Dividend investors are likely closely watching Procter & Gamble’s (PG) decision to cut 7,000 jobs, a move that’s sending ripples through the consumer goods sector. This comes at a time when consumer confidence is notably low. 

P&G isn’t the only one facing tough choices. Companies like Microsoft (MSFT), Disney (DIS), and Walmart (WMT) have also recently announced layoffs as they deal with sluggish consumer spending and rising costs. The Congressional Budget Office is warning that President Donald Trump’s new tariffs could make things worse by pushing inflation higher and reducing household purchasing power. These tariffs are expected to cost P&G up to $600 million before taxes in fiscal 2026, which is a big reason why the company is moving quickly to streamline operations and cut expenses.

Even with all these challenges, P&G just raised its dividend for the 69th year in a row, keeping its Dividend King title. Now investors are asking: Is this job cut a smart way to protect profits and keep growing, or is it a sign of deeper trouble for one of America’s most dependable dividend payers? Let’s find out.

P&G’s Financial Fortitude

Procter & Gamble (PG) is a consumer staples company that focuses on everyday essentials across beauty, grooming, healthcare, and home and family care. The board of directors recently declared a 5% increase in the quarterly dividend to $1.0568 per share. 

That increase marks 69 years in a row of raising the dividend. This brings the yearly dividend to $$4.23 per share, with a yield of 2.61% and a payout ratio of 60.4%. That’s a strong sign P&G is still serious about keeping its title as a Dividend King.

PG’s price action reflects a series of dips as year-to-date, the stock is down 3.3%, with a 52-week decline of 3.2%. 

P&G’s market capitalization stands at $381 billion, while its price-sales ratio of 4.54x and a forward price-to-earnings ratio of 23.98x indicate a premium valuation that investors are willing to pay for its consistency and defensive qualities.

On April 24, the company released its fiscal third-quarter 2025 results, offering a clear look at its financial performance. P&G reported net sales of $19.8 billion, a 2% decrease from the prior year, but organic sales, excluding currency, acquisitions, and divestitures, rose 1%, led by higher pricing. Diluted and core net earnings per share both came in at $1.54, up 1% year-over-year, and currency-neutral core EPS was up 3%. 

CEO Jon Moeller described the quarter as one of “modest organic sales and EPS growth … in a challenging and volatile consumer and geopolitical environment,” highlighting the company’s focus on integrated growth and brand innovation.

Operating cash flow for the quarter reached $3.7 billion, with net earnings of $3.8 billion and adjusted free cash flow productivity at 75%. The company returned $3.8 billion to shareholders, $2.4 billion in dividends and $1.4 billion in share repurchases, reinforcing its reputation as a dividend stalwart.

The company is navigating challenges, including $200 million after-tax impacts from both commodity costs and unfavorable foreign exchange rates, which together are expected to weigh on EPS by $0.16 per share. Despite these challenges, P&G is targeting robust capital discipline, expecting capital spending to remain at 4% to 5% of net sales, adjusted free cash flow productivity at 90%, and plans to return around $10 billion in dividends and $6 billion to $7 billion in share repurchases in fiscal 2025.

P&G’s Next Chapter

P&G is making some big changes as it heads into its next chapter, planning to cut up to 7,000 jobs over the next two years. That’s about 6% of its total workforce and 15% of its corporate jobs. The news came out at the Deutsche Bank Consumer Conference in Paris, where CFO Andre Schulten explained that these cuts are meant to help P&G reach its long-term growth goals over the next few years. 

Still, he was upfront that these changes won’t solve all the company’s short-term problems, especially with tariffs making things more expensive and the economy making shoppers more cautious.

Cutting jobs isn’t the only thing on the table. P&G will also stop selling some products in certain markets, aiming to keep things simple and focus more on its main brands. More details on which products and markets will be dropped are expected in July. The company expects these changes to cost between $1 billion and $1.6 billion before taxes over two years, which is a big investment for a plan that’s meant to help P&G work smarter and faster.

A major part of this plan is P&G’s push to save $1.5 billion every year by using new technology and improving how it manages its supply chain. The “Supply Chain 3.0” project is all about keeping shelves stocked 98% of the time and cutting costs by $1.5 billion each year, which is a huge goal.

How Analysts See P&G’s Future

Analysts are keeping a close eye on Procter & Gamble as it enters a transformative period, and the consensus is surprisingly optimistic despite the headline-grabbing restructuring. Wall Street expects Q4 EPS of $1.43 and full-year EPS of $6.78, both up from last year’s $1.40 and $6.59, respectively, reflecting estimated year-over-year growth rates of 2.14% for the quarter and 2.88% for the fiscal year. 

P&G’s updated fiscal 2025 outlook calls for all-in sales to be roughly flat compared to the prior year, with organic sales growth of about 2%. Diluted net earnings per share are expected to grow between 6% and 8% over last year’s $6.02, while core EPS is forecast in the range of $6.72 to $6.82, translating to 2% to 4% growth over 2024’s $6.59. 

The analyst community, with 24 analysts surveyed, assigns P&G a “Moderate Buy” consensus rating and an average price target of $175.86, representing 8% upside from the current price.

Conclusion

So, is P&G’s decision to slash jobs a red flag for this Dividend King? 

While layoffs and restructuring can rattle investors, the company’s strong cash flow, consistent dividend hikes, and analyst optimism suggest it’s more about adapting than weakening. With a solid outlook and a “Moderate Buy” consensus, shares are likely to drift higher, provided P&G keeps executing on its plan and the macro environment doesn’t dramatically worsen. For now, it seems more like a strategic pivot than a warning sign.