3 Consumer Business Companies That Are Dividend Machines
Consumer product companies trade at relatively high valuations with P/E ratios in the 20s. This is despite the fact that these companies aren’t really growing their profits that quickly if at all. The reason for this is that consumer product companies have extremely stable businesses. Furthermore, they consistently pay dividends to their shareholders.
In fact, the three companies I mention here have been paying dividends for over a century! They have done so through two world wars, the Great Depression, the banking panics of 1907 and of 2008, the Cold War, recessions, commodity shortages, and so on. So while their stocks may be overvalued, and while they may go down, you can be pretty sure that four times a year you will receive a dividend payment from them if you purchase their stocks.
1. Procter and Gamble (NYSE:PG)
Procter and Gamble is the poster child for “widows and orphans” investing. The company has been around since the 1800s creating and selling consumer goods. It is one of the largest companies in the world and it owns some of the leading brands from Gillette, Crest, and Swiffer. These are products that people need to buy even if they have very little money to spend. Therefore Procter and Gamble has been performing relatively well despite the fact that the economy has been weak.
The stock currently trades at 22 times earnings, and it isn’t growing these earnings due to a strong U.S. dollar hurting international profits, and strong commodity prices that have led to an increase in input costs. Nevertheless the company has strong margins and several stable income sources. While the stock may be expensive it is expensive in a market where certainty and stability trade at a premium, and any weakness can be purchased.