P&G: Still a Reliable Ride (and a Bit of a Surprise)

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Last year, I rather boldly declared Procter & Gamble (PG +0.57%) my top value stock for 2026. It seemed a sensible enough notion at the time. P&G, you see, isn’t just a company; it’s a sort of anthropological study in miniature. They make the things we all use, day in, day out – laundry detergent, nappies, toothpaste. The sheer ubiquity of it all is… well, it’s remarkable. They’ve got a brand for practically every human need, and a surprising number of those we didn’t even know we had.

Investors have long turned to P&G as a sort of financial bedrock – a company that reliably pumps out dividends. Sixty-nine consecutive years of dividend increases is… a feat. It’s the sort of consistency that makes you wonder if someone up there is secretly a P&G shareholder. A Dividend King, they call it. Which sounds rather grand, doesn’t it? Like a medieval monarch dispensing financial bounty.

Now, here’s where things get interesting. I expected a steady, predictable climb. What I didn’t anticipate was a rather exuberant 11.1% surge in 2026, handily beating the S&P 500’s more modest 1.3% gain. It’s as if the market suddenly remembered that people will always need toilet paper, regardless of the latest tech bubble. A reassuring thought, frankly.

So, what’s driving this rally, and is P&G still a good bet? Let’s have a look.

P&G: Solid, But Not Exactly Setting the World Alight

My initial assessment of P&G hinged on its reasonable valuation, impressive portfolio of brands, a supply chain that operates with almost unnerving efficiency, and those reliably high operating margins. It’s a well-oiled machine, P&G. But last year, it was one of the slower-moving cogs in the Dow Jones Industrial Average, dipping more than 10%. A bit like a stately ocean liner being overtaken by a jet ski. The consumer staples sector, generally, was out of favour as investors chased the flashier, faster-growing opportunities. Perfectly understandable, of course. Who doesn’t like a bit of excitement?

Heading into 2026, P&G’s valuation was, shall we say, unpretentious. Then, on January 22nd, they announced their second-quarter results. Flat organic sales growth. A slightly lowered forecast. Not disastrous, but not exactly fireworks either. P&G continues to generate a prodigious amount of free cash flow – enough to keep the dividend flowing and buy back shares. But it’s not exactly firing on all cylinders. It’s more like… a very efficient, slightly subdued idling.

P&G traditionally protects its margins by raising prices. But consumers, understandably, are starting to resist. Higher living costs have a way of focusing the mind. So, the new CEO is shifting the focus towards growing sales volume. A sensible move, I think. It might mean a slight dip in margins, but it’s better to sell more stuff at a reasonable price than to price yourself out of the market. A lesson many a company has learned the hard way.

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A Sector-Wide Lift

You might be wondering why P&G is up so much despite those rather modest results. The answer, surprisingly, has less to do with what P&G is doing and more to do with broader market dynamics. It’s a bit like being swept along by a tide. You can paddle furiously, but ultimately, the current will have its way.

Company-specific fundamentals drive long-term stock prices, naturally. But in the short term, emotion and sentiment can be surprisingly powerful forces. And in this case, P&G is benefiting from a broader rally in the consumer staples sector – up 13% year to date. Consistency and reliability aren’t always glamorous, but they become rather appealing when growth stocks start to wobble. It’s a bit like switching from a sports car to a comfortable, reliable sedan. You might not get the same adrenaline rush, but you’ll get there in comfort.

Investors, it seems, are starting to scrutinize those AI investments and question their long-term impact. Suddenly, the promise of exponential growth seems a little… less certain. And that’s when companies like P&G, with their steady, predictable earnings, start to look rather attractive.

P&G: Still a Solid Long-Term Bet

P&G could certainly continue to rally if investors keep flocking to value sectors. But for the stock to truly thrive over the long term, P&G needs to reduce its reliance on price increases. They’re already doing that, thankfully, through product innovation and operational efficiency – a strategy they call “constructive disruption.” It sounds a bit like an oxymoron, but it seems to be working.

All told, P&G remains a well-rounded company with a solid 2.7% dividend yield. It’s not as cheap as it used to be, but it’s still a good value at 23 times projected 2026 earnings. It’s not going to make you rich overnight, but it’s a reliable, dependable investment – and in a world full of uncertainty, that’s worth a great deal.

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2026-02-11 18:15