In its recent earnings report the company reported organic sales growth of 3%. But the CEO also said organic sales would’ve been 4% if P&G had already split off the brands it intends to sell.
Essentially P&G’s “extra” brands are holding back its performance.
The CEO also said that the company’s top 70 to 80 brands – the brands it intends to keep – generate 90% of P&G’s sales and 95% of its profits.
Not only will selling off extra brands result in immediate cash flows but it will also enable the company to focus its marketing and manufacturing efforts on the brands that generate almost all of its sales.
From my way of thinking, a stable company paying more than 3% in dividends that is refocusing on its core brands and generating cash flows by selling its extra brands is a winning combination.
The Proctor and Gamble stock split seems like an excellent opportunity to pick up shares of this consistent dividend champion.
This article is brought to you courtesy of Jay Taylor from Wyatt Research.