5 Best Dividend Stocks For Rising Interest Rates

In this article, we discuss 5 best dividend stocks for rising interest rates. If you want to read our detailed analysis of dividend stocks and their returns in the past, go directly to read 11 Best Dividend Stocks For Rising Interest Rates. 

5. The Procter & Gamble Company (NYSE:PG)

Dividend Yield as of January 19: 2.53%

An American multinational consumer goods company, The Procter & Gamble Company (NYSE:PG) is one of the best dividend stocks for rising interest rates as the company has endured previous inflationary periods better than its peers. It continued raising its dividends during these years and its dividend growth streak stands at 66 years. The company currently pays a quarterly dividend of $0.9133 per share and has a dividend yield of 2.53%, as of January 19.

In December, Deutsche Bank raised its price target on The Procter & Gamble Company (NYSE:PG) to $162 with a Buy rating on the shares, presenting a positive stance on the consumer staples sector.

The Procter & Gamble Company (NYSE:PG) recently announced its fiscal Q2 2023 earnings and reported a 5% year-over-year growth in its organic sales. Its operating cash flow came in at $3.6 billion and its free cash flow productivity stood at 72%. The company also returned $2.2 billion to shareholders in dividends during the quarter.

As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in The Procter & Gamble Company (NYSE:PG), down from 71 in the previous quarter. The collective value of these stakes is over $4.08 billion.

Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:

“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”