3 Reasons to Buy and Hold This Wide-Moat Dividend King's Stock Forever
Key Points
Procter & Gamble has enough sway with customers to pull its products through distribution channels.
Its raw marketing firepower provides a formidable advantage over competitors with smaller ad budgets.
Past dividend performance is no guarantee of future results, but it is a pretty good indication of what’s likely.
Are you shopping for a dividend stock you can comfortably buy and hold forever? It's not as easy as it used to be. Yesteryear's stalwart companies aren't guaranteed survivors anymore. The advent of the internet -- and, more recently, artificial intelligence -- is making it easier than ever to compete with titans in any industry.
There's one well-known dividend-paying blue chip stock, however, that's still as attractive as it ever was because its competitive moat is as wide today as it's ever been. That's consumer goods behemoth Procter & Gamble (NYSE: PG).
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Three reasons to buy and hold Procter & Gamble stock forever
Even if you don't use any of them (which is unlikely), you know the company's products. Procter & Gamble is the parent company of Tide laundry detergent, Charmin toilet paper, Gillette razors, Crest toothpaste, and more. Several of its goods are either the first- or second-best sellers in their particular product categories.
That's not just due to luck, though, or even the direct result of being around for longer. In fact, the three reasons so many of P&G's brands dominate their respective categories are the same reasons that income-seeking investors can comfortably buy and hold this consumer staples name forever.
1. It's got leverage with retailers
OK, there is one competitive edge Procter enjoys that's at least partially the result of being around for nearly 200 years, allowing it to become the company we've known for decades now. That's the fact that retailers like Walmart and Kroger know many consumers step foot in their stores specifically to buy Procter & Gamble-made products. Once they're in their stores, these retailers then have a chance to sell these shoppers something else. It's also worth mentioning that P&G is one of the few suppliers that can push back on Walmart's distribution leverage.
2. Procter & Gamble can simply outspend its competitors' marketing efforts
Advertising isn't nearly as simple as it used to be. How and where consumers congregate is increasingly fragmented, and the internet has made these consumers savvier shoppers.
Image source: Getty Images.
Ultimately, though, the effectiveness of advertising is a function of how much of it a company can do. And few companies -- and even fewer direct competitors -- can even come close to spending what Procter & Gamble can on this front.
This outfit shelled out $10.2 billion on advertising last year (compared to revenue of $87 billion), making it one of the planet's very biggest marketers. For comparison, Clorox spent only about $750 million on advertising last year.
3. Its dividend's track record is too impressive to not maintain
Finally, while it's largely a function of the company's scale, Procter & Gamble boasts a dividend growth track record that's nothing less than jaw-dropping.
In April, the company announced its 70th consecutive annual dividend increase, making it a Dividend King, or a company that has increased its dividend for more than 50 consecutive years. Only five other companies have matched this feat, and only one has topped it. With such a rare reputation at stake, P&G is almost certainly going to do whatever it takes to maintain this uninterrupted growth indefinitely.
Newcomers will be plugging into a forward-looking dividend yield of 3%, by the way. That's more than you'd be getting from most other blue chip dividend stocks of this ilk right now.
James Brumley has positions in Procter & Gamble. The Motley Fool has positions in and recommends Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.