Consumer staples giant The Procter & Gamble Company (NYSE:PG) is the gold-standard among rank-and-file dividend paying stocks. The company epitomizes slow and steady investing, having for many decades in a row provided investors steady profit growth and reliable dividend payments.
At the same time, over the last couple years, The Procter & Gamble Company (NYSE:PG) has experienced a sharp rally that would normally be reserved for high-flying small-cap stocks. Income investors are understandably attracted to P&G stock, but is there still a case to be made from a value perspective?
A world-class business
The Procter & Gamble Company (NYSE:PG) directs investors’ collective attention to its 50 ‘Leadership Brands,’ the 50 products that comprise 90% of the company’s revenues and more than 90% of its profits. 25 of them each generate at least $1 billion in annual sales.
Its flagship brands can be found in virtually every aisle in the local grocery store. These include Gillette razors, Pampers diapers, Bounty paper towels, Tide laundry detergent, Crest toothpaste, and Head and Shoulders shampoo.
Not surprisingly, the consumer staples sector is filled with highly profitable companies with long histories of success.
The Clorox Company (NYSE:CLX) is also a market leader among consumer staples stocks. The company sells its products in more than 100 countries, and has many household brands including its namesake bleach, Kingsford charcoal, Pine-Sol cleaner, and Glad trash bags. Nearly 90% of The Clorox Company (NYSE:CLX)’s brands hold the No. 1 or No. 2 market-share positions in their categories.
Going forward, The Clorox Company (NYSE:CLX) provides investors with what it calls its Centennial Strategy, designed to underscore its long-term strategic initiatives. One of which is long-term revenue growth between 3% and 5% per year, and profit growth to be slightly above those levels.
Close industry peer Colgate-Palmolive Company (NYSE:CL) has more streamlined operations as compared to its two peers. The company is tightly focused on Oral Care, Personal Care, Home Care, and Pet Nutrition. Colgate sells its products in over 200 countries around the world, under such internationally recognized brand names as Colgate, Palmolive, Mennen, Speed Stick, Softsoap, and Irish Spring.
Compelling shareholder returns
A major reason for investing in the sector is the reliable dividend checks the sector is known for. No matter the prevailing economic climate, P&G’s rock-solid brands are found in millions of shopping carts every day. That means that investors can count on those quarterly dividend checks to keep rolling in for many years to come.
To illustrate, in fiscal 2012 The Procter & Gamble Company (NYSE:PG) returned $10 billion to shareholders through dividends and buybacks. Very recently, the company increased its dividend by 7%. This year marks the 123rd in a row of consecutive dividend payments, since the company’s incorporation in 1890. Furthermore, The Procter & Gamble Company (NYSE:PG) has increased its dividend for 57 years in a row.