stock holding in my portfolio.  We call it a foundation stock, so I wanted to make it such in my portfolio.  Two of the other contenders for this purchase were Kimberly Clark (KMB) and Unilever (UL).  However, with this mindset, I opted to increase one position by adding to PG versus holding two smaller positions.  I’ll hopefully initiate a position in both companies one day too when I can make one massive purchase.
  • I was able to buy this stock right before the ex-dividend date to ensure that I am going to receive a dividend on this purchase.  So I won’t even have to wait one month to get my first dividend check.  This point played a HUGE roll in the timing of my purchase and I may have waited a little longer if it weren’t for the rapidly approaching ex-dividend date.

Overall, couldn’t be happier with my purchase.  While there isn’t much to add here in terms of a financial analysis, because Lanny has done a great job analyzing the company over the last month, I hope this provides some insight into why I decided to purchase PG at this time.  At the end of it all, I just want to continue building positions in amazing companies that continue to grow their dividend income on an annual basis.  I’m going to try not to over think investing in 2017 as I look to accomplish my goals and take the no-brainer investment decisions while they are right in front of me.  To me, adding to PG this month was that kind of a decision.  I have a few companies in mind for my next purchase, but I want to take some time to reserve some cash and save to pay off our student loans.  Hopefully I’ll have another no brainer  investment decision to report to you soon because if it ends up being the stock at the top of my watch list, it definitely will be considered a no brainer!

What are your thoughts on my purchase?  Do you like consumer stocks at the moment?  Would you have purchased KMB or UL over PG at the current prices?  What stocks are on your radar?

Bert

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32 thoughts on “Bert’s Recent Buy – Procter & Gamble (PG)

  1. PG is a solid company, I think you won’t regret the purchase on a long term. Nevertheless I find the stock quite expensive right now. It’s a shame that I didn’t pay more attention when it pulled back to 70$ around November.
    From the sector my ultimate favourite is Unilever, so personally I would’ve gone for that. But no-one can see the future. And you still get a safe dividend yield over 3%, so I definitely wouldn’t call it as a bad long term purchase.

    • Thanks Roadrunner. I’m with you, I wish I would have grabbed it then. While it is expensive, I’m ultimately fine with the price I paid here. You know what, if it dives lower, no big deal, I’ll collect more via DRIP and I’ll purchase more shares haha

      You’re right, in the long run, I will be very happy. It is just one of those companies that is amazing to hold from a dividend investing perspective. In 20 years, am I going to remember that the PE was in the low 20s versus the high teens at the time of my purchase? I sure as heck hope not.

      Thanks for the comment!

      Bert

  2. PG definitely has history on its side and I hope they prove me wrong with some faster dividend growth, but personally I don’t expect to see anything better than 4% and likely less for the time being. I hope to see the consumer staples sector get beat down a bit more because there’s several that are getting close to my buy targets. MKC for one looks pretty solid and is one of the few consumer staples that I see a clear and easy path to around double digit earnings growth for the next 5-10. JNJ is looking really good here too although if you already have a position you might choose to be a bit pickier with additional funds there. All the best and hopefully PG gets back on track after all of the changes they’ve undergone.

    • Thanks JC. Gotta say first, I love JNJ, MKC, and other consumer staples out there. I am looking to add to those positions as well, but PG’s ex date was coming and I wanted to make sure I was able to sneak in and capture all four dividends with my purchase. I’ll be looking to do the same with JNJ in February. Hopefully PG’s upcoming dividend announcement will be as nice as their earnings release haha Seems like their changes are finally starting to produce some results that should further increase their long-term value.

      Bert

  3. PG is for sure a solid foundation stock for any dividend growth portfolio. At first glance, I would have gone with UL based on the valuation. But there both very strong companies. And PG restructuring their organization already comes off very positive. We own shares of both companies, and as we continue to grow our portfolio, would love to add more of them in the future.

    • Divnomics,

      Who knows, I’ll maybe be adding UL later on in the year at this rate haha Right now, I just had the cash to add to a position and I didn’t want to start a new one at the moment. Regardless, both are great companies! I am very optimistic about the restructuring based on their earnings release a few days ago. Definitely recommend checking it out.

      Bert

  4. Nice buy. i sold a put last week on PG, but the way it’s looking right now, the shares won’t be assigned. Oh well, I guess I’m stuck with free money in the form of a premium. I’ll get some PG shares at some point this year.

  5. I totally agree that it’s desirable to have fewer, larger positions rather than a lot of small ones. Owning too many companies leads to a situation where a portfolio just performs exactly like SPY, which isn’t necessarily bad but won’t generate any alpha.

    • Yeah, I’ve enjoyed building larger positions for that reason. While I don’t own enough positions to resemble the SPY, that would take a lot of capital, that is not going to stop my from being an alpha dog! Lanny bet me that I wouldn’t say that so eat it Lanny!

      Thanks for the comment!

      Bert

    • Thats how I roll Captain! Congrats on the purchase as well. Gotta say though, being able to buy was a big piece of my decision making process and I may not have purchase PG this week if it weren’t going ex dividend for a month. But I’m happy I did, especially given the earnings release this week. How many shares do you own now?

      Bert

  6. Bert – While you may not shoot the lights out with this one, as a dividend growth investor, it is tough to go too far wrong with a mega cap consumer discretionary like P&G. The primary issue, as others have noted, is that it is not cheap at 24x earnings. Like a lot of US companies with global sales, in the last few years they have faced currency headwinds because of the strong US$. My understanding is that they are looking at streamlining their product offering by divesting some of the less profitable lines, which will decrease revenues but should help profit.

    • Dining on Dividends,

      Your understanding is my understanding as well. Their recent deal with Coty to sell their beauty products line was a key piece of this strategy and to focus on a portfolio of core holdings. While it isn’t the cheapest, It met our screener in this expensive market environment and I saw an opportunity to continue to build one of my portfolios key positions. Couldn’t be happier with the purchase.

      Bert

  7. I think the recent minimal increase throws some caution to me with PG…hoping to see that improve in April. Btw I am very inspired by you and lannys story. I am motivated to do the same thing y’all are doing. Because of reading your story I have made a budget, made note of necessary expenses and then figured what I had left to invest and set a monthly goal! I’m following along with the both of you, dividend growth is the way to go at our age (I am 25)! I did start a position in VFC the other day…over 3% yield, attractive valuation, nice increases in the past, and a dividend aristocrat.

    • Blake,

      Thank you so much! Glad we were able to help motivate you and get you started. We are motivated by so many others and that’s one of our favorite parts about this community.

      Understandable about PG, but I believe their restructurings and divestitures will allow the company to increase their dividend growth rate this year and hopefully years to come. Only time will tell and we will see in April! VFC is a great company and Lanny has been hot on their trail for a while now.

      Hopefully we will see you commenting more on this site now! Take care.

      Bert

  8. Nothing wrong with following the lead in picking up more PG. It’s one of my January considerations along with other consumer staples too. Some might say it’s expensive but I guess it’s all relative. As we all know, the consumer staples rarely go on sale and if they do the market as a whole is in some deep trouble. PG, KMB, UL, GIS and the like have been trading at more attractive levels than in months past and any time you can grab a 3%+ yield with a dividend stalwart like PG, then it’s worth considering. Thanks for sharing.

    • Thanks Divhut! I just took the easy opportunity right in front of my eyes instead of trying to overthink it. I love the consumer staples industry right now. Great companies, Great Aristocrats, Great products/brands…whats not to love! KMB is alos high on my watch list as well.

      Take care.

      Bert

  9. PG is a great buy in biopharmaceutical/consumer staple sector combine. The conglomerate will not going anywhere, but the dividends are like clockwork – on time, on schedule and will be there for a long long time. You buy it at the beginning of the year, so you’ll benefit from the rest of the year when you start to collect dividend. I can see a great year coming ahead.

    • Thanks Vivianne,

      The clockwork dividend is one of my favorite aspects about the company, as with most Dividend Aristocrats! Cannot wait till my November 201 dividend summary to see the real power of this purchase after four quarters of DRIP from this buy!

      Bert

  10. Quality pick up. Don’t own any PG myself, but would love to buy some in the future. And even though it’s just a short term effect, gotta love that the price rose $2-3 a share within a day or two of you buying it. With a 3% dividend on top of that, it’s a win win. Nice work!

    • Thanks Dividend Daze! The stock has been on a tear since my purchase (coincidence..I think not haha). What’s holding you back from buying haha IS it on your watch list? If not, what other stocks are you targeting?

      Bert

  11. Go PG! I own 6 shares of this company and should absolutely pick up more. Glad others are picking this up. I agree it’s a solid company, and that’s one of my biggest factors when investing. Do it!

  12. I have PG for several years now primarily because of their strong dividend history. If I was to do it over again I would give more consideration to Unilever, JNJ, or Kimberley-Clark. The same thoughts went through my head then and the tiebreaker decision was I used my PG products than the others (I know this might be adding emotions to the mix).

    I know PG is hit or miss since they have been relatively flat compared to the competition as well. It seems like the analysts are consistently looking for a breakout year.

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