By Bob Fredeen (TMF Bobdog)

There's no doubt that Procter & Gamble has a huge number of brands in its portfolio. In fact, supporting all of these brands forces the company to be the second largest spender on advertising in the world. And the result of all that spending has been 3% annual sales growth over the past four fiscal years, only recently improving to 6%. According to the company, 6-8% is the expected topline growth going forward. And, the company expects to grow profits at only about 11-13%, though analysts are expecting that number to be 10% in the next year or so.

It's interesting that Paul brought up the dividend. Sure, P&G has managed to increase its payout every year. In April, the company raised the first-quarter dividend 9.4%, 27.1% less than its five-year average of 12.9%, and below its 12-year average increase of 11.3%. In fact, annual dividend increase has shrunk for the second consecutive year. Not exactly a trend, but not an optimistic piece of information, either.

Really, slowing sales and profits are the core of my argument. Slowing sales and profits mean slowing returns for investors. Sure, P&G has all of those brands, patents, and dollars of advertising spending at its disposal, but it doesn't seem to be helping the top or the bottom line. This does not seem like a competitive advantage to me. People need to buy the types of products that P&G makes, but that does not mean that they have to buy P&G products. Even worse, people seem to be choosing to buy P&G products when they are on sale, certainly not the hallmark of a strong brand.

Procter & Gamble may be trading at a valuation tempting to some, but I submit that over the past couple of years, the company has earned its valuation.

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