Now is a great time to initiate a position in Procter & Gamble (or increase an existing position). As P&G’s stock price has declined over the last few weeks (along with declines in the overall stock market), the company’s dividend yield has increased to its highest level in almost 25 years (it’s been hovering around 3.7% to 3.8%). P&G is a stalwart blue chip that generates around $11 billion in free cash flow every year, and the dividend is one of the safest in the world (i.e. this dividend is not going to be reduced).
For some background, P&G’s stock price has been hammered over the last year by severe foreign currency headwinds (the US dollar has been strong) and a variety of (soon-to-be eliminated) sub-optimal market ventures. However, knowing that the foreign currency headwinds are normalizing and P&G’s restructuring is progressing, now is a great time to buy.
Also worth noting, P&G’s CEO A.G. Lafley will be replaced on November 1st by David Taylor (David has been with P&G since 1980, and most recently was head of the company’s global beauty grooming and health-care division). This was Lafley’s second go-round as CEO (they brought him out of retirement to lead the company’s recent restructuring), and Lafley will remain on as Chairman to help with the transition. You can read our full report on P&G here.