P&G's Cash Flow Statement Defies Skeptics on Dividend Growth

Procter & Gamble (PG) has been a Dividend King for 70 consecutive years, but its recent dividend growth rate of 3% has some investors skeptical. However, a closer look at the company's cash flow statement reveals a different story.

In Q3 FY2026, P&G generated operating cash flow of $4.045 billion, up 9% year over year, and free cash flow of $3.026 billion, up 6%. Cash and equivalents on the balance sheet swelled to $12.306 billion, a 35% jump year over year.

Management's guidance for FY2026 adjusted free cash flow productivity is 85% to 90%, with about $10 billion expected in dividend payouts and ~$5 billion in buybacks. The company's historical record of raising its dividend through economic downturns, including the 2008-2009 Financial Crisis and the 2020 COVID-19 pandemic, also suggests that the current dividend growth rate is not a concern.