Consumer staples stocks are finding more proponents on Wall Street these days. Given the current macroeconomic conditions, investors appreciate these companies' ability to grow earnings through recessions, not to mention the steady dividend growth that many of them offer.

But which ones belong in your portfolio?

Let's take a closer look at two successful consumer businesses, Procter & Gamble (PG 0.25%) and McCormick (MKC -0.56%), that have roughly 100 years of consecutive annual dividend raises between them to see which would be the better fit for most income investors.

Sales updates

Both companies reported the same 5% sales increase in their most recent quarters, a pace that reflects their respective dominant industry positions. Procter & Gamble is winning market share in key niches like home care, beauty care, and laundry supplies. McCormick is catering to robust demand for at-home cooking products such as sauces and spices.

Look a bit deeper, though, and you'll see some key differences in their sales trends. P&G had to rely more on price increases to offset a 6% sales volume decline. McCormick faced volume challenges too as customers reacted to rising prices. But its volume only fell 2% in Q1. The growth edge goes to McCormick, then, due to its stronger underlying sales trends.

Profitability trends

Procter & Gamble has fared better through the recent supply chain and inflation challenges, though. Sure, its operating profit margin declined from recent highs this past year. But the drop was modest, and P&G is still trouncing peers and McCormick on this score.

PG Operating Margin (TTM) Chart

PG Operating Margin (TTM) data by YCharts.

McCormick lost more ground on this metric, due in part to a few major supply chain impediments. Profitability fell to below 15% of sales into early 2023 as a result of these challenges. The good news is that management believes that the worst is over and that margins will start rebounding into late 2023.

Valuation and outlook

The short-term outlook favors McCormick, which is guiding for sales growth of about 6% this year and earnings growth of around 10%. P&G executives, meanwhile, forecast 4% to 5% increases in both sales and profits.

The final piece of the puzzle is cash returns, including from dividends. The metrics here are firmly in P&G's favor. The consumer staples giant's stock yields 2.5% today compared to McCormick's 1.4%. P&G also has a longer track record of consecutive annual payout hikes (60 years vs. 37 years).

P&G is also in a strong enough cash position to engage in significant stock buybacks, while McCormick is still prioritizing paying down debt. P&G plans to return between $6 billion and $8 billion to shareholders this fiscal year in the form of share repurchases.

As you might expect, investors are being asked to pay a large premium for P&G's stock today. Its shares trade for 4.6 times sales compared to McCormick's price-to-sales ratio of 3.4. Even P&G's peer Kimberly-Clark is much cheaper at 2.2 times sales.

Most investors will still prefer P&G stock today, though. Not only does it have a much larger sales base that will cushion its revenues during recessions, but it offers a higher dividend yield, is more profitable, and returns more cash to shareholders through stock buybacks. Given the relatively modest difference between the two companies when it comes to their 2023 outlooks, those factors make P&G more attractive as a dividend payer.