Company Analysis: Procter & Gamble (Ticker: PG)
Procter & Gamble (P&G) is one of the largest American consumer goods companies, based in Cincinnati, Ohio, in the United States.
In the spirit of full transparency, the 3 founders of Ockham Finance started our corporate careers at P&G, and we have a special place in our hearts for it. To give you a little background, P&G has been producing household consumer goods for over a century. Today, it generates over $80 billion in revenue and operates in more than 150 countries. Its product portfolio includes many brands with over $1 billion in sales, including Pampers, Tide, Ariel, Crest, Gillette, and Charmin, among many others. Its stock trades at around $160 as of today, and its dividend yield is approximately 2.5%.
Its more traditional competitors are the other major ‘FMCG’ (Fast Moving Consumer Goods) or ‘CPG’ (Consumer Packaged Goods) companies: Unilever, Kimberly-Clark, Reckitt-Benckiser, Henkel, Colgate-Palmolive, etc.
Over the last decade, the barriers to entry for starting new companies and brands in the consumer goods world have been tremendously reduced, both on the production side (it's relatively easy to hire someone to make your products) and on the promotion, marketing, and sales side (with the opening and proliferation of digital channels). That's why P&G and the industry as a whole have to compete not only against their major rivals but also against thousands of small and medium-sized businesses, or startups. If you take a look around your home, you'll surely find both mass-produced products and other, more niche ones.
In terms of business performance and its standing on the stock market, P&G is what you might call an "oil tanker"—meaning a very large, heavy ship that moves slowly but surely, staying relatively stable in a storm: a reliable stock. It has leaders who steer the ship with a level head and with ambitious yet achievable business goals. Annual growth targets are generally set between 1% and 5%, and they end up delivering those results most years. They also maintain a strong focus on cost reduction, which makes their profit margins (gross profit margin) among the highest compared to the competition.
What are some of the keys to its success?
A deeply rooted corporate culture, with widely applied principles of leadership and internal talent development
A highly diversified product portfolio, which minimizes the risk that might exist within a specific category or brand
Prioritizing product innovation: If you're the first to launch something the public loves, more people will buy it, and you can charge a higher price for your product
Broad market coverage, which spreads out financial risk. Nevertheless, approximately 50% of its sales are still concentrated in the US
Why include a company like P&G in your stock portfolio?
If you're looking for stability in your portfolio, P&G can be a good choice: The stock doesn't fluctuate as aggressively as stocks in the Tech sector, for example, which can be a good thing during market downturns, but less so during market upswings. Generally, you'll see P&G's stock hold its value or even rise when the market is volatile and most other stocks are down.
If you're looking to earn income, or DIVIDENDS, from your stocks: P&G is known for paying dividends to its shareholders. This means that every quarter, the company declares a dividend and pays a certain amount to each shareholder. For example, in the first quarter of 2025, it paid a dividend of $1.0568 per share. If we annualize this payment (meaning, multiply it by 4), it means P&G pays approximately $4.22 per share annually. If the stock price today is $160, this translates to a dividend yield of 2.64% per year. On top of that, you have the stock's value growth, which has historically been around 2% per year. Something quite special about P&G's dividends is that the company has increased its quarterly dividend payment for 69 consecutive years. It's something shareholders count on, regardless of whether P&G's stock price goes up or down.
In summary, P&G is a reliable and conservative stock, worth considering as part of a balanced portfolio where the goal is to generate income through dividends.
Javier Neves
Ockham Finance Founder
We created Ockham Finance to equip you with financial knowledge so you can easily understand the world of finance, make better decisions, and take control of your financial future. Click here to access our library of short and easy courses to build your knowledge 3 minutes at a time. Visit our blog for new content every week on financial world news, stock and company analyses, financial book reviews, and much more. Subscribe to get access to exclusive content.
