Love him or hate him but when Jim Cramer talks, stocks move. Recently, the Mad Money host talked positively about Procter & Gamble (NYSE:PG). Of course, this stock is way too big to even someone like Cramer to make it have sizzling moves. But that article had a lot of valid points. Below are some more details that this dividend growth giant is starting to look interesting again.
Five-Year Average Yield: The stock's current yield of 3.06% is exactly matching up with the five-year average yield, as shown in the chart below. The yield is still considerably below the five-year maximum of 3.60% but we might get real close to that soon as the point below explains.
Upcoming Dividend Increase: Procter & Gamble has now paid the same quarterly dividend of $0.602 per share for four quarters. And that means a 58th consecutive dividend increase is on the cards. The table below shows the last five increases. Based on this average, an 8% increase would give the stock a yield of 3.30% based on current share price.
A trailing payout ratio in the 60s gives the company enough room for this dividend increase.
(Source: Percentages compiled with data from Yahoo Finance)
10% Price Drop: As indicated in the article linked above, Procter & Gamble lost 10% of its share price from its 52-week high and has rebounded a little since. As of this writing, it is still 8% off its 52-week high. That by itself does not make the stock a buy but the long-term "value" of the company hasn't changed much. So, the recent drop in "price" could be seen a good opportunity to add more or initiate a position.
Price Target: According to 22 analysts on Yahoo Finance, the average price target for Procter & Gamble stands at $87.61. This means a 12% upside from here excluding dividends. Just as a comparison, Kimberly-Clark (NYSE:KMB) is actually trading above its price target and has a PEG of 2.5 compared to Procter & Gamble's 2.1.
Conclusion: Let us conclude the article by recapping the positives about this stock:
- A low beta of 0.40.
- A current yield marching towards the five-year high.
- An enviable dividend growth history (with one more coming up soon).
- An expected earnings growth of almost 9% per year over the next five years - targeted through strategic cost cutting and emerging markets growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.