In 1991, shares of Procter & Gamble traded for an average of $7.21 per share on a split-adjusted basis. Since 1992, P&G has paid out a total of $17.92 in dividends cumulatively, plus the one-time stock spin-off of the Jif/Crisco units. At Friday's market close, Procter & Gamble was selling for $65.81 per share. ...
Yet, it's unlikely Procter will be able to reward shareholders to such an extent in the future. Quite simply, its revenue and earnings were growing far more quickly in the 1990s than they are now.
In my last article, I compared Procter circa 1991 to the Procter of today. The table below demonstrates a more vibrant 1991 Procter with higher revenue and earnings growth rates. Further, Procter had a lower payout ratio: The company would be able to raise the dividend more easily down the road and, at the same time, Procter would be committing capital to drive its future growth. The low payout further left the option for dividends to go a lot higher.
I proposed seeking companies that looked like Procter 1991 than Procter 2012, specifically higher revenue and earnings growth and a lower payout.
Below are Procter and six other consumer staples stocks: Church & Dwight (NYSE:CHD), Colgate-Palmolive (NYSE:CL), General Mills (NYSE:GIS), Kellogg (NYSE:K), Kimberly Clark (NYSE:KMB), and J.M. Smucker (NYSE:SJM).
Of the bunch, SJM has the best 3-year revenue and earnings growth while possessing an attractively low payout ratio. Judged by these criteria, SJM is poised to deliver more dividend boosts and stock appreciation than the others.
Disclosure: I am long SJM, PG.