Buy And Hold: The Story For Procter & Gamble

| About: The Procter (PG)

Procter & Gamble(NYSE:PG) has been a consumer staple since 1837, and is still one of the most admired companies in the world. In 2012, PG reported over $83 billion in sales in its five segments; beauty, grooming, healthcare, fabric and home care, and baby and family care. Internationally PG is very successful, with 65% of sales coming from outside of the United States. Year to date, PG has performed well, topping analysts' estimates.


1.) Management Change- A.G. Lafley is back at the rein of PG, which was well received by the market. Lafley ran PG from 2000-2010, and did a fantastic job. The consumer staple conglomerate doubled its amount of brands, and in return more than doubled sales. He also made a few key acquisitions, Gillette being the most widely publicized.

2.) Billionaires- It's worth a mention that both Warren Buffett and Bill Ackman own significant chunks of PG. Ackman has been adamant that PG can be more profitable and see more growth under proper management, and sees Lafley as the right person for the job. He also believes that the changing cost structure will be more beneficial to PG's bottom line.

Reasons to Hold-

1.) Dividend- PG's above-average yield of about 3% is an excellent reason to hold onto the stock. The dividend is safe (excellent free cash flow), and has been shown to increase over time. In the long run, PG's dividends reinvested will account for a much higher return. PG has increased its payout to stockholders for 57 straight years.

2.) Growth Potential- Growth for PG has been doing well, particularly in new emerging markets. This creates an excellent opportunity for new consumers to become loyal fans of PG's brands. Growth may also occur as the United States economy improves, and more consumers switch back from the store brand to their favorite name brand products. Procter and Gamble is often considered the best of breed versus its competitors Kimberly-Clark (NYSE:KMB) and Johnson & Johnson (NYSE:JNJ)

3.) Safety- Procter and Gamble has been able to increase stockholder payouts for 57 years for a reason. Excellent financial security and earnings predictability make this stock one for a conservative, income-oriented investor with a long-term time horizon.


Overall, PG is a solid company, with no signs of slowing down. PG's above-average dividend, excellent growth potential and fantastic product diversification allow PG to be a great stock to own. In addition, the recent management change should lead to an even stronger performance and new innovation. PG is a great long-term hold for the patient and dividend-seeking investor.

Disclosure: I am long PG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.