Procter & Gamble (PG 1.49%) has done an excellent job of returning cash to shareholders over the past three years, and the coming year is not expected to be any different. Management sees a positive outlook for 2022 while acknowledging the challenges ahead. 

The COVID-19 disease is still spreading in high numbers despite more than six billion doses of a vaccine against the virus having been administered worldwide. Outbreaks at manufacturing facilities and other sites of strategic importance are causing supply shortages in everything from products to labor. Through all of that, the company is confident it can deliver above-average revenue and earnings growth and return a hefty $16 billion in cash to shareholders. 

Person in a store shopping for cleaning products.

Procter & Gamble could pay $8 billion in dividends in fiscal 2022. Image source: Getty Images.

P&G to return $16 billion to shareholders

Surprisingly, $16 billion in cash returned to shareholders would be a decrease from the year before when the figure was $19.3 billion. However, it would be higher than the $12.5 billion and $15.2 billion returned in fiscal 2019 and 2020, respectively. The total distribution will be split roughly evenly between dividends of $8 billion and share repurchases between $7 billion and $9 billion.

Fueling the payout this coming year will be an estimated revenue growth in the range of 2% to 4% and earnings-per-share growth of 6% to 9%. That revenue growth would be particularly  impressive considering the 7.3% increase last year, which was its highest dating back at least a decade. Sales of the company's products are benefiting as folks stay home more often than before the pandemic.

Moreover, the company gained market share as it handled the disruptions caused by the pandemic more adeptly in fiscal 2021. These gains could potentially reverse in fiscal 2022 as the company has planned price increases on its products to help offset the $1.9 billion of inflationary pressure it is facing. If competitors choose not to raise prices, customers could select lower-priced products on the shelf.

That said, competitors are likely to follow suit and raise prices too, given that they will be facing similar pricing pressure. Furthermore, getting into a price-cutting competition could reduce profits for the entire industry and is unlikely to be undertaken during a time of supply constraints.

Should you buy Procter & Gamble stock? 

Procter & Gamble is trading at a price-to-earnings ratio of 25 and offers a dividend yield of 2.38%. The planned share repurchases should help put a floor under the stock price as management can step in and buy the stock when it dips.

In the past five years, Procter & Gamble has delivered a total return to investors of 81%, including both dividends and share price gains. Given its solid history of excellent performance and management's optimistic outlook for 2022, investors can feel good about putting Procter & Gamble on their list of stocks to watch.