Slow inflation has forced most consumer goods companies to take unpopular decisions, leading to unexpectedly disappointing results.
An entire group of stocks may have simply fallen out of favor due to overwhelming preference for AI names.
A reversal of both these dynamics, however, is on the horizon.
10 Stocks We Like Better Than Procter & Gamble
Does your portfolio need a reliable dividend, but you don’t want to pay too much for too little yield? This is a tall order these days. The rapid growth of artificial intelligence (AI) stocks has driven many tickers to unusually high valuations, dialing back their relative dividend payouts.
However, not all names have experienced this phenomenon. If you’re willing to give up a little growth potential and a lot of excitement, there are a handful of reliable “forever” dividend payers you can get into today at great prices. And right now these tickers are one of the best Proctor and gambling(NYSE:PG).
Image source: Getty Images.
You’ve surely heard of the company. What you may not realize is the breadth and depth of its presence within the consumer goods space. P&G is the name behind Tide laundry detergent, Gillette razors, Dawn dishwashing liquid, Crest toothpaste, Pampers diapers, Bounty paper towels and more. It’s not just the world’s largest consumer staples name as measured by revenue and market cap, reporting a top line of $84.3 billion for the fiscal year ending in June. Many of its products dominate their respective categories. And it is much easier to stay in the leadership of a particular market than it is to topple a market leader.
Sheer size can also work against a company, of course. Not only does greater size generally mean greater corporate complexity, but it also creates larger year-over-year comparisons that make growth seem a little less meaningful.
That’s one of the main reasons P&G shares have performed so poorly since November 2024, down 20% from that peak — the company has been forced to operate aggressively in an inflationary environment where consumers are shopping more price-consciously (not to mention an environment that now offers them more accessible options). This, in turn, led to a few more quarterly revenue and profit shortfalls, and took longer than expected when the headwinds first started blowing.
The thing is, this cyclical headwind may be nearing its end. Meanwhile, Procter & Gamble’s dividend was never in real danger. This is why the stock’s prolonged weakness is a definite buying opportunity for true long-term income investors.
P&G’s near future may remain difficult to navigate. Now more than a year into the discourse gauntlet, however, management has apparently figured out how to do just that.
Meanwhile, the underlying inflation that has been so problematic for P&G finally appears to be easing as economic growth picks up. The Federal Reserve projects that the annual inflation rate in the United States will remain above 2% for 2027, up from last year’s figure of around 3%, and remain there in 2028. And, after a surprisingly strong third-quarter growth estimate of 4.3%, Fed governors expect the country’s average GDP growth rate to improve. Growth in the ballpark of 1.7% this year is about 2.2%, where it should stay next year. Outside the United States (where Procter & Gamble does half of its business), the World Bank is calling for global GDP growth of 2.6% (roughly in line with last year’s progress) in 2026, helped by better inflation.
These small numbers actually mean a lot to P&G’s price-sensitive customers.
the irony? While Procter & Gamble may have reported some disappointing quarterly results of late, the company actually managed to find a way to widen its profit margins during this turbulent period.
Data by YCharts.
Perhaps more important to income-minded investors, all of these dynamics support Procter & Gamble’s already well-supported dividend payout. With earnings per share of $6.51 last fiscal year, only $4.08 (or 63%) of that bottom line was distributed as dividends. In fact, the company has not only paid dividends like clockwork for 135 years now, but has been able to increase its annual dividend payout every year for the past 69 years. And by more than a little. It has grown by about 5% per year over the past decade, comfortably outpacing inflation during this expansion. There is no end to any streak.
Given the company’s stature, the stock’s current above-average forward yield of 3%, it’s surprising that shares of Procter & Gamble have been allowed to sink for so long. On the other hand, it’s also possible that slow-growing value stocks like this one simply fell out of favor in an environment where investors can’t get enough exposure to fast-growing artificial intelligence stocks.
However, both dynamics set the stage for a better performance from P&G shares from here.
This ticker is much more than just a way to capitalize on a short-term shift back to long-term norms. Procter & Gamble has a long history of solid, risk-adjusted performance that is ultimately based on the nature of its products and its dominance in many consumer goods categories. The entry opportunity is temporary because it is unusual to see the stock down for so long.
While we don’t know if P&G’s stock has hit an all-time low, don’t overthink it. This is more than enough discount to dive into it here and now.
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James Brumley has positions at Procter & Gamble. Motley Fool has no position in any of the stocks mentioned. Motley Fool has a disclosure policy.
1 Magnificent S&P 500 Dividend Stocks to Buy Down 20% and Hold Forever was originally published by The Motley Fool
