Friday, April 13, 2012
Dividend Increase: PG
One of my dividend-growth stocks, Procter & Gamble (PG), increased its quarterly dividend by 7% today, raising the payment from $0.525 to $0.562 per share. This puts the company on track for its 56th consecutive year of dividend growth. Given that I own 50 shares of PG, my quarterly dividend increases from $26.25 to $28.10, which will add an extra $7.40 to my annual dividend income. This dividend increase also boosts my yield on cost to 3.54%.
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Have you noticed, or been concerned with, the lower dividend growth as of late? It seems that some of the blue chips have been a bit disappointing lately with dividend growth. PEP, ABT, JNJ and now PG come to mind quite quickly, but there many other cases of this. It seems this trend started last year, and it continues into 2012. Have you noticed any of this? Any thoughts?
Hi Dividend Mantra,Delete
Yes, I have noticed that some of the blue chips have slowed their dividend growth this year. I think part of it reflects issues affecting individual companies:
- PEP is going through a transitional year and dividend growth might be below average until their restructuring is achieved.
- ABT is splitting into two companies and may have limited their recent dividend increase to accommodate costs associated with the split. I think the first post-split increases next year will be highly informative.
- JNJ has had various problems with recalls and lawsuits that have affected its operating results. Even though this year's dividend increase has yet to be announced, I would not be surprised if it is only about 5%, which would be below average.
I think part of the slower growth may also reflect general economic conditions, with U.S. GDP growth being lackluster and parts of Europe in trouble. I suspect that may be partly responsible for the below average dividend increases from PG, CL, and KMB. However, there are occasional bright spots such as KO, which gave its largest increase in 4 years.
I don't know whether there is a sustained trend toward lower dividend growth, but it is something I am monitoring. I am also taking a greater interest in companies that may have lower yields (in the 2-3% range) but higher DGRs (in the double digits) in an effort to compensate for reduced growth among higher yielders. That is yet another reason why I bought HRL, for example.
I do hope dividend growth improves going forward, but I think it may depend to some degree on world economic conditions.