Updated on February 5th, 2025 by Felix Martinez
The Dividend Aristocrats are widely known as the best dividend growth stocks to buy and hold for the long term. These companies have generated strong profits year after year, even during recessions, and have proven the ability to grow their earnings steadily over many years.
The Dividend Aristocrats are a group of companies in the S&P 500 Index, with 25+ consecutive years of dividend increases. Of the stocks that comprise the S&P 500 Index, just 69 currently qualify as Dividend Aristocrats.
You can download an Excel spreadsheet with the full list of Dividend Aristocrats by clicking on the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
Once per year, we review each of the Dividend Aristocrats. Up next in the series is the consumer products behemoth Procter & Gamble (PG). P&G has paid dividends for 134 years and has increased its dividend for an amazing 68 consecutive years.
Not only is the company a Dividend Aristocrat, but it is also a Dividend King as well. The Dividend Kings have increased their dividends for 50+ consecutive years.
Procter & Gamble is one of the most well-known dividend stocks, largely due to its extremely long dividend history and its widely recognizable brands.
This article will discuss P&G’s recent portfolio transformation, future growth prospects, and stock valuation.
Business Overview
Procter & Gamble is a consumer products giant that sells its products in more than 180 countries and generates over $85 billion in annual sales. Some of its core brands include Gillette, Tide, Charmin, Crest, Pampers, Febreze, Head & Shoulders, Bounty, Oral-B, and many more.
The company trades with a market capitalization of approximately $394 billion. This qualifies P&G as a mega-cap stock.
During P&G’s massive portfolio restructuring over the past few years, the company sold off dozens of its consumer brands. Today, P&G has slimmed down to just ~65 brands, down from 170 previously.
The benefit of the restructuring is that P&G held on to its core consumer brands such as Tide, Charmin, Pampers, Gillette, and Crest, while shedding low-margin businesses with limited growth potential.
The effect of the transformation is that P&G is now a nimbler, more flexible organization with improved growth prospects.
Source: Investor Presentation
Growth Prospects
P&G’s slimmed-down portfolio has made the company more efficient, with lower costs and higher margins. In addition, P&G received billions of dollars from its various asset sales, a large portion of which was used to buy back stock. These share repurchases improved P&G’s earnings-per-share growth.
In late January, Procter & Gamble reported (1/22/25) financial results for the second quarter of fiscal 2025 (its fiscal year ends June 30th). The company reported a 2% increase in net sales for the second quarter of fiscal year 2025, reaching $21.9 billion. Organic sales, which exclude foreign exchange, acquisitions, and divestitures, rose by 3%. Diluted earnings per share (EPS) increased by 34% to $1.88, primarily due to a prior-year impairment of the Gillette intangible asset, while core EPS grew by 2%. Operating cash flow for the quarter was $4.8 billion, with net earnings of $4.7 billion. The company returned $4.9 billion to shareholders through $2.4 billion in dividends and $2.5 billion in share repurchases.
P&G’s performance was driven by organic sales growth across its key segments. The Beauty segment saw a 2% increase, with Hair Care benefiting from volume growth in multiple regions, while Skin Care declined due to lower sales of its premium SK-II brand. The Grooming and Health Care segments each posted 2% and 3% organic sales growth, respectively, supported by product innovation. Fabric & Home Care increased by 3% due to stronger North American demand, and Baby, Feminine & Family Care led with 4% growth, bolstered by high demand for Family Care products. Despite unfavorable foreign exchange impacts and cost headwinds, P&G maintained strong profitability through productivity savings and pricing adjustments.
For fiscal year 2025, P&G reaffirmed its guidance, projecting 2% to 4% all-in sales growth and 3% to 5% organic sales growth. Diluted EPS growth is expected to range between 10% and 12%, with core EPS anticipated to rise by 5% to 7%, placing the midpoint estimate at $6.98 per share. The company anticipates a $200 million commodity cost headwind and a $300 million foreign exchange impact, equating to a $0.20 per share reduction. P&G remains committed to returning value to shareholders, planning to pay approximately $10 billion in dividends and repurchase $6 to $7 billion in common shares. Capital spending is projected to be 4% to 5% of net sales, with an expected free cash flow productivity of 90%.
We are forecasting 5% annual earnings-per-share growth over the next five years.
Source: Investor Presentation
Competitive Advantages & Recession Performance
P&G has several competitive advantages. The first is its strong brand portfolio. P&G has several brands that generate $1 billion or more in annual sales. The ~65 remaining core brands hold leadership positions in their respective categories. These products are associated with high quality, and consumers will pay a premium for them.
The company invests heavily in advertising to retain its competitive position, which it can do thanks to its financial strength. The company invests billions more each year in research and development. This investment is a competitive advantage for P&G; R&D fuels product innovation, while advertising helps market new products and gain share.
P&G’s competitive advantages allow the company to remain profitable, even during periods of recession. Earnings held up very well during the Great Recession:
- 2007 earnings-per-share of $3.04
- 2008 earnings-per-share of $3.64 (19.7% increase)
- 2009 earnings-per-share of $3.58 (-1.6% decline)
- 2010 earnings-per-share of $3.53 (-1.4% decline)
As you can see, P&G had a very strong year in 2008, with nearly 20% earnings growth. Earnings dipped only mildly in the following two years.
This was a very strong performance in one of the worst economic downturns in the past several decades. The company continued to perform well during 2020-2021 when the coronavirus pandemic sent the U.S. economy into recession. Once again, P&G generated stable profits and raised its dividend.
P&G has a recession-resistant business model. Put simply, everyone needs paper towels, toothpaste, razors, and other P&G products, regardless of the economic climate.
Valuation & Expected Returns
Based on the expected earnings-per-share of $6.98 for fiscal 2025, along with a current stock price of ~$168, P&G is presently trading at a price-to-earnings ratio of 24.
Over the past decade, shares traded with an average valuation of around 20 times earnings. As such, shares appear to be more than fully valued. The improved growth prospects of the company appear to be priced in, and then some.
If P&G’s valuation were to revert back to 20 times earnings, which is our estimate of fair value, future shareholder returns would face a -3.5% annual reduction over the next five years.
Earnings growth and dividends will help offset the impact of a contracting price-to-earnings multiple. For example, we expect P&G to generate 5% annual earnings growth through 2029, and the stock has a current dividend yield of 2.4%.
However, adding it all up leaves uninspiring total return potential in the low single-digits on an annualized basis. Total returns are expected at 3.9% per year, as the impact of a declining valuation multiple effectively offsets the company’s expected EPS growth.
Granted, this estimate could be too conservative if shares were to continue trading at an elevated valuation, or if growth were to formulate at a quicker pace.
The current dividend payout is well-covered by earnings. Based on expected fiscal 2025 earnings, P&G has a payout ratio of just over 58%. This leaves enough cushion for future dividend increases each year in the low-to-mid single-digit range.
Investors should expect P&G to continue increasing its dividend each year for many years to come. It has the brand strength, competitive advantages, and profitability to maintain its steady annual dividend increases over the long term.
Final Thoughts
P&G has many strong qualities that make it a time-tested dividend growth company. It has paid a dividend for 134 years. It has also earned a place on both the Dividend Aristocrats and Dividend Kings lists.
However, the current valuation – notably above its historical average despite a rising-rates environment – leaves something to be desired from a value perspective.
As a result, we have assigned shares a hold recommendation, given that valuation concerns overshadow the company’s dividend yield and dividend growth prospects.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the ultimate dividend growth stocks, the Dividend Kings list is comprised of stocks with 50+ years of consecutive dividend increases
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: