Thanks to its enviable stable of consumer brands -- from Charmin to Pampers, Tide, Bounty, Crest, Gillette, and dozens of other popular names -- Procter & Gamble (PG 0.23%) is one of the most secure dividend stocks our market has to offer. In fact, the consumer-goods juggernaut has raised its dividend for 61 consecutive years, with a quarterly payout that equates to a solid 3.05% annual yield.
But Procter & Gamble isn't the only high-yield dividend stock available to investors today. To that end, we asked three top Motley Fool investors to each discuss a dividend stock that has a larger dividend yield than Procter & Gamble. Read on to learn what they had to say about Finish Line (FINL +0.00%), ONEOK (OKE +1.68%), and Kimberly-Clark (KMB +1.00%).
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Tread carefully with this juicy yield
Steve Symington (Finish Line): Shares of Finish Line are down more than 50% over the past year following a series of disappointing earnings reports, driven by lower traffic, higher promotions, and a lack of innovative new footwear products from its suppliers. But with shares near five-year lows, its dividend now yields an enticing 4.11% as of this writing.
Finish Line has shown some promise for a potential rebound. Shares even skyrocketed more than 44% in the month of September, driven by a combination of its better-than-feared fiscal Q2 report and speculation that U.K.-based stakeholder Sports Direct International could move to acquire the footwear retailer in an effort to enter the U.S. market. Moreover, while some analysts on Wall Street have voiced concerns that those heavy promotions are unsustainable, the company did an admirable job weathering those headwinds in its fiscal third quarter, helped by a corporate restructuring and the gradual improvement in availability of premium products compared to the first half of this year.
That's not to say it will all be smooth trails from here. But if Foot Locker is able to sustain this momentum, its depressed share price could be an enviable opportunity for long-term investors to open, or add to, their positions while its dividend yield is still high.
Grow your portfolio with ONEOK
Sean O'Reilly (ONEOK): It's not enough for a dividend stock to yield more than Procter & Gamble -- that dividend needs to be both sustainable and growing, as well. Fortunately, ONEOK, Inc. has what it takes.
P&G is the quintessential dividend stock. It currently yields over 3%, has increased its payout 4.26% each year on average since 2012, and supports a dividend coverage ratio of 2.14. This is key. Not only has the owner of brands like Crest toothpaste and Gillette razors increased its dividend at a healthy pace, but it has lots of room to grow them for years to come.
ONEOK, which sports a juicy 5.72% dividend yield, is an energy midstream operator that specializes in the transportation of natural gas through over 38,000 miles of pipeline. The company is ideally positioned to benefit from the shift toward increased natural gas production and consumption -- so you know its profits (and dividends) stand a high chance of rising mightily in the future. Its dividend coverage ratio is 1.3 and not as strong as PG's, but that's to be expected for a midstream operator. In fact, ONEOK's payout is near the high end for the industry.
Looking toward the future, ONEOK has an estimated $2.5 billion-$3.5 billion in expansion projects underway that will fuel its dividend growth for years to come. For investors looking to trump PG's yield safely, ONEOK is a top contender.
Two recession-resistant dividend payers -- but one is better than the other
Rich Smith (Kimberly-Clark): With a pantheon of everyday products ranging from shampoo to toothpaste to detergent to diapers, many investors figure Procter & Gamble stock is about as "safe" and recession-resistant a stock as there is. P&G's beefy dividend yield -- 3.1% annualized at last report -- is also a big attraction to income-seeking investors. But if it's "safe" you want, and dividends you need, then there may be a better choice for you: Kimberly-Clark.
If everyday cleaning products are P&G's forte, then Kimberly-Clark is the king of paper products, selling everything from Kleenex to Kotex to toilet paper to... diapers (again) -- items arguably used even more frequently than Procter & Gamble's wares.
Kimberly-Clark beats out P&G in dividend generosity, too, offering investors a 3.3% dividend yield. And perhaps most important to folks who depend on these companies to maintain their dividends, Kimberly-Clark devotes only 63.1% of its profits to dividend payments. This gives K-C greater flexibility to maintain (and increase) its dividends than Procter & Gamble, with a 72.5% dividend payout ratio, can offer.
Granted, neither of these consumer-products giants is growing very fast these days. Analysts project mid-single-digit growth rates for both Procter & Gamble and Kimberly-Clark over the next five years. But of the two, Kimberly-Clark stock boasts more staying power. If recession-resistant dividends are what you're after, I think Kimberly Clark is worth a look.
The bottom line
There's no disputing that Procter & Gamble is one of the world's most successful consumer-goods conglomerates, and it's likely to continue boosting its dividends for the foreseeable future. But while there are no guarantees that Finish Line, ONEOK, and Kimberly-Clark will fare even better, each of their combinations of potential share-price appreciation and an even higher dividend yield, make them intriguing portfolio candidates for any investor looking to put money to work today.
