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John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.

Procter & Gamble Co. has been one of the stalwarts of my Strategy Lab model dividend portfolio.

Since the portfolio's inception in September, 2012, shares of the global household products powerhouse have risen about 23 per cent in U.S. dollars. Thanks to the falling loonie, the gain in Canadian currency has been an even more impressive 39.2 per cent.

Those returns are based on the price of the stock alone. If you include dividends, the return is closer to 47 per cent.

I'm pleased with how my P&G shares have performed, and I think there's more to come. There are risks with every stock, of course, and short-term price changes are impossible to predict. But for investors with a long time horizon, I believe that P&G will continue to deliver rising dividends and capital growth.

Here are five reasons I still like the company (which I also own personally).

It's a dividend machine

P&G has paid dividends since 1890, and it has raised its dividend annually for the past 58 consecutive years. The most recent hike, in April, was 7 per cent, and I'll bet you a jug of Tide Ultra that it will announce another increase next spring. With a comfortable payout ratio of about 57 per cent of earnings and a strong AA credit rating, P&G can easily cover its dividend with plenty of cash left over to reinvest in its business. "Given Procter & Gamble's stable cash flow, we expect the dividend to continually increase over time," Edward Jones analyst Jack Russo said in a note.

It has powerful brands

P&G makes some of the world's best-known brands, including 23 that generate annual sales of more than $1-billion (U.S.) each – among them Tide, Pampers, Pantene, Gillette, Charmin and Duracell. Every time I use a Swiffer on my floor, spray Febreeze in my living room or brush my teeth with Crest, I'm reminded of P&G's incredible reach. What's more, the company is constantly innovating to keep its brands ahead of the competition. Two recent examples are Crest Sensi-Stop Strips (for sensitive teeth) and the Fusion ProGlide FlexBall razor (which Gillette says is designed to respond to the contours in a man's face for a closer shave).

It's getting lean and mean

As announced in August, P&G plans to divest or discontinue 90 to 100 of its smaller, slower-growing brands to focus on the 70 to 80 that account for more than 95 per cent of its profit. The goal is to allocate marketing, advertising and research dollars where they provide the greatest return. This week, P&G completed the sale of its pet food business (which included Iams, Natura and Eukanuba), and is aiming to complete the sale of other brands over the next 24 months. "We're going to create a faster-growing, more profitable company that is far simpler to manage and operate," A.G. Lafley, Procter & Gamble's CEO, said on the fourth-quarter conference call. As it culls its brand portfolio, the company is also in the midst of a $10-billion cost reduction plan that will further help its bottom line.

It has lots of room to grow

P&G derives an estimated 40 per cent of sales from emerging markets. That's about double the level in 2000, but it's still less than competitors such as Unilever and Colgate-Palmolive that generate more than half of their revenue in developing countries. With its unparalleled marketing muscle and distribution capability, the company intends to capitalize on the vast opportunities in developing markets. "That's where the demographics will be driving us, that's where the babies are born, that's where the households form, that's where incomes are rising," Mr. Lafley said.

The stock isn't outrageously expensive

Okay, maybe it's a little bit expensive. P&G's shares trade at about 19 times estimated earnings of $4.46 a share for the fiscal year that ends next June. That's lower than the peak forward price-to-earnings multiple of 20.3 in April, 2013, but higher than average P/E of 17.3 over the past five years.

Clearly, market sentiment toward P&G has improved, but the higher P/E also turns up the pressure on management to meet or exceed its guidance of mid-single-digit earnings growth for fiscal 2015. Mr. Russo of Edward Jones thinks the company can deliver: "We believe further share appreciation could be driven by recent restructuring actions/asset sales and P&G's renewed focus on boosting sales, both of which could lead to better-than-expected earnings," he said.

In the meantime, investors get paid a 3-per-cent yield and can look forward to another dividend increase next April.

Globe app users click here for chart showing Procter & Gamble dividends

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