Investors have found many things to like about Procter & Gamble (NYSE:PG) and Philip Morris International (NYSE:PM) stocks over the years. While they compete in different industries, each company has used assets like global market strength and pricing power to generate market-beating returns.

The businesses also have long track records of returning excess cash back to shareholders through a steadily rising dividend payment and aggressive stock-repurchase spending.

But which income investment makes the better bet heading into 2019? Let's take a closer look at the consumer products giant and the tobacco titan.

P&G vs. Philip Morris stocks



Philip Morris

Market cap

$240 billion

$131 billion

Sales growth



Operating profit margin



Dividend yield



P/E ratio



52-week performance



Data sources: Company financial filings and S&P Global Market Intelligence. Sales growth and operating margin are for the past complete fiscal year. 

Recent growth trends

P&G and Philip Morris both maintain global franchises that dominate the markets they compete in, allowing for returns that peers can't match. In P&G's case, that means sales growth of between 1% and 3% lately, compared to peer Kimberly-Clark's (NYSE:KMB) flat result. For Philip Morris, that positioning delivered volume declines of around 2% this year compared to a 2.5% decrease for the wider industry.

A woman shops for laundry detergent.

Image source: Getty Images.

P&G has been enjoying more robust growth lately, though. Its sales gains are on pace to accelerate to over 2% this fiscal year thanks to a healthy mix of higher volumes and prices. Philip Morris, on the other hand, must rely on significant price increases and growth in heated tobacco products to offset persistent declines in cigarette volumes.  

As for the outlook, P&G takes the edge here, too. The owner of consumer staples like Pampers diapers and Crest toothpaste can count on a growing global population to support increased sales for its portfolio of brands even if some parts of the portfolio struggle at times, as occurred recently with Gillette razors. Philip Morris must contend with the extra regulatory burdens of selling a highly controlled product. Its best growth opportunities, meanwhile, are in e-cigarettes, a space in which its brands aren't nearly as established.

Show me the money

The two companies also diverge as investment candidates with respect to dividend income. P&G has paid, and increased, its dividend in each of the last 62 years, while Philip Morris' track record only dates back to its spin-off from Altria Group in early 2008. P&G also has more room to raise its payout over time, given that its dividend currently takes up about 70% of earnings compared to over 100% for Philip Morris.

A woman smoking an e-cigarette.

Image source: Getty Images.

Those sharply different payout ratios, combined with the fact that Philip Morris stock is down in 2018 while P&G's shares have rallied, mean that investors can get a far higher yield by purchasing Philip Morris right now. The biggest returns for a dividend stock investment accrue through long-term growth in the payout, though, and so it makes sense to give more weight to a dividend's growth prospects than its current yield.

Ultimately, both companies are likely to remain powerful global competitors a decade from now even if their industries show slow growth at times. But P&G appears to have the clearer shot at accelerating sales and profit growth right now. Thus, unless you're simply looking for a market-thumping 5% dividend yield, the consumer products giant should make a better long-term investment.

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.