Even This Elite Dividend King Stock Is Feeling the Effects of Tariff Turmoil. Is It a Buy Anyway?

Daniel Foelber, The Motley Fool

Tue, Apr 29, 2025, 6:05 AM 6 min read

Procter & Gamble (NYSE: PG) has established a reputation for delivering steady results and dividend growth, regardless of the economic cycle. In fact, P&G is so consistent that it has raised its dividend for 69 consecutive years, an extensive streak that puts it at the top of an elite list of companies known as Dividend Kings.

But the maker of laundry detergents, dish soap, paper towels, razors, and more slipped 3.7% on April 24 in response to its third-quarter fiscal 2025 earnings report. Let's dive into key takeaways from the report to see if the sell-off in P&G is justified, or if it's an excellent buy now.

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When P&G reported second-quarter fiscal 2025 results in January, it was guiding for full-year sales growth of 2% to 4%, diluted net earnings per share (EPS) growth of 10% to 12%, core EPS growth of 5% to 7%, $10 billion in fiscal year dividend payments, and $6 billion to $7 billion in stock buybacks.

But P&G's latest quarterly results were weak, with a 1% decline in volumes, just a 1% increase in price, and a 2% overall decline in net sales.

P&G is maintaining its full-year sales growth and capital return targets, but has revised its EPS guidance downward. It now expects diluted EPS growth of 6% to 8% and core EPS growth of 2% to 4%.

With just one quarter left to go in P&G's fiscal year, a cut to full-year guidance essentially means the weak results won't be made up for in the coming quarter.

P&G has an impeccable track record of passing higher input costs on to customers through price increases. This strategy allowed P&G to steadily grow earnings despite inflation and supply chain disruptions in recent years. P&G is still delivering decent results, but it is clearly hitting a bit of a roadblock.

On the earnings call, management didn't shy away from detailing pressures on consumers. P&G CFO Andre Schulten said the following in response to an analyst question:

The consumer has been hit with a lot of volatility, market volatility, that impacts their portfolios, their 401(k)s, volatility in the economic outlook, uncertainty on the job market, volatility in terms of mortgage rates expectations, all the divisiveness and nationalistic rhetoric that we saw around the world, uncertainty on tariffs and the impact on prices and availability of goods. So, I mean, the consumer has been hit with a lot, and that's a lot to process. So what we're seeing, I think, is a logical response from the consumer to pause. And that pause is reflected in retail traffic being down.