If you've been holding Procter & Gamble (NYSE:PG) shares for long, you're likely a bit disappointed with the investment. The consumer products giant's stock has trailed the market by a wide margin since late 2007, having risen just 20% in the past decade compared to the Dow's 68% increase.

Add dividends into the mix and that gap gets much smaller, but P&G still trails the broader index and has underperformed peers like Kimberly-Clark (NYSE:KMB) and Unilever (NYSE:UL).

P&G's Tide detergent, in liquid and Pod form.

Image source: P&G.

A buy-and-hold investor's share count hasn't risen either (except through dividend reinvestments). After all, it has been over 13 years since P&G split its stock.

Stock split history

Date

Split Level

June 21, 2004

2-for-1

Sept. 22, 1997

2-for-1

June 15, 1992

2-for-1

Nov. 20, 1989

2-for-1

Feb. 22, 1984

2-for-1

Data source: Procter & Gamble.

The splits don't matter

Stock splits aren't value creating events. They simply increase the number of outstanding shares while reducing the price of each share by the same proportion.

For example, if you owned 10 shares, valued at $10 per share, before P&G's most recent 2-for-1 split, you'd own 20 shares valued at $5 per share immediately afterwards. Your total investment hasn't changed from its initial $100.

Yet splits do tend to happen during boom times for a stock since they often reflect optimism by the management team about the business. P&G's 2004 split occurred during a fiscal year in which the company posted 10% organic sales growth as it soaked up market share across its product divisions.

Don't expect another split soon

The company isn't in a similarly strong situation today. Organic growth was just 2% in the most recent fiscal year, and, while that represented a boost from the prior year's 1% uptick, it still translates into additional market share losses for the company. In fact, P&G has been struggling for over three years with falling market share, and that challenge has been compounded by slowing industry growth.

A picture of P&G's most popular products.

Image source: P&G.

The climate isn't bullish for splits in general, either. It's been almost 30 years since either Unilever or Kimberly-Clark announced a stock split, and so there's little pressure on P&G executives to push for one today.

What to look for instead

On the bright side, management has shown a commitment to boosting total shareholder returns during periods of weak growth like the one impacting the industry right now. P&G sent $22 billion to investors last year in one of the most generous capital return plans on the stock market.

Chart showing P&G's aggressive capital return program as it compares to other large companies.

Image source: P&G investor presentation.

Most of that spending is going toward stock repurchases lately, which have reduced P&G's outstanding share count by almost 20% over the past decade. Unlike stock splits, these moves usually have a positive impact on shareholder returns since they allow per-share earnings to grow at a faster pace than net income. 

Ultimately, though, P&G won't deliver market-beating returns until it can get back to its long-term goal of consistently outgrowing the industry. It is making small steps in that direction, with growth set to rise to 2.5% in 2018 even as Kimberly-Clark forecasts flat results. But investors will know a real rebound is in place when organic sales gains march closer to the 10% rate the company enjoyed in 2004 and further from 2016's disappointing 1% uptick.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Unilever. The Motley Fool has a disclosure policy.