Procter & Gamble is a Hold For Now But Look to Buy in the Second Half Procter & Gamble stock is sitting on the high-end of its 52-week range. And with the company set to report earnings on January 19, it's time to wonder if this...

Growth for the consumer staples giant is a question of when, not if

Procter & Gamble (NYSE:PG) is down about 4% in the first weeks of 2021. Still, the stock is sitting on the high-end of its 52-week range. And with the company set to report earnings on January 19, it's time to wonder if this is just a necessary consolidation, or the start of a larger sell-off.

I like to remind investors that, in many cases, when a company tells you something (good or bad) you should generally pay attention. So it was that Procter & Gamble told investors on the company's last earnings call that earnings were likely to be under pressure in the first half of its fiscal year (which began last quarter).

Sure enough, P&G reported quarterly earnings of $1.61. While this was a 42% sequential increase in what is typically one of the company's strongest quarters, it was a 1% year-over-year decline from the $1.63 per share it posted in 2020. Furthermore, the earnings number only beat analysts' projections by 1% whereas it had posted an 8.6% beat in the prior year.

However, P&G is having no such issues on the top line where revenue came in at a record high of $20.34 billion. But here again, it's important to pay attention to what the company is forecasting. In the fiscal year that ended in June, the company reported 6% organic growth.

Like many consumer staples companies, Procter & Gamble is facing higher supply chain costs that it is passing along in part to end consumers. Those price increases have already started being seeded in the market. And so far the company is optimistic in their ability to come in at the high end of a 2% to 4% range.

Nevertheless, it's clear that the company is already managing expectations for slower growth. Which brings the stock price into question. As I pointed out above, PG stock is currently trading near the upper end of its 52-week range. And most of that growth has occurred since October 2021.

Look for Growth in the Second Half of the Year

While the company did forecast a sluggish start to the year, it also forecast earnings momentum to pick up in the second half of the year. Of course, investors are still on edge about the effect that higher interest rates will have on consumer spending and economic growth. However, as a defensive stock, Procter & Gamble is likely to weather any downturn more asily than other companies.

This may be what was on the mind of JPMorgan (NYSE:JPM) analyst Andrea Faria Teixeira who reaffirmed a Buy rating for PG stock with a price target of $165.32 - over 10% higher than the consensus of the analysts that MarketBeat tracks.

The Dividend Makes PG Stock a Staple for Income Investors

One strength of a stock like Procter & Gamble is the company's ability to pay a reliable, and growing, dividend. In fact, Procter & Gamble is part of the exclusive Dividend Kings club. This is reserved for companies that have increased their dividend for at least 50 consecutive years. P&G has done so for 65 years.

The company announced its most recent dividend will be paid out on February 15 and the ex-dividend date is January 20, 2022. That's the day after earnings so I expect that investors who are looking to buy PG stock at a bargain price may be well served to wait until after the ex-dividend date passes.

And if you currently own the stock, there is no reason to sell now. While you may not get the kind of stock price appreciation you got in 2021, the company is still planning to pay over $8 billion in dividends in FY 2022 with an additional $7 to $9 billion in share repurchases.