Portfolio Ideas

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>>> My Top Stock Pick for Stability Amid Inflation


Motley Fool

By Dan Caplinger and Demitri Kalogeropoulos

Mar 12, 2022


https://www.fool.com/investing/2022/03/12/my-top-stock-pick-for-stability-amid-inflation/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Consistent sales, growth, and innovation continue to fuel this global brand.

If you're trying to find a solid stock to shine in the current inflationary environment, this one should be near the top of the list. In this video clip from "Ask Us Anything" on Motley Fool Live, recorded on Feb. 28, Fool.com contributors Dan Caplinger and Demitri Kalogeropoulos look at what makes Proctor & Gamble ( PG 0.38% ) enticing to investors.

Dan Caplinger: What kinds of inflation-proof stocks are you looking at? What do you like today, especially after what we're seeing, the market has stabilized today, it looked like it was going to be a really steep down day. Not quite as big of a down day as many had feared, but what are you looking at today that looks attractive to you?

Demitri Kalogeropoulos: Yeah absolutely. I'm glad you mentioned the brand power and pricing power. The stock I wanted to highlight today is Procter & Gamble. I like that stock in just about any environment. But I think today in this inflationary world it can shine through a lot of its competitive advantages to become clear.

Everyone's heard of this company, it's one of the biggest out there, $380 billion market cap. It's got dozens of really great global brands, it's a lot of products, I'm sure you've got probably about a dozen of their products in your houses. If you're an average consumer, things like Tide detergent, Pampers diapers, Crest toothpaste. They've got all kinds of skincare, shampoo is just millions of products that millions of people use every day.

It's a great stock, I think because it's got a really good, strong business there. Their sales were looking good coming into the pandemic, but they've really sort of solidified their lock on a lot of these niches through the pandemic. They've consistently been outgrowing peers like Kimberly Clark ( KMB -0.10% ).

Sales were up about 6% this past quarter on top of really big growth before that. Very diverse business globally and portfolio-wise, they've got all that strength there so it tends to not drop, be hit really hard by recessions and things like that. Stability is really great there.

But you talked about pricing power. They can pass along a lot of these higher costs because of that brand position and that size. But also because their innovation that they really have a great ability to consistently innovate on the premium side of these products like Tide Pods is one example to push those margins higher.

I also love the dividend yield is up 2.2%, which is a lot more than you can get in a broad index fund today and that helps with my purchasing power as an investor, and that dividend is increased every year for the past 64 years, and that includes a 6% increase last year and the PG typically raises its dividend around in April so at about six weeks or so.

We'll almost certainly get another raise from P&G and it could be another significant one, maybe even a little bit faster than last year's 6%. Just a good stock to keep on your watchlist. That really good cash flow, earnings, and stability stock.

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