The Procter and Gamble Company (PG) raised its quarterly dividend by 9% to 52.5 cents a share from 48.18 cents a share earlier. The hike is applicable on the company’s common stock and on the Series A and Series B ESOP convertible Class A Preferred stock. The increased dividend will be paid on or after May 16, 2011 to shareholders on record as on April 29, 2011.
The increase in dividend reflects the company’s sound financial position and well-defined future prospects. Signs of recovery in the economy have made share buybacks and dividend increases a common factor among companies sitting on ample cash. Apart from enhancing shareholders’ return, such a strategy lifts the market value of the stock.
PG reported modest results for the second quarter of 2011. Net earnings from continuing operations were $1.11 a share, up 10% compared with $1.01 a share in the year-ago period, surpassing the Zacks Consensus Estimate of $1.10.
P&G’s net sales advanced marginally by 1.5% to $21.3 billion in the second-quarter of fiscal 2011. Quarterly revenues missed the Zacks Consensus Estimate of $21.5 billion. Excluding the impact of acquisitions, divestitures and foreign exchange, organic sales inched up 3% in the reported quarter. On the back of a solid innovation program and marketing investment, the company reported unit volume growth throughout fiscal 2010. Quarterly volume grew 6%.
Procter & Gamble exited the quarter with cash and cash equivalents of $3,249 million and long-term debt of $21,317 million. The company spent $1,256 million for capital expenditures.
Based in Cincinnati, Ohio, Procter & Gamble is one of the leading provider of consumer packaged goods in the United States and internationally. Procter & Gamble maintains a Zacks #3 Rank, which translates into a short-term Hold recommendation. However, our long-term recommendation for the stock remains Neutral.
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