Portfolio Update: New Addition (PG; June 20, 2012)

by FI Fighter on June 21, 2012

in Stock Portfolio Updates

A dividend paying stalwart was on sale recently and I used this opportunity to add more shares to my portfolio. Procter and Gamble (PG) revised forecasts for this quarter that were below previous projections. As a result, the stock tumbled ~3.0% at closing on Wednesday.

I’m a strong advocate of utilizing a buy and hold strategy for my core portfolio investments. As such, I found the “discounted” price to be too enticing to pass up. I added 35 shares at a price of $60.07/share.

Although the return on investment from PG has left a lot to be desired in recent years, I still believe it is a strong investment for the long term. The company has a history of not only paying dividends, but also increasing them every year – the last 56 years, in fact. PG sports a low beta of 0.45, high yield of 3.76%, and reasonable trailing P/E of 18.6.

With such a wide economic moat and brand recognition second to none – Tide, Crest, Gillette, Charmin, Old Spice, etc.  immediately come to mind, PG will most definitely be around for the long haul. The nice thing about consumer products is that they tend to hold constant over the years, unlike high tech, which can become obsolete in only a matter of years. Who knows what will happen to the losers of the smart phone war? But at least people will always need toothpaste and soap, no matter what happens to the economy. PG has this in spades.

{ 6 comments… read them below or add one }

1 Compounding Income June 22, 2012 at 5:57 am

You got in at a great price. PG is a large position in my portfolio, but I might have to buy a little more at these levels. I went to the store earlier today because I needed TP and batteries. What did I buy? Duracell and Charmin. I’m a huge fan of P&G products.

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2 FI Fighter June 24, 2012 at 10:28 pm

Compounding Income,

Thanks for the comment! I’ve been watching PG and a lot of other blue chips like KO, PEP, JNJ, etc. waiting for a good time to buy. Who knows if PG will fall even further, but at these levels, I would agree that it presents fair value.

I’m also a big fan of PG products and like the saying goes, invest in companies you use on a daily basis and understand. Since I use Crest, Old Spice and Gillette every morning, I feel pretty comfortable investing in PG 😉

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3 Brian June 25, 2012 at 5:57 am

KO willl be an interesting one to watch since it looks like the 2 – 1 split is going to happen. I’ll be interested to see how investors react afterwards. I’m pretty pleased with it, especially since Coke is available pretty much everywhere in the world now (even Myanmar!)

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4 FI Fighter July 9, 2012 at 12:28 pm

Brian,

Yes, KO is one of my favorites and it has been doing very well ytd. I would like to add some more shares before the split, so hopefully another good opportunity comes up soon

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5 Dividend Mantra June 25, 2012 at 6:41 pm

Great pickup. I love PG for the long haul. Solid products and worldwide exposure creates an economic moat that is difficult to destroy. I’m a bit concerned about the lack of innovation and revenue growth from PG, but I feel confident they’ll right the ship. The $60 level is a great long-term price in my opinion, as there appears to be limited downside at this price.

Best wishes!

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6 FI Fighter July 9, 2012 at 12:34 pm

DM,

Thanks for the comment! Yes, PG hasn’t been exactly performing up to par as of late (just compare the last 5 years to CL, for example), but like you said, it has worldwide exposure and a strong economic moat. As such, as a long term investor, I have faith that management (or new management) will eventually get things right again. Just keep buying on the dips as we wait!

Cheers!

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