Over the past few years, investors who have bet on stocks in the low interest rate environment have been able to reap good returns.
Even 2020 was a positive year on balance despite the Corona crisis.
Investors who invested in a Dax ETF were able to post an increase of 3.8 percent in the end after the sharp slump in the spring.
Over a longer period of time and in view of the lack of investment alternatives outside of the stock market, however, the returns were significantly more attractive if an investor had a bit of stamina and provided his investment with a certain degree of diversification.
So far, there is one factor that investors have not had to pay attention to at all - inflation.
The power of pricing
That suddenly changed. Stockbrokers deal intensively with the topic. Not only because the central banks have to keep an eye on inflation rates in order to maintain their loose monetary policy. Investors should now also look around for possible profiteers from inflation - or at least focus on companies that are relatively robust in such a difficult market environment.
These companies certainly include companies with a certain power to set prices. Consumers will not immediately forego buying the respective product or switch to competing offers with every price increase, no matter how small. Accordingly, it is important to show strong brands that consumers trust so much that they do not want to miss their products even in difficult economic times. One such company is Procter & Gamble (P&G).
The American consumer goods group has been convincing many generations of consumers for many decades with well-known and popular brands such as Head & Shoulders, Old Spice, Braun, Gillette, Oral-B, Ariel, Febreze, Pampers or Always.
What is particularly pleasing for Procter & Gamble and other companies in the consumer goods sector is the fact that even in economically difficult times consumers think about food, their personal hygiene, diapers for the little ones or house cleaning and therefore need the appropriate tools and products.
Impressive dividend history
This fact is reflected in the success of the Cincinnati company founded in 1837. P&G has experienced and survived global crises and periods of high inflation. Even better: The group even coped with these difficult times so well that it has been able to pay a dividend to its shareholders since 1890, for 131 years in a row. In addition, shareholders have been able to look forward to increases in dividends for the past 65 years in a row. This makes the group one of the real “dividend aristocrats”. Companies that are among those who have continuously increased dividends for more than 25 years are ennobled on the stock exchange.
The company recently demonstrated that Procter & Gamble can cope well with the current situation with its report on the first quarter of the 2021/22 financial year (as of the end of September). Although the group had to cope with increased raw material costs, at the same time Procter & Gamble was able to compensate for these effects with price increases. Revenues were up five percent year-on-year to $ 20.34 billion, above the average analyst estimate of $ 19.91 billion. Organically, the plus was four percent. Market expectations were also beaten for adjusted earnings per share. However, there was one downer: the company had to raise inflation expectations. However, previous experience has shown that Procter & Gamble should be able to:to deal with it - which is also shown by the long-term chart history.
Long-term upward trend
After Procter & Gamble's share price slumped to $ 94 in March of last year, a strong catch-up movement followed, culminating in a record high of $ 146.90 in November 2020.
After another correction by March of this year, the price rose again to a new all-time high of $ 147.20 by September, which is currently followed by a consolidation.
The chances of new historic highs are good, because Procter & Gamble shares are trading on a very long-term upward trend.
However, the share is not known for the big price jumps.
Over a ten-year perspective, for example, the price recorded a moderate increase averaging eight percent per year.
In comparison, the Dow Jones Index, in which Procter & Gamble is listed, rose by an average of almost 13 percent annually over the same period.
But the interim price setbacks at Procter & Gamble were usually comparatively below average, which makes the share interesting for conservative investors (not only in times of inflation).
P&G may be a "boring" paper for many investors.
In view of the fact that over a ten-year period a 10,000-euro position has turned into almost 26,000 euros today, one or the other boring stock apart from the large high-tech stocks does very well in its own long-term portfolio.