It’s been a volatile week or so for Procter & Gamble (NYSE: PG), which fell up to 6% in response to its fourth-quarter fiscal 2024 results, only to make up those losses and rise to near an all-time high. It’s a lesson in why knee-jerk reactions to quarterly earnings can be misleading.
Here’s a breakdown of where P&G stands, what it expects from fiscal 2025, and why the dividend stock is worth buying now.
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Titans of dividend growth
Coca-Cola is one of the most well-known dividend stocks out there. It has paid and raised its dividend for 62 consecutive years, making it a Dividend King. Dividend Kings have at least 50 consecutive years of dividend raises. Coke stock just hit an all-time high as it sustains high margins and works to boost volumes.
The beverage king pays around $8 billion in dividends a year — giving it one of the highest dividend expenses in the S&P 500. But it still doesn’t pay as much as Procter & Gamble. In April, P&G raised its dividend by 7% — marking the 68th consecutive year it increased the dividend. The streak makes P&G one of the longest-tenured Dividend Kings.
In fiscal 2024, P&G paid $9.3 billion in dividends and made $5 billion in share repurchases. In its recent earnings report, P&G gave fiscal 2025 guidance that forecasts a whopping $10 billion in dividend payments and $6 billion to $7 billion in stock repurchases. The guidance suggests that another sizable dividend raise could be coming, and that P&G feels it can support a growing capital return program.
The pace at which P&G is raising the dividend is a significant vote of confidence for passive income investors. P&G is hyper-aware of the importance of its dividends and buybacks to the investment thesis. Investors expect annual dividend raises, meaning every time P&G raises the dividend, it effectively sets the bar higher for the following year’s obligation.
For Dividend Kings, dividend raises work the same way as compound interest. A 7% raise may not sound like much at first glance — but 7% of $9 billion is $630 million. The difference in dividend expense…
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