Three Powerful Reasons Why This Unyielding Dow Dividend Monarch Continues to Attract Passive Income Investors in 2025
Procter & Gamble (PG) shone brighter on Wednesday following its Q2 2025 earnings report, gaining 1.9%. The stock was even hotter earlier in the session. PG's impressive 14.4% surge in 2024 surpassed the Dow Jones Industrial Average's 12.9% increase, with its consistent and growing dividend being a significant draw. The company boasts a six-decade long history of annual dividend increases and yields 2.4%.
Key takeaways from P&G's latest financials, along with reasons why this Dow stock is a worthwhile investment, particularly for risk-averse individuals, are outlined below.
1. Revival of positive volume growth
In its 2024 fiscal year, ending June 30, P&G reported modest 2% net sales growth effectively driven by a 4% price increase, partially offset by a 2% negative impact from foreign exchange. The company's volume growth remained flat for the fiscal year. Similar trends occurred in P&G's Q1 2025, with flat volume growth, a 1% increase in price, and negative 1% net sales growth.
Investors seek net sales growth based on increased product demand rather than price hikes, as the latter has its limitations, particularly in the realm of everyday consumer items.
P&G, being a global entity, faces challenges due to the strength of the U.S. dollar. This currency's strength translates into diminished profitability for P&G, as earnings are reduced when sales made in foreign currencies are converted back into dollars. The company cannot control the negative impact of foreign exchange on its earnings. Consequently, P&G focuses on strengthening its product range and marketing efforts.
In the recently reported quarter, P&G reported 2% net sales growth, 3% organic sales growth, and a 1% increase in volumes, a 1% increase in mix, flat pricing, and no impact from foreign exchange. The positive change in mix reflects consumers shifting preferences toward more expensive options within some of P&G's categories.
Although these figures may not be earth-shattering, they indicate a promising trajectory for the corporation.
2. Modest dividend increase in the offing
P&G has increased its annual dividend every April for over two decades. There's little reason to assume this pattern won't persist in 2025. However, the exact size of the increase is yet to be determined.
In its latest earnings report, P&G reaffirmed its full-year 2025 guidance for approximately $10 billion in dividends and $6 billion to $7 billion in common stock repurchases.
In 2024, P&G paid out $9.31 billion in dividends to shareholders. Given the $10 billion target, a moderate 4% increase in the dividend per share seems likely.
P&G is unique among Dividend Kings for combining buybacks and dividends to return capital to shareholders. Although a company like Coca-Cola may yield more than P&G, it doesn't consistently engage in stock repurchases.
3. Reliable performance
One simple explanation for P&G's continued success in 2025 and beyond is its robust business model and respected brand portfolio.
With a diverse product range encompassing beauty, grooming, oral care, personal care, fabric and home care, baby products, feminine products, and family care, P&G boasts about 80 brands, most of which have been part of its portfolio for at least 20 years. Brands such as Pampers, Charmin, Bounty, Tide, Downy, Pantene, Old Spice, Crest, Vicks, Gillette, and many more have maintained their prominence within the company for decades.
In the 21st century, P&G's success does not stem from developing new brands. Rather, the corporation maintains its market position by consistently improving and marketing its products under established brand names, boosting sales volumes and justifying price increases over time.
P&G thrives despite economic downturns since consumer demand for staple goods doesn't fluctuate as drastically as demand for discretionary purchases. Moreover, P&G boasts sector-leading operating margins, a testament to the strength of its brands and its dominant market position.
- Investors considering long-term finance opportunities might find Procter & Gamble (PG) appealing due to its reliable performance and consistent dividend increases.
- With its robust financial strategy, PG plans to continue investing money in dividends, aiming for an approximate 4% increase in 2025, following its tradition of annual dividend hikes for over two decades.