Procter & Gamble declared its quarterly dividend of $1.0885 per share earlier this month, a payout the company has raised for 70 years in a row. It reports first-quarter results before the market opens this week. The company is one of the 10 No-Brainer Stocks to Buy Now.
But the business behind that streak is barely growing. Organic sales were flat in the fiscal fourth quarter, and core earnings per share fell 3% to $1.43. The question is whether a company guiding to organic growth of 1% to 3% can justify a stock multiple that sits close to its five-year average.
P&G sells Charmin, Pampers, Bounty, Oral-B and Head & Shoulders, everyday goods that households keep buying when budgets tighten. The dividend looks well covered by cash, but the price already assumes a recovery that the company’s own guidance promises only in small steps.
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Cash Flow Is Covering the Dividend
The payout does not depend on earnings growth alone. In the fourth quarter, adjusted free cash flow productivity was 133%, meaning P&G produced more free cash than its profit, even as core earnings per share dropped.
Management plans to keep paying that dividend and buying back shares this fiscal year. Over the past five years, earnings per share grew about 3.8% a year, so the streak has always rested on steady cash rather than fast growth. For investors looking for reliable income, our list of 10 Best Blue Chip Dividend Stocks to Buy Right Now is worth a look.
Sales Growth Has Slowed to Almost Nothing
Revenue grew about 2.7% a year over the past five years, and that pace has faded. Organic sales rose 1% across fiscal 2026, and volume and mix were unchanged for the year.
Beauty was the only segment with clear growth in the fourth quarter, while baby, feminine and family care slipped. CEO Shailesh Jejurikar said the plan is to put the consumer first and speed up growth from one half-year to the next, paid for by a productivity program.
Its earnings targets are just as small, with core earnings per share expected to grow anywhere from in line with last year to 3%.
Cost Pressure Is the Main Worry
Costs are what could keep results at the low end of that range. P&G expects a hit of about $1 billion after tax this year from higher raw material, energy and transportation costs. According to CNBC, CFO Andre Schulten said last quarter’s headline results suffered from US trade effects and a jump in input costs, even though global market share trends improved.
That worry caps the view without breaking it. The guidance already includes the cost hit, and the company still plans its dividend and buyback. A shareholder holds a business expected to grow earnings very little this year, so the first-quarter report matters mostly as a check that sales are moving up from flat.
What the Price Already Assumes
P&G trades at about 22.8 times estimated fiscal 2027 earnings. That is slightly below its five-year average of about 23.8, but about 49% above the sector median. Consensus expects earnings per share to grow just 1.25% for fiscal 2027.
So the price matches the stock’s own history even though growth is expected to be small. The multiple also rests on adjusted earnings, which ran well above reported earnings last quarter because of one-time items. If you’re looking for cheaper names, check out 10 Best Undervalued Stocks to Buy in October.
The dividend streak earns the company patience, and the cash supports it. For the stock, though, growth of 1% to 3% is enough to keep the payout rising but not enough to make that multiple look cheap. The number to watch in this week’s report is organic sales, and whether it climbs off the flat reading from the fourth quarter.
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This article is originally published at Insider Monkey.
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