Key Points
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Procter & Gamble’s dividend increase streak spans 71 years.
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The company started boosting its payout way before the Moon landing.
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That run has been durable across at least 10 recessions.
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It might be difficult for some of us, but think about the 1950s for a moment. Specifically, the year 1955. What’s significant about that year?
It’s the year in which Procter & Gamble (NYSE: PG) started raising its dividend, a streak that remains alive and well today at 71 years. Not only does that make the consumer staples Goliath a Dividend King, or one of the corporations with a payout-increase streak of at least 50 years, it also means the Tide maker is tied for the third-largest dividend-increase streak among U.S. companies.
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Think about that. Procter & Gamble’s run of consecutive dividend increases is nearly as old as color television, predates the Moon landing by 14 years, and began nearly 20 years before women could get credit cards without a male co-signer. In other words, Procter & Gamble’s devotion to steady dividend hikes puts the “long” in “longevity.”
Durable in trying economic environments
Call it certainty, consistency, or dependability, but those are very much the reasons why so many investors embrace Dividend Kings, including Procter & Gamble. Market participants certainly love all-weather durability, which the Febreze maker has.
Think about P&G’s dividend reliability in the context of recessions. The experts at the National Bureau of Economic Research (NBER) say there have been 10 official recessions since 1955. Some, such as the COVID-19 economic contraction of 2020, were brief. Others, including the 1981-82 recession and the global financial crisis earlier this century, lasted well over a year.
Through all of that, good times and bad, Procter & Gamble’s dividend ticked higher every year. That’s the type of dependability that dividend growth investors should prioritize. The consumer defensive label isn’t a guarantee against future negative action. Some of the sector’s previously storied names have cut payouts.
However, Procter & Gamble’s dividend is considered safe, and its payout ratio of 67.8% of free cash flow isn’t alarmingly high, particularly when accounting for one of the highest levels of free cash flow in the household products industry. Those are among the reasons why I’m bullish on P&G heading into 2027, even though the stock is up 16% year to date.
More reasons to like P&G in 2027
Indeed, P&G stock is hot this year, but it can keep the good times rolling in 2027, particularly if jitters about the artificial intelligence (AI) trade linger. The U.S. Election Day rebuke of data centers in some states may be a sign that some investors will lean into defensive stocks heading into the new year.
Speaking of Election Day, congressional power changed hands. That’s not necessarily an alarm bell for investors, but uncertainty about how legislative agendas will shape up could compel market participants to gravitate toward lower-volatility names, such as P&G.
There’s talk that the new congressional majority could push through new spending initiatives, potentially stoking inflation. Hopefully, inflation won’t rise, but if it does, Procter & Gamble’s compound annual dividend growth rate (CAGR) of 4.9% over the past 10 years should be enough to keep pace with or beat inflation.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
