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Are you looking for a new income-generating investment? Thanks to recently rising interest rates, there are plenty of good ones to choose from, including some dividend stocks that have seen their yields rise in step with these recent rate hikes.
There's one dividend-paying name, however, that arguably stands head and shoulders above the rest right now (no pun intended!). Its yield has actually fallen a bit in recent months (for a good reason), and the stock itself is admittedly not dirt cheap at the moment. It's a quality company with an amazing dividend pedigree, however, worth the price and its so-so dividend yield: Procter & Gamble (NYSE: PG).
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It's such a commonly suggested dividend stock that it's almost a cliché. But clichés are typically true, and for a well-deserved reason. That makes Procter & Gamble the ultimate dividend stock to buy at this time.
The consumer goods giant is parent to dozens of popular brands, including Tide laundry detergent, Bounty paper towels, Head & Shoulders shampoo, and Crest toothpaste.
And the depth and breadth of its product portfolio allows P&G to dominate North America's consumer goods industry. This is the same company behind Pampers and Luvs diapers, Charmin toilet paper, Gillette razors, Braun grooming devices, Pantene shampoos and conditioners, Cascade and Dawn dishwashing detergent, Oral-B dental floss, and more. Many of its products are the No.1 and No. 2 sellers in their respective categories.
Last fiscal year's $87 billion in sales makes it by far the biggest name in the consumer staples business.
Since its humble beginnings nearly 200 years ago, the company has been acquiring (or developing) new brands with real growth potential, and (for the most part) avoiding ones without that. And it did so at particularly opportune times that laid the groundwork for periods of explosive growth, like the economic boom following World War II -- when it developed Tide -- and in the mid 2000s when it bought Gillette.
There's an unfair advantage that comes with this size, too. It creates leverage with its retail partners since it is just as important to them as they are to the company because they know these products draw consumers to their stores, helping drive foot traffic with its own marketing effort.
The company enjoys another unfair advantage over its competitors. Its sheer size and subsequently deeper pockets mean it can afford to outspend its competitors on advertising. Management spent more than $10 billion on ads last fiscal year alone, making it one of the world's biggest advertisers. For comparison, Clorox only spent about $750 million on advertising last year.
Size can be a disadvantage by making a company unwieldy and limiting the potential for future expansion. To this end, Procter & Gamble actually lost a small amount of market share during the third calendar quarter of last year.
But it has already executed a smart recovery plan. Last quarter's organic revenue improved 4% year over year on a 2.4% increase in volume, with all 10 of its product categories reporting net growth. Management clearly knows how to solve problems and remain the market leader.
For income-minded investors, this persistent success and progress is evident in PG's performance as well as its dividend history. The company has paid a quarterly dividend like clockwork for decades now and has raised its payment every year for the past 70 years.
The forward-looking yield of 2.6% isn't thrilling -- respectable, but not thrilling. That's mostly due to strong share price performance in 2026 (up almost 15%). It's not like the dividend grows dramatically, either. The last increase was a modest 3%, more or less matching its growth rate for the past decade. The company's typical revenue growth isn't much better.
There's much to be said for reliability and consistency, though, and Procter & Gamble brings plenty of that to the table. It's survived dozens of recessions, while its dividend payments remained uninterrupted and shares continue to notch new records with each cyclical ebb and flow. Give some credit to the simple nature of its business, too. Consumers must always buy detergent ad toothpaste over and over again.
Just be patient and remember this is a (very) long-term stock. Each of these new record highs can materialize years after the previous one did. The dividend income in the interim makes it easier to wait things out.
Before you buy stock in Procter & Gamble, consider this:
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James Brumley has positions in Procter & Gamble. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The Ultimate Dividend Stock to Buy With $1,000 Right Now was originally published by The Motley Fool
