The Procter & Gamble Company (PG), Colgate-Palmolive Company (CL): Buy This Personal Product Maker for Years of Great Returns

The second thing you should look for when considering a stock for the long haul is share buybacks as a form of increasing the intrinsic value of a company’s shares. Over the past four years alone, Proctor & Gamble has reduced the amount of shares outstanding from 3.15 billion to 2.73 billion, a reduction of 13.3% in a relatively short timeframe.

Alternatives

The logical alternative options are other diversified consumer products companies, such as the aforementioned Colgate-Palmolive Company (NYSE:CL), and companies such as Kimberly Clark Corp (NYSE:KMB).

Colgate-Palmolive Company (NYSE:CL) is primarily known for its namesake oral care products; however the company also produces other personal care brands such as Irish Spring, Speed Stick, Palmolive, and Softsoap. At 22.3 times TTM earnings, it seems a bit expensive compared with P&G, not to mention that they have a lower dividend yield. There is also some comfort in the size of The Procter & Gamble Company (NYSE:PG), as larger companies are generally (but not always) more stable and predictable.

Kimberly-Clark makes various products from natural or synthetic fibers, and they have an array of well-known brands including Kleenex, Scott, Huggies, Pull-Ups, Kotex, and Depends. Kimberly-Clark pays a higher dividend yield than P&G at 3.4% but is a bit pricier at 21.6 times TTM earnings. The consensus calls for just a 6% forward growth rate, making their valuation way too high in my opinion.

Conclusion

The Procter & Gamble Company (NYSE:PG) is precisely the kind of stock that investors should get excited about buying. While some investors may think that these big, stable companies make boring investments, consider this: $100,000 invested in Proctor & Gamble exactly 20 years ago, assuming reinvestment of dividends, would be worth $1,072,000 today! All of the sudden, it doesn’t seem so boring anymore.

The article Buy This Personal Product Maker for Years of Great Returns originally appeared on Fool.com and is written by Matthew Frankel.

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