My Top Value Stock to Buy for 2026 (and It's Not Even Close)

Procter & Gamble (NYSE: PG) is one of the largest household and personal care companies in the world. With dozens of category-leading brands spanning fabric; home care; hair, skin, and personal care; personal healthcare; oral care; and baby, feminine, and family care, the company has built a reputation for its resilience during recessions and stable free-cash-flow generation it passes along to shareholders through dividends and buybacks.

But P&G is in a bit of a rut, along with many of its peers in the industry. Growth has ground to a halt as consumers resist price increases and turn to value. Tariffs and supply chain challenges have led to cost pressures, which P&G is tackling with a multiyear restructuring plan.

Despite the near-term headwinds, here's why P&G is a compelling buy for investors looking for an ultra-reliable dividend-paying value stock.

Image source: Procter & Gamble.

Navigating the slowdown

P&G reported its results for the first quarter of fiscal 2026, ended Sept. 30, on Oct. 24. It maintained the same guidance it gave in July -- net sales growth of 1% to 5% and diluted earnings per share (EPS) growth of 3% to 9% compared to $6.51 per share in fiscal 2025.

In P&G's latest quarter, the company didn't generate any organic sales growth from its fabric and home care or baby, feminine, and family care segments. It saw a 1% uptick in healthcare, a 3% increase in grooming, and a 6% increase in beauty. P&G had a particularly strong quarter in Latin America and Greater China.

P&G is at its best when it leverages its global brand recognition while adapting to local preferences, supply chains, and marketing dynamics. For example, P&G attributed its double-digit Greater China organic sales growth in Pampers and its luxury skin care brand, SK-II, to digital commerce efforts. It's classic P&G: taking one of its category-leading brands -- in this case, Pampers -- and finding a way to make that brand resonate with a specific market.

All told, P&G's results aren't great and its guidance is lackluster, but it is still growing in an environment when many of its peers are experiencing flat or even negative organic sales and earnings growth.

P&G's efficiency improvements could drive margins even higher

Investing is all about expectations. With the household and personal care product industry in a slowdown, expectations are low and stock prices are down. At times like this, it's best for investors not to overcomplicate the buying decision and simply go with the industry leader in P&G.

P&G's product mix and global reach give it many advantages over its competitors. You may not think that making paper towels and detergent can be as profitable as developing highly advanced mobile phones. But it's close. In its latest quarter, P&G's operating margin was a staggering 26.7%. Apple's operating margin in its latest quarter was 30%.

P&G keeps its costs low by obsessing over the efficiency of its supply chain, from how it captures data, to how it works with suppliers and retail partners, to its payment processes, last-mile delivery, and more. On Friday's earnings call, P&G discussed the components of its restructuring, including developing a more effective portfolio that can perform well across global markets and making its supply chain and manufacturing more agile. It is reducing its non-manufacturing headcount by 7,000 people to create digitally enabled, data-focused teams that are smaller and more flexible. And finally, Supply Chain 3.0 -- which P&G has been building for years -- incorporates automation and digital tools into its supply chain to be faster and more consumer-focused.

In sum, P&G is well positioned to benefit from artificial intelligence-driven improvements to its supply chain, which should support margin expansion even during challenging times and further strengthen its recession resilience.

Returning capital to shareholders

Out of the thousands of publicly traded U.S. companies, you can count on one hand the number of stocks that come close to P&G regarding dividend reliability. The company has increased its dividend for 69 consecutive years, making it one of the longest-tenured Dividend Kings.

Even in its current growth slowdown, P&G's dividend is affordable. The midpoint of its fiscal 2026 adjusted earnings guidance is $6.90 per share. P&G expects to convert 85% to 90% of adjusted earnings into free cash flow, which it will use to support a whopping $10 billion in dividend payments and $5 billion in buybacks for fiscal 2026.

Even during a slowdown, P&G generates so much cash that it can afford to grow its dividend and repurchase stock. That's basically a $5 billion lever P&G can pull if the operating environment gets worse, or if it wants to accelerate investment in a specific category.

A foundational stock for generating passive income

With a dividend yield of 2.8% and an impeccable track record for supporting dividend raises with cash, P&G stands out as a top buy for passive income investors.

The stock is also a great value, with a price-to-earnings (P/E) ratio of 23.5 compared to a 10-year median P/E of 25.7.

In today's premium-priced market, P&G is sure to appeal to investors seeking a high-quality company at a compelling valuation with an elite dividend.

Daniel Foelber has positions in Procter & Gamble. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.