Procter & Gamble (PG) stock is one of our top dividend stock picks for a recession because of its dividend history and being a consumer staple. It has been recently upgraded by several analysts (see below). PG is a staple food company that sells and distributes its products in more than 180 countries and has annual sales of more than $70 billion. There are a number of companies and divisions – leading brands such as Gillette, G.I. Joe and other household products. Its core brands include Proctor and Gamble, Gamble’s flagship brands, and its family of home care, beauty and personal care brands.
P&G has grown in recent years following a major restructuring that saw several brands taken out of the portfolio. According to a Wall Street Journal report, P&G wanted to streamline, focus on its core brands, and become more efficient.
Proctor sold its Duracell battery business in 2016 to Berkshire Hathaway (BRK-B) for nearly $5 billion. P&G also sold a group of more than forty beauty brands to Coty (COTY) for $12.5 billion. The restructuring was successful because the company was once again streamlined with accelerated growth. At the end of the process, the company lost its position as the second-largest cosmetics company in the world.
Revenue was $17.2 billion in 2016, compared with $18.5 billion in 2015 and $19.4 billion a year earlier.
Even in a recession, consumers still need things like toothpaste, razors, diapers, and detergents. Organic sales grew by a solid 6% in 2016, led by strong growth in the US and Europe as well as in Asia and Latin America. The strong results prompted leadership to raise its full-year 2016 profit estimate by 4.5%. While the company may not meet its growth estimates because of the coronavirus, PG is a defensive company that should do better than most in recessions.
Indeed, Procter benefited from inventories in response to the closures, paying huge dividends during recessions. As a result, demand is expected to remain stable and PG has a strong track record.
The company has been paying its shareholders dividends for 130 years and has increased its dividend 64 years in a row. It currently yields 2.8 percent and is a dividend hero with an average annual dividend yield of 3.5 percent.
PG Stock Analysists Prices & Recommendations
Mar-30-20 Upgrade Jefferies Hold → Buy $130 → $128
Mar-27-20 Upgrade Stifel Hold → Buy $119 → $117
Mar-26-20 Upgrade Argus Hold → Buy $120
Mar-17-20 Upgrade Deutsche Bank Hold → Buy $130
Jun-28-19 Upgrade Goldman Neutral → Buy $114 → $125
Apr-24-19 Upgrade Barclays Equal Weight → Overweight $94 → $112
Apr-08-19 Upgrade Wells Fargo Market Perform → Outperform $78 → $115
Mar-07-19 Initiated Credit Suisse Neutral
Jan-24-19 Upgrade Berenberg Sell → Hold
Jan-11-19 Initiated Evercore ISI Outperform $105
Dec-13-18 Upgrade BofA/Merrill Neutral → Buy
Nov-06-18 Reiterated BofA/Merrill Neutral $92 → $95
Oct-19-18 Upgrade JP Morgan Neutral → Overweight
Jul-09-18 Downgrade Jefferies Buy → Hold
Apr-20-18 Downgrade BofA/Merrill Buy → Neutral
Apr-20-18 Downgrade Argus Buy → Hold
Feb-28-18 Initiated Berenberg Sell $78.50
Jan-16-18 Upgrade Goldman Sell → Neutral
Dec-14-17 Initiated Deutsche Bank Buy $101
Sep-15-17 Initiated Macquarie Outperform