Earnings for this leading maker of household goods were up 3.1% in the most recent quarter.

The rise reflects successful restructuring efforts and the elimination of $3.3 billion in annual expenses. That has helped to free up cash for more research spending and new acquisitions, including a line of grooming products for people of colour.

PROCTER & GAMBLE CO. (New York symbol PG; www.pg.com) is one of the world’s largest makers of household and personal-care goods. It began operating in the U.S. in 1837 and now sells its products in over 180 countries. Overseas markets account for 56% of its total sales.

Its major brands include Tide (laundry detergent), Pampers (diapers), Gillette (razors) and Crest (toothpaste).

The company has paid an undisclosed amount for Walker & Co. Brands. That firm makes grooming products specifically developed for people of colour. Those include men’s razors and skin creams, sold under the Bevel label, and women’s shampoos and hair-care products under the Form brand.

Procter’s marketing expertise and large distribution networks should help expand the availability of Walker’s products. The purchase will also help it compete with Unilever plc, which also recently acquired a firm that specializes in grooming products for people of colour.

Starting with the May 2018 payment, Procter raised its quarterly dividend by 4.0%. Investors receive $0.7172 a share, up from $0.6896. The annual rate of $2.87 yields 2.8%. The company has paid dividends for 128 years and has increased its payout annually for the past 62.

For its fiscal 2019 second quarter, ended December 31, 2018, Procter’s sales were unchanged from a year earlier at $17.44 billion. On a comparable basis and excluding foreign exchange rates, sales improved 4%.

Higher comparable sales of Beauty products (up 8%), Fabric and Home products (up 6%), Health products (up 5%), and Baby, Feminine and Family Care products (up 3%) helped offset a 3% decline in Grooming products.

In the quarter, excluding one-time items, earnings rose 3.1%, to $3.27 billion from $3.17 billion. Earnings per share rose 5.0%, to $1.25 from $1.19, on fewer shares outstanding.

Dividend Stocks: A restructuring plan and strategic spending should boost earnings

A successful restructuring plan, which includes closing plants in North America and shifting production to larger facilities, also contributed to the improved earnings. That plan has cut the company’s annual costs by $3.3 billion.

Procter has also lowered its spending on advertising and marketing. It totaled $7.10 billion (or 10.6% of sales) in fiscal 2018. That’s down from $7.12 billion (or 10.9%) in 2017. The decrease is partly because the company continues to shift away from traditional TV and print ads to more effective online ads and in-store promotions.

Those savings are freeing up cash that Procter can use to develop innovative new products. In 2018, its research spending rose 1.8%, to $1.91 billion (or 2.9% of sales) from $1.87 billion (or 2.9%) in 2017.

For all of fiscal 2019, Procter’s earnings will likely rise 13.5% to $4.45 a share. The stock trades at a somewhat high 23.1 times that estimate.

However, that’s a still a reasonable P/E in light of the company’s improving earnings and rising dividend rate. It also expects to buy back $5 billion of its shares in fiscal 2019.

Recommendation in Dividend Advisor: Proctor & Gamble is a buy.