Procter & Gamble Co. (NYSE:PG) is a dividend aristocrat with its long history of 125 years, and the company has raised its dividend since 1957. The technology company currently offers a quarterly dividend of $0.699 per share, yielding around 3.08%. It is also the most loved stock of Warren Buffet and a consistent player in the Buffet’s portfolio over the years.
In the last year alone, P&G returned $7.4 Billion to investors through dividends and $8 billion through buybacks. The stock can be traded during markets trading hours and the company is operating mostly in the consumer packaged goods industry. Proctor & Gamble markets its products in about 180 countries through mass merchandisers, drug stores, grocery stores, department stores, and membership club stores among others.
Though, the consumer package good industry has been experiencing slowdown and intensifying market competition, P&G’s dividends look strong amid its cash generation and extensive revenue base. The company’s cash conversion ratio to income stood at 145% in the latest quarter. This means that P&G has generated 45% more in cash flows than its earnings. Therefore, the company’s dividend growth looks safe despite stagnant revenue and earnings growth amid strong market competition and micro-economic headwinds.
Looking at General Electric
On the other hand, General Electric (NYSE:GE) is the largest player in the diversified industrial industry. The company has made several significant changes in its business model over the last two decades, which retarded its financial performance compared to its peer group. Despite that, GE looks like an attractive pick for dividend investors with its high dividend yield.
The latest technology company currently offers a quarterly dividend of $0.23 per share, yielding around 2.93%. Its dividends are safe, as it is operating in a less capital intensive industry and the management have the potential to raise a significant amount of cash in a shorter period of time by selling its non-core assets.
In addition, GE’s strategy of moving its business model back towards its original industrial business could enhance its financial performance in the coming years. With its diversified business model, General Electric has significant potential to sustain its dividends. The company’s share price has also upside potential, amid its strategy to return back to original industrial businesses