Procter & Gamble(NYSE: PG) is, for many investors, a classic dividend stock that is happy to pay a consistently increasing disbursement to its shareholders on the regular. However, it's also got enough potential to power its share price notably higher.
One analyst feels P&G's stock can manage a double-digit percentage gain over the next year or so. Let's crunch a few numbers to try and gauge how accurate his prediction is.
1 analyst thinks this Procter & Gamble has room to run
The analyst upbeat on P&G is Deutsche Bank's Steve Powers. In early April he tweaked his Procter & Gamble price target, bumping it $2 higher to $172 per share. He maintained his buy recommendation on the sturdy consumer goods company as he did so.
Procter & Gamble might not be a household name, but most Americans consider many of the products it manufactures to be household names. Its dizzying product assortment includes such longtime favorites as Pampers diapers, Tide laundry detergent, Gillette shaving products, Charmin toilet paper, and Crest toothpaste.
The company's monster presence on retail shelves ensures a torrent of revenue and strongly flowing rivers of cash flow to fund an ever-increasing dividend.
While inflation has been something of a beast in the post-pandemic period for companies that make stuff, Procter & Gamble has effectively passed along higher input costs to consumers. Revenue rises consistently, if not spectacularly (it inched up by 2% in its last fiscal year). And while net income was stagnant across that stretch, margins remained high.
Growth and a generous dividend make a fine combination
It's doubtful that Procter & Gamble will experience a monster, unexpected pop on the top or bottom line anytime soon. Slow and steady wins the race here, meanwhile that consistently high cash flow keeps alive the impressive dividend raise streak of 67 years and counting.
The combination of a reliably profitable business and a relatively generous dividend that yields 2.3% should attract investors to the stock. I think the 10% share price gain Powers predicts is easily achievable for this company.
Should you invest $1,000 in Procter & Gamble right now?
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
