We recently compiled a list of the 10 Dividend Zombies and Kings with Longest Dividend Payouts. In this article, we are going to take a look at where The Procter & Gamble Company (NYSE:PG) stands against the other dividend stocks.
Last year, artificial intelligence (AI) was the main focus in the markets, driving tech stocks to the forefront. These stocks rose by nearly 56%, accounting for the majority of the market’s gains. However, these trends quickly lose popularity once they emerge. Experienced long-term investors understand a crucial principle: while chasing short-term investment trends can often lead to disappointment, committing to a long-term strategy can yield success. As AI-related companies drove the market upward, the valuations of high dividend-paying companies quietly declined in comparison. It is not about attractive valuations of dividend stocks, these stocks also offer diversification benefits and the potential for a growing income stream, especially if the Fed decides to lower interest rates, making them a strong investment option. These stocks become more attractive when companies have a solid history of consistently paying and increasing their payouts. Read our list of Best Dividend Kings to Buy for Safe Dividend Growth.
Dividend zombies are companies that have paid dividends to shareholders for at least 100 consecutive years whereas dividend kings are companies boasting 50 years of dividend growth. Dividend growers have shown strong performance over the years, often surpassing the overall market returns. The Dividend Aristocrats index, which tracks the performance of companies with 25 consecutive years or more, has outperformed the broader market since its inception in 2005, with lower levels of volatility. Historically, the index has captured 90% of the market’s upward movements while experiencing only 82% of its declines. Currently, the Aristocrats are trading at a price-to-earnings multiple that is more than 10% lower than that of the broader market. This discount level has historically preceded prolonged periods of superior performance by the Aristocrats.
Since the end of 1989, there have been six calendar years where the broader market experienced negative performance. In each of these years, the Dividend Aristocrat index surpassed the performance of the broader equity benchmark by an average of 13.28%. Remarkably, the aristocrats delivered positive total returns in three of those years.
Given investors’ preference for dividend stocks, companies listed in the broader market indices are consistently increasing and sustaining their dividend payments. In the first quarter of 2024, the S&P’s main index distributed $151.6 billion in dividends, compared to $146.8 billion in Q1 2023. There were 796 reported dividend increases in the first quarter, totaling $22.7 billion, up from $19.7 billion in the prior-year period.
The impressive returns of dividend growers clearly demonstrate their strong performance. In this article, we will take a look at dividend zombies and dividend kings to invest in.
Our Methodology:
For this list, we selected companies that have paid dividends for over 100 years and also have strong dividend growth histories. Some of these companies are dividend kings, which means that they have raised their payouts for 50 years or more. We also considered the hedge fund sentiment around each stock, according to Insider Monkey’s database for Q1 2024. The stocks are ranked in ascending order of the consecutive years of dividend payments. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A happy couple viewing the products of this household and personal product company in a mass merchandiser store.
The Procter & Gamble Company (NYSE:PG)
Consecutive Years of Dividend Payments: 134
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods company. It took over two years, but PG achieved a new all-time high in May of this year, reaching $168 per share, which surpassed its previous peak of approximately $165. The company’s effective execution is one of the fundamental reasons why the stock has achieved a new all-time high. It has performed well over the years. Especially during periods of inflation, it successfully implemented significant price hikes. For example, throughout fiscal 2023, organic sales saw growth in every quarter. Moreover, the company managed to expand its market share in 31 out of its 50 key category and country combinations during this period.
In fiscal Q3 2024, The Procter & Gamble Company (NYSE:PG) reported revenue of over $20.2 billion, which showed a slight 0.63% growth from the same period last year. The company achieved solid sales and strong earnings growth during the quarter despite facing several challenges. This performance allowed the company to increase its EPS growth forecast and uphold its revenue expectation for the fiscal year. The company’s operating cash flow for the quarter came in at $4.1 billion and its free cash flow productivity was 87%. The Procter & Gamble Company (NYSE:PG) remained committed to its shareholder obligation as it returned $3.3 billion to investors in Q3 through dividends and share repurchases.
The Procter & Gamble Company (NYSE:PG) currently offers a quarterly dividend of $$1.0065 per share and has a dividend yield of 2.41%, as of June 20. The company has never missed a dividend for 134 consecutive years and has raised its payouts for 68 years in a row. It is among the best dividend zombies on our list.
The Procter & Gamble Company (NYSE:PG) was a part of 69 hedge fund portfolios at the end of Q1 2024, compared with 71 in the previous quarter, as per Insider Monkey’s database. These stakes are valued at over $7.2 billion. Fisher Asset Management was the company’s leading stakeholder in Q1. The hedge fund also remained bullish on the stock, boosting its PG stake by 56%.
Overall PG ranks 7th on our list of the dividend zombies and kings with longest dividend payouts. You can visit 10 Dividend Zombies and Kings with Longest Dividend Payouts to see the other dividend stocks that are on hedge funds’ radar. While we acknowledge the potential of PG as an investment, our conviction lies in the belief that deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is as promising as PG but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.