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Is Procter & Gamble Co (NYSE:PG) the Best Dividend Aristocrat Stock To Buy Now?

Fahad Saleem
·4-min read

Procter & Gamble Co (NYSE:PG) ranks 8th in Insider Monkey's list of the 10 Best Dividend Aristocrat Stocks to Buy Now.

Before analyzing the stock, let's see what's happening in the dividend investing space these days.

Dividend growth investing strategy is in the spotlight these days as investors scramble to offset market risks in a higher-for-longer environment where interest rates aren’t expected to come down anytime soon. Matt Powers, Powers Advisory Group President, while talking to CNBC, recently said that while a high interest rate environment is a headwind for dividend growth strategy, he is looking to buy more dividend growth stocks and practice patience in the current scenario. The analyst said his dividend income strategy is looking to increase total returns by preferring dividend growth stocks instead of high-yield dividend stocks. Matt Powers said that he looks for 10-year track record of dividend growth while choosing stocks.

How to Choose Dividend Growth Stocks

He highlighted that payout ratio is one of the most important metrics in dividend strategies. For example, one of the notable picks of Matt Powers is MasterCard, whose payout ratio is less than 30%. This, according to Powers, shows that the company is investing significantly to grow. He's also picking up Hershey on the back of rising cocoa prices. Lockheed Martin is another dividend growth stock pick of the analyst amid the geopolitical situation that bodes well for companies like Lockheed. This shows instead of limiting focus to yields, dividend growth investors should focus on core business strengths and catalysts because these are the factors that affect dividend payment and income growth trajectory of companies.

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Dividend investing has always sparked investor interest amid a proven track record of dividend strategies. A Raymond James report titled "The Power of Dividends in a Portfolio" highlighted that $1 invested in the S&P 500 in December 1929 would have grown to $57 over the following 75 years. But the same $1 invested along with reinvested dividends would have grown to a whopping $1,353.

Dividend stocks have also contributed heavily to the total market returns over the past several decades. From 1930 to 2023, 40% of the annualized total return of the S&P 500 came from payment and reinvestment of dividends.

Photo by Joshua Hoehne on Unsplash

Procter & Gamble Co (NYSE:PG)

Number of Hedge Fund Investors: 69

Procter & Gamble Co (NYSE:PG) is one of the most coveted dividend stocks in the market, with 68 years of consistent dividend increases. Insider Monkey's database of 919 hedge funds shows that 69 hedge funds reported owning stakes in Procter & Gamble Co (NYSE:PG) as of the end of the March quarter. The biggest stake in Procter & Gamble Co (NYSE:PG) in this period is of Ken Fisher's Fisher Asset Management which owns a $2.7 billion stake in Procter & Gamble Co (NYSE:PG). In  April Procter & Gamble Co (NYSE:PG) announced a 7% dividend increase, cementing its reputation as one of the top dividend-paying companies that remain strong despite market volatility.

Procter & Gamble Co's (NYSE:PG) annual dividend growth rate over the past three years came in at 6.70%, while the growth rate stood at 4.50% over the past decade.

In April, Procter & Gamble Co (NYSE:PG) posted fiscal Q3 results. Adjusted EPS in the period came in at $1.52, beating estimates by $0.11. Revenue in the quarter inched up 0.6% year over year to $20.2 billion, missing estimates by $240 million.

Madison Sustainable Equity Fund stated the following regarding The Procter & Gamble Company (NYSE:PG) in its fourth quarter 2023 investor letter:

“We sold The Procter & Gamble Company (NYSE:PG). After two years of strong pricing growth, the company is facing slower market growth in both the US and Europe. China, the company’s second largest individual market, is facing a protracted downturn with poor visibility on when fundamentals will improve.”

Procter & Gamble Company (NYSE:PG) ranks 8th on our list of the 10 Best Dividend Aristocrat Stocks To Buy Now.

Click to see the full list of 10 Best Dividend Aristocrat Stocks to Buy Now.

If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.