Motley Fool: Procter & Gamble is a steady dividend grower

Procter & Gamble (NYSE: PG) recently announced its 70th consecutive annual dividend raise, good for a yield of 2.9% (as of early May). The company has averaged annual dividend hikes of nearly 5% over the past decade.

Procter & Gamble is the largest household and personal products company in the world, and the thirdlargest U.S. consumer staples company by market value. Its portfolio of leading brands spans many categories. To give just a few examples: diapers (Pampers, Luvs), paper towels (Bounty), toilet paper (Charmin), facial tissues (Puffs), feminine products (Tampax, Always), grooming and hair care (Gillette, Old Spice, Pantene), cleaning products (Dawn, Cascade, Mr. Clean), laundry detergents (Tide, Gain), oral and personal healthcare products (Crest, Oral-B, Pepto-Bismol), and skin and personal care (Olay, Old Spice).

Procter & Gamble is a mature bluechip stock built for longevity. Its business is recession-resistant, as demand for its products tends to remain consistent across economic cycles.

It’s a good idea to have some safer, steadier stocks in your portfolio, especially in recent turbulent market conditions. Plus, a dividend yield of nearly 3% is solid, and it will only get more attractive if interest rates begin to fall. Investors can buy P&G on sale these days, as it’s trading with a recent price-to-earnings ratio of 21.6, below its five-year average of 25.5.

My dumbest investment

My most regrettable investment was when I was able to buy a few shares of Facebook (now Meta Platforms) at its initial public offering. I sold them within a month when they dropped below the IPO price. I never bought the stock again. – J., online

The Fool responds: Facebook’s IPO was not initially a huge success. That serves as a good reminder that often, it’s best to give a newly issued stock some time to settle down before investing – perhaps as much as a year. Some IPOs surge unreasonably high on enthusiasm and speculation in their first months, and others, like Facebook, see their shares sink.

Facebook went public on May 18, 2012, with shares initially priced at $38 per share. They closed at $38.23 on their first day. Within months, the stock dropped by more than 50%, as investors grew skeptical about how Facebook would generate profits from its expansion into the mobile realm. Of course, the company is now hugely successful, with a recent market value of over $1.5 trillion and shares trading at more than 16 times their IPO price. Meta is investing heavily in artificial intelligence now, and many are bullish about it.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)

Ask the fool

Q. Is it better to invest in individual stocks through a brokerage account or to invest via a 401(k) account? – L.K., Greensburg, Pennsylvania

A. Both are solid choices. If you have the time, skill and interest to study stocks and choose which ones to buy and sell, that’s great. With a 401(k) account, you’ll typically only be able to select from a limited menu of investments, most or all of which may be mutual funds. They might not deliver the amazing returns that a strong growth stock could, but they can be less risky, as your money generally will be spread across many securities. Note that 401(k)s offer tax breaks, and if your employer matches part of your contributions, that’s free money.

You don’t even have to decide between the two options – consider investing through your 401(k) and also investing in some individual stocks or exchange-traded funds via a good brokerage. (You can read about good brokerages at fool.com/money.)

Q. Is it sketchy if a brokerage charges $0 in trading commissions? How can they profit from that? – B.B., Sierra Vista, Arizona

A. It’s not sketchy at all, and most major online brokerages are charging little to nothing for most trades these days. They don’t have to profit by charging you for trades because they have plenty of other ways to make money, such as investing (and earning interest on) cash in customer accounts. They may also charge fees for paper statements, account maintenance, account inactivity, cryptocurrency trading, retirement planning services and research reports, among other things. And many brokerages collect fractions of pennies per share traded for sending their customers’ buy or sell orders to market makers for execution.