The Procter & Gamble Company (PG), And How to Assess A Declining Level of Dividend Increases

There were a series of circumstances beyond The Procter & Gamble Company (NYSE:PG)’s control that negatively affected earnings, such as increases in material costs and higher tax rates.

Additional investments have been made in an effort to expand opportunities in emerging markets. These investments should pay off in the long term but have negative effects over the short term.

P&G is focused on providing the highest quality and most innovative products available today. This requires extensive R&D costs, which can have a detrimental short-term effect on earnings.

The Foolish bottom Line

After taking all of these points into consideration, I believe that most of these items that are out of Procter & Gamble’s control will improve over time and that their investments in emerging markets and product innovation will pay off.

This belief was reflected in P&G’s 2Q and 3Q earnings reports, which were both improvements over last year’s results. However, its 4Q guidance was lower than analysts expected, resulting in a 6% decline in the share price. With shares at an all-time high, a pullback of this level is not surprising. After these improved results, I am hopeful for an improvement in The Procter & Gamble Company (NYSE:PG)’s dividend boosts in upcoming years.

After this sell-off,  I believe that now is a good time to consider Procter & Gamble as part of a diverse, well managed portfolio.

The article Assessing P&G’s Declining Level of Dividend Increases originally appeared on Fool.com and is written by Greg Williamson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.