The maker of household brands
The Procter & Gamble Company (NYSE:PG) defines itself as a “branded consumer packaged goods” company. It owns brands such as Duracell batteries, Tide detergent, Dawn dish detergent, MACH 3 razor blades, etc. The public’s love of these brands will keep this company going for some time. This company produces hard to replicate high-quality brands that fulfill the daily needs of modern day life.
Over the past five years this company grew its revenue and free cash flow 9% and 13%, respectively. Its stock price advanced 19% beating the S&P 500 by 2%.
In The Procter & Gamble Company (NYSE:PG)’s most recent quarter, revenue and free cash flow grew 2% and 24%, respectively. The strength in the company’s latest earnings report came from the “needs” part of the business with the health and baby care segment showing the strongest gains with sales increasing 8% and 3%, respectively. The vanities part of the business served as its greatest weakness. The beauty and grooming segments each lost 2% of their sales.
The Procter & Gamble Company (NYSE:PG) paid out 56% of its free cash flow in dividends in its last quarter. As of this writing, The Procter & Gamble Company (NYSE:PG) yields 3.1% per year in dividends.
Cost savings programs will continue to boost margins for The Procter & Gamble Company (NYSE:PG). Consumers in emerging markets embracing the many brands of the company will serve as future avenues of top and bottom-line growth.
Hailing from Europe
A consumer goods company with roots in the Netherlands, Unilever plc (ADR) (NYSE:UL), also owns many household items you may recognize like Dove soap, Axe deodorant, Hellman’s mayonnaise, Vaseline, and Ben & Jerry’s ice cream.
Over the past five years Unilever plc (ADR) (NYSE:UL)’s revenue and free cash flow increased 28% and 62%, respectively. The share price of the company’s Unilever, PLC American depository receipts increased 24% versus 17% for the S&P 500. Meanwhile the share prices of the company’s Unilever NV shares increased 22% versus 17% for the S&P 500.
Unilever plc (ADR) (NYSE:UL) paid out 68% of its 2012 free cash flow in dividends. The Unilever plc (ADR) (NYSE:UL), PLC American depository receipts and Unilever NV listed shares currently yield 3.2% and 3.3%, respectively, as of this writing.
Unilever plc (ADR) (NYSE:UL)’s most recent quarterly sales, when factoring out exchange rates and brand disposals, increased 5%. Unilever faced a tough competitive environment in its food and refreshment segments. All of Unilever’s sales growth came from emerging markets.
For the foreseeable future, growth for Unilever plc (ADR) (NYSE:UL) will also come mostly from emerging markets. The company faces market saturation in developed nations.
Here comes the hammer
Church & Dwight Co., Inc. (NYSE:CHD) owns the Arm & Hammer brand. It also makes other essential products such as birth control, pregnancy tests, and Orajel pain relief. People need these products and many buy them from Church & Dwight Co., Inc. (NYSE:CHD).
Church & Dwight Co., Inc. (NYSE:CHD) blew it out of the water with revenue and free cash flow growing 32% and 125%, respectively, over the past five years. Its stock price returned 133% to its shareholders, not including dividends, beating the S&P 500 by eight times.
In the most recent quarter Church & Dwight Co., Inc. (NYSE:CHD) grew its revenue 13%. Free cash flow declined 37% due to a tax payment delayed until this quarter. Interestingly, domestic consumer sales grew the most driven by increased sales in detergent, birth control and pregnancy tests.
Even with the lower cash flow, Church & Dwight Co., Inc. (NYSE:CHD)’s dividend payment amounted to less than 62% of free cash flow. As of this writing, the company pays $1.12 per share per year in dividend payments equating to a 1.8% annual yield.
This company’s small size and narrow range of products makes it more nimble. Product innovation will serve as a catalyst for future growth.
Conclusion
These companies make needed products with beloved brand names indicating that you shouldn’t need to worry about obsolescence. They will make a worthy addition to your Motley Fool Watch List.
The article Building a Watch List From Household Items originally appeared on Fool.com and is written by William Bias.
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