Investors seem to perceive Procter & Gamble (P&G) (PG -0.78%) as one of the safer stocks on the market. For over 185 years, it has provided consumer staples that have evolved into some of America's most venerable brands. However, market conditions can change. And while neither Procter & Gamble nor its most popular brands are likely to disappear, investors may not want to buy the personal care stock right now. Here's why.

Its business remains solid

Investors should first know that the issues with P&G stock have nothing to do with its business. Products like Gillette razors, Tide laundry detergent, Crest toothpaste, and many other popular products continue to drive increasing sales, even amid rising prices.

With this success, the Dividend King celebrated 67 consecutive years of payout hikes in April when it increased the annual dividend by about 3% to about $3.76 per share. This takes the dividend yield to more than 2.5%, well above the S&P 500 average yield of just over 1.5%.

Moreover, in the first nine months of fiscal 2023 (ended March 31), its $9.4 billion in adjusted free cash flow covered the $6.7 billion in costs for common and preferred dividends. Although the payout claims more than 70% of adjusted free cash flow, these financials strongly indicate that the dividend and streak of increases will continue for the foreseeable future.

So, what's the problem?

The dynamic working against P&G's dividend is rising interest rates. Before the Fed's latest round of interest rate hikes, certificates of deposit (CDs) typically paid investors less than 0.2% in annual interest. With dividend yields far exceeding this level, it was arguably worth the risk to buy a stock like P&G, especially considering the annual payout hikes.

Nonetheless, interest rates are now significantly higher. While the average CD pays about 1.6% annually, some banks have started offering interest rates exceeding 5% per year. And unlike owning a stock, this offers depositors a risk-free return, assuming the investors have less than $250,000 in a specific financial institution.

Furthermore, P&G stock could see limited upside due to valuation. Its current price-to-earnings (P/E) ratio now stands at 26, a level it has closely approximated for several years.

However, investors might question the wisdom of paying 26 times earnings when profit growth is typically in the single digits. Also, such a valuation tends to limit a stock's upside. With a dividend that has become less attractive, taking on the market risk is arguably not worthwhile even with a more stable stock like P&G.

Stand pat on Procter & Gamble stock

Under current market conditions, new investors have few reasons to buy Procter & Gamble stock. P&G owns numerous consumer-staples brands with proven pricing power. With a decades-long streak of dividend increases, it is arguably one of the safest individual stocks in existence.

Moreover, if an investor has owned the stock for years, the rising yield and the prospect of yearly dividend increases leave that investor with no reason to sell.

Nonetheless, the 2.5% dividend yield is significantly below what an income investor can now earn in a CD. Additionally, its 26 P/E ratio and slow rate of profit growth could mean the stock does not rise significantly, if at all. Hence, if you're looking for income, you should probably not consider adding P&G shares in the current environment.