No business is free from risk, not even one that markets dozens of blockbuster consumer products franchises.

Procter & Gamble (NYSE:PG) sells several brands -- including Pampers diapers, Gillette razors, and Bounty paper towels -- that millions of people around the world purchase and use every day. Its dominant market position has allowed it to fund dividend increases for 60 consecutive years to give it one of the longest-running payout streaks on the market.

And yet, P&G's operations are exposed to a few major risks that investors should consider before buying the stock.

Market share risks

Procter & Gamble aims to grow its sales at a faster rate than rivals. That modest market-share expansion forms the basis for its entire business model since it drives above-average earnings growth and improving economies of scale.

A woman shopping for diapers.

Image source: Getty Images.

That virtuous cycle has been moving in the wrong direction lately as P&G has seen its market share slip overall in each of the past two fiscal years. Some of its core brands have struggled mightily. The Gillette franchise, for example, commanded 70% market share in the razors and blades industry as recently as fiscal 2013. The figure is below 65% today.

Challenges to its portfolio include value-based offerings that in some cases are being sold by P&G's retailing partners. The consumer products titan also has to fend off increased competition from global peers like Unilever (NYSE:UL) and Kimberly-Clark (NYSE:KMB), who frequently ramp up price cutting to jockey for increased volume.

P&G has responded to these issues by reshaping both its portfolio and its selling infrastructure. Yet, despite encouraging early signs, the moves haven't yet produced a sales growth rebound. P&G is on track for slightly higher organic sales growth this year, but its expansion rate is still lower than Unilever's and only about equal to Kimberly-Clark's.

Financial rewards

Offsetting that operating risk is the fact that P&G shareholder returns are enhanced by dividends and stock repurchases. With help from funds raised by selling off portions of its business, P&G plans to deliver $22 billion of cash to investors in 2017 alone, with additional large outlays targeted over the next two fiscal years.

Factor in these dividend payments, and the consumer products giant's stock returns look more respectable. Yes, its price improvement trailed the broader market by about 30 percentage points over the past five years. With dividend reinvestments included, though, P&G has essentially tracked the Dow's 75% increase since mid-2012.

PG Chart

Comparing nominal returns with total returns. PG data by YCharts.

Thanks to important advantages like its global, recession-proof sales base, its deep portfolio of brands, and its high profit margin, P&G's business isn't likely to shock shareholders with a dramatic earnings downturn. And as recent history shows, even a prolonged operating slump isn't much of a threat to overall shareholder returns.

The big long-term risk facing investors involves P&G's portfolio reboot and stepped up innovation spending failing to deliver a sales growth rebound. In that scenario, continued market share losses would pressure earnings, and at some point, the company would run out of room to offset these declines with the cost cuts and brand divestments that have protected core profits these past few years. That's why investors should keep a close eye on organic sales, which will need to rise while showing a healthy mix of both pricing and volume gains.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and Unilever. The Motley Fool has a disclosure policy.