Procter & Gamble Company (NYSE:PG) and Kimberly-Clark (NYSE:KMB) are two of the best-known consumer staples companies in the world, making them attractive investments for risk-averse investors. Procter & Gamble's well-known items including Pampers, Gillette, and Tide, and Kimberly-Clark's Huggies, Kleenex, and Cottonelle aren't going to be replaced anytime soon and should continue to churn out cash for decades to come. 

The question is: Is P&G or Kimberly-Clark the better buy? 

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The battle of the no-growth stocks

You can see below that Procter & Gamble and Kimberly-Clark are both growth challenged. There's simply not a lot of growth in consumer staples like laundry detergent and paper towels, and that unlikely to change anytime soon. 

PG Revenue (TTM) Chart

PG Revenue (TTM). Data source:

We're also starting to see some turbulence in net incomes, driven mainly by pricing pressure. Consumer giants like P&G and Kimberly-Clark are facing pressure from start-ups who don't need shelf space in big box stores that can just launch a website and find customers online. The competition reduces the ability to expand margins when growth slows, making net income growth difficult. 

Because there isn't a lot of growth, I think what investors should look at more closely is the return each company can generate from the cash it invests in its business. On that front, there are big differences between P&G and Kimberly-Clark. 

Doing more with less

Net income and return on assets will fluctuate over time, but they give us a glimpse of how management is turning existing assets into profits going forward. You can see below that P&G generates more net income given its bigger size as a company, but Kimberly-Clark has a much higher return on assets. 

PG Net Income (TTM) Chart

PG Net Income (TTM). Data source:

Both companies are focusing on cost savings to drive bottom-line growth, but Kimberly-Clark is doing it more effectively and that may be its biggest advantage in today's operating environment. 

The better buy today

Both P&G and Kimberly-Clark are low-growth consumer staples companies that are trying to find their way in a market that's more disruptive than they've seen in a century. 

While both will face challenges, I think that Kimberly-Clark's higher return on assets shows better operational efficiency, which will give it more slack to adapt and adjust as new competitors enter the market. Kimberly-Clark also has a slightly higher dividend yield of 3.5% versus 3.4% at P&G. 

Neither of these stocks is going to be a big gainer for investors, but if you're looking for a dividend backed by a consumer staples company that isn't going anywhere, Kimberly-Clark is my pick today. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.