Up 16% This Year, How Long Can Procter & Gamble Continue Outperforming the S&P 500?
Key Points
Procter & Gamble is beating the S&P 500 by a healthy margin this year.
There’s no ceiling on how long that scenario will last.
- 10 stocks we like better than Procter & Gamble ›
Defensive consumer staples stocks are back in the limelight, with the sector on pace for its best monthly showing in 28 years.
Count Procter & Gamble (NYSE: PG) among the contributors to the sector's strength. One of the largest consumer staples companies by market cap, P&G was up 15.6% year-to-date as of Oct. 23, a 320-basis-point advantage over the S&P 500. Another fun fact about the Tide maker's 2026 showing: It's one of just 13 Dow Jones Industrial Average components up at least 10% this year.
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Procter & Gamble is hot and it might be able to keep outpacing the broader market. Image source: Getty Images.
Shares of the Gillette parent certainly have the potential to continue outpacing the broader market. This Dividend King -- a company with a dividend increase streak of at least 50 years -- yields 2.7%. That's more than double the yield on the S&P 500. Factor in the stock's impressive 2026 run and some investors may be drawn to Procter & Gamble over higher-yielding Treasuries because the former has the potential to deliver more long-term upside.
Plus, there's no telling how long market participants will remain skittish about the artificial intelligence (AI) trade. To be sure, those jitters are playing a big role in driving consumer staples stocks, including P&G, higher.
Still, investors who are mulling P&G today have some important points to ponder. First, the broader consumer staples sector is richly valued. Recently, the S&P 500 Consumer Staples Index, of which P&G is a member, sported a higher price-to-earnings ratio (P/E ratio) than the equivalent technology index.
Valuation alone isn't a reason to buy or sell a stock, but there's something else to consider. Some experts believe that the rotation out of tech stocks into defensive stocks may be a warning sign of looming weakness for the broader market. Maybe that prediction proves accurate. Maybe it doesn't. But if it does, the outperformance of staple stocks, including P&G, may simply be a case of "less bad."
Should you buy stock in Procter & Gamble right now?
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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