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Procter & Gamble Rewards Investors Amid Coronavirus Despair

Zacks Equity Research

Amid the coronavirus crisis creating havoc worldwide, The Procter & Gamble Company PG has announced a quarterly dividend hike, just two days prior to its earnings release scheduled for Apr 17. Earlier, management had decided to announce third-quarter fiscal 2020 results on Apr 21.

Notably, the company has approved a dividend of 79.07 cents per share on the common shares of class A and B. This reflects an increase of 6% from the prior dividend and is payable on or after May 15, as of shareholders record on Apr 24. Further, its latest move marks the 64th successive quarter of a dividend increase and the 130th consecutive quarter of paying out dividends to shareholders.

Unlike many companies, who have slashed dividends, suspended share repurchases and withdrawn cash from revolving credit facilities to strengthen their financial positions, Procter & Gamble’s decision to increase dividends is likely to cheer up investors. This might be the reason behind the stock gaining more than 4% yesterday during the close of the trading session. Shares of this Zacks Rank #3 (Hold) company have lost 3.9% in the past three months as compared tothe industry’s decline of 7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

 

Speaking of financial flexibility, the company generated operating cash flow of $4.4 billion in the fiscal second quarter, while adjusted free cash flow productivity was 100%. Moreover, it returned nearly $5.4 billion of cash to its shareholders. This included dividend payments worth $1.9 billion and share buybacks of $3.5 billion. For fiscal 2020, the company had envisioned adjusted free cash flow productivity of 100%, up from 95% stated earlier. Also, it anticipated paying out more than $7.5 billion in dividends and repurchasing $7-$8 billion of common shares in fiscal 2020. 

Moving on, consumers’ shifting preference for essential products, at a time when the world is battling coronavirus, is touted to be working in favor of the company. In fact, sources reveal that the consumer products giant is struggling to meet customers growing demand for toilet papers and other household products.

Additionally, Procter & Gamble remains committed to serving the society to curb the spread of this virus. To this end, the company has pledged to produce masks, face shields and hand sanitizers for use by frontline medical workers in such testing times. 

Other companies following suit include Perrigo Company PRGO, Mondelez International MDLZ and Loius Vuitton LVMUY. Perrigo is making hand sanitizers at its New York facility to be utilized by healthcare workers. Mondelez donated masks and sanitizers to support hospital staff and police. Also, Louis Vuitton is producing sanitizers and expected to source 40 million face masks from a Chinese supplier.

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