M* generally has laudatory comments regarding Procter & Gamble, PG.  PG has a wide moat, low uncertainty factor, and is currently rated 4 stars.  Further, PG yields about 2.4% and has a 5 yr div growth rate of 11%.  PG has paid dividends for a very long time and has consistently raised them as it prospered. 

S&P rates PG a "strong buy" and gives it an A+ quality rating.  

PG sure looks like a Builder Portfolio type stock to me.  Yet, and here's the rub, Josh Peters has never mentioned PG in the Dividend Investor Newsletter. To the best of my recollection PG has never even been included "on the Bench" for the Builder.  Correct me if I am mistaken. 

My question is, why is PG not in the Builder Portfolio?  Is there some hidden flaw, or risk, that escaped my notice?

I suspect someone knows the answers.  If so, please enlighten me.  If not, please feel free to speculate.

FWIW, I hold a position in PG.

Regards,
Russ

It's certainly one of the most solid companies on this orb. About the only complaint I could imagine is that the valuation is never cheap. At about 20x trailing earnings today, the shares are about as reasonable as they ever get.

Duane

I can not answer your question as I see nothing now or in the future that will hurt PG. If I had to keep only two or three stocks then PG would be one of them as they rank close to the top in my NEED stocks to hold. Have you every seen people cut back on buying tide or toliet paper in a recession?

Copie

"Have you ever seen people cut back on buying tide or toliet paper in a recession?" 

Or razor blades and batteries?

P&G is selling their products in 80 countries, so they are well diversified with respect to both the economy and the currency..

In my opinion, there are three core stocks for every portfolio and they are GE, JNJ and PG. 

"Have you ever seen people cut back on buying tide or toliet paper in a recession?" 

Or razor blades and batteries?

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No, but people shift from brand names to generics in a recession.  There really isn't a difference between Tide and the cheaper laudry detergents.

KCallie what you say may be true about the different in laudry, but you need to tell that to the ladies on Fri. and Sat. hauling tide out of Walmart!! :-}.

Copie

Russ,

PG has been on my radar ever since I've moved close to their worldwide HQ in the early 90's.  I've been buying PG ever since because I've met quite a few ordinary folks who have retired very comfortably from PG. 

As someone mentioned, PG, JNJ & GE ought to be in everyone's portfolio.  Their long term dividend history is simply phenomenal.  A steady rising dividends from a financially sound company is one of the best way to go, IMO.  Maybe, I am pushing too hard but it is certainly better than static bond yields over the long term.

Justin 

"Have you ever seen people cut back on buying tide or toliet paper in a recession?" 

Or razor blades and batteries?

P&G is selling their products in 80 countries, so they are well diversified with respect to both the economy and the currency..

In my opinion, there are three core stocks for every portfolio and they are GE, JNJ and PG. 

[/quote]

Sure, but would you have really picked these three (and no losers) 30 years ago?  It sure looks easy with hindsight.  In 1978, you might have picked Union Carbide, Chrysler, Westinghouse and Kodak.

It is best to simply be well diversified.

Best wishes.

Andy

Good point, Andy.  Although we may have a different conception of what it means to be diversified. 

My current position in PG is slightly less than 2% and at these prices (4 stars per M*) I am dividend reinvesting.  

Lots of positive opinion re PG.  I agree with the positive comments, but I was hoping for speculation on why Peters has failed to mention PG.  Here is my speculation: 

Point 1, PG, even though trading at below average historical P/E ratios (currently 19.7), is still not "cheap" relative to the market as a whole.  I find it difficult to believe any stock trading around P/E of 20 is cheap. 

Point 2, PG is a very large cap company, approx. $200B.  For such a large company to grow at a rate faster than the economy, they will, in addition to growing organically, have to make acquisitions.  Growing by acquisition is inherently "risky", at least more risky than growing it's current business organically.  Now, PG has demonstrated a knack for buying the right businesses, e.g., Gillette.  And they have shown the ability to integrate purchases effectively.  Never-the-less, there is more risk with this type of growth.  It is always possible to over-pay when buying a company, and considering the size of companies PG will need for meaningful growth, means they could over pay significantly.

Point 3, It is apparent that future growth is also dependent on expanding into foreign markets.  While I suspect PG will succeed in foreign markets, just as they prospered in the US, it does add an element of uncertainty.

It is possible that Peters has not mentioned PG because of one or more of the above points.

Regards,
Russ

Re: diversification

It would certainly be risky to have a large percentage of assets in only three or four stocks, but I don't think it's necessary to own hundreds or thousands of stocks in order to be diversified.

Take a look at this chart of the DJIA vs the S&P500 over the past 20 years. Even though the former is only represented by 30 stocks, and has at various points in time included such "dogs" as Union Carbide, Westinghouse, Woolworth, Goodyear Tire&Rubber, etc, it has still been a good investment vehicle.

Also, Jack Bogle has suggested that simply buying the 50 largest stocks by market cap and holding forever would be a reasonable strategy. I think this is an interesting idea for lump-sum investing a large dollar amount in a taxable account. It's very cost effective and it also allows one to harvest losses for tax purposes.

Regards,

Duane

Good News!  Peters added PG to the Dividend Investor Newsletter "Booster Club Watch List" in the latest (June) issue (now available on line). 

Regards,
Russ

Good News!  Peters added PG to the Dividend Investor Newsletter "Booster Club Watch List" in the latest (June) issue (now available on line). 

Regards,
Russ

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He probably read your post.

Regards,

Dave