We are kicking off 2017 with a dividend aristocrat stock purchase. What better name to buy than to have a stock purchase towards the brand that is in your cousin’s cupboard or bathroom; on your neighbor’s shelf; one so commonplace you might not even realize is the brand you use daily when brushing your teeth with Crest toothpaste? I am talking about Procter & Gamble Co (NYSE:PG), based in Cincinnati, Ohio. This is not the first time I have purchased PG shares, but I am excited that I was able to add this well-branded company to my dividend producing portfolio.
The Stock Purchase
The first business day to trade in 2017 and my purchase for PG has been made. On January 3rd, I had a purchase of Procter & Gamble based on the market price of just under $84 per share using a glorious free trade credit. I finally had decided that price is very important, but also – the company itself, their core values and hearing about how families love a company, as well as even their employees sealed the deal for me. Yet, what other reasons encouraged me to purchase PG? Let’s dive in:
1.) PG was on my 2017 Stocks to Look forward to list. I wanted to build this position up to 50 shares, and this adds 10.1207 to my ~21 shares that I do own. Their brands by far are a staple among many households. How many do you currently use or have? I use Crest, Dawn, Charmin, Bounty & Gillette, to name a few.
2.) The company is a dividend aristocrat and made my top 5 foundation stocks for a portfolio. Moreover, with over 60+ years of consecutive dividend increases, it is hard not to be confident in that established history and reputable track record.
3.) Though Procter & Gamble’s earnings have been stagnant and have higher P/Es currently than in the past, the company’s shares are still valued below the S&P 500, which has a 26.00 p/e approximately. Additionally, I am looking forward to PG’s slimmed-down version, to get back to revenue and earnings growth, as the company has slimmed down its brands quite a bit.
4.) The timing of the trade was very solid. PG more than likely will go ex-dividend within the next 8-10 days. Therefore, with this purchase, I will capture its first dividend of $0.6695 per share. I am then set up to collect a full year of them from this purchase. I am ready to capitalize on that opportunity and finally receive more than $20 per quarter from my PG ownership.
See my trade screen shot below:
I purchased $850 worth at $83.986 per share for a total of 10.1207 shares. This alone adds $27.10 to my forward dividend income. In my post on my top 2017 stocks to look forward to, I had discussed that I wanted to reach 50 shares, compared to my previous count at 21. As such, this has laid a building block on my march towards 50, with only 19 shares left to go.
My position now sits at ~ 31 shares of Procter & Gamble in my portfolio and is now producing forward income for me of $83.11 or $20.78 per quarter, already crossing the $20 per quarter threshold. If prices remain consistent at ~84 per share, in order to buy 19 more, I will need ~$1,600 more, excluding fees. Additionally, with PG’s growth rate being fairly low the last 2 years (2016 – 1% and 2015 – 3%), as it relates to the dividend, I do have confidence the shares will return to their normalized level and make a comeback. Procter & Gamble’s P/E at the time of purchase was around 21, based on current year expected EPS or 19 based on forward earnings. The yield at time of purchase was 3.19%- neither too high nor nor too small. Overall, I am positive on this purchase and PG’s prospects.