Wall Street put the stocks of both Kimberly-Clark (KMB 0.84%) and Procter & Gamble (PG 1.27%) in the discount aisle in 2023. The two consumer staples giants have thus far sat out the market's rally due to investors' worries about slowing growth trends in an uncertain economy. Investors have been more attracted to tech stocks this year, too.

That performance slump could be good news for investors seeking bargains on high-quality businesses. It's an even better development for fans of dividends, since the stocks' yields are sitting near 3% today. With those positive factors in mind, let's look at which company might be the better fit for your portfolio.

Market share matchup

While both companies are growing revenues at a healthy pace, P&G will appeal more to investors seeking market-leading sales trends. Its organic sales beat expectations for the second straight quarter this past quarter, rising 7% year over year. Kimberly-Clark posted a 5% year-over-year increase in its corresponding quarter.

P&G also achieved better sales volumes. Sure, both companies are seeing reduced volumes in their portfolios of products like detergents, tissues, and diapers as consumers react to rising prices. But Kimberly-Clark's volume drop was more pronounced at 3% year over year.

P&G noted just a 1% year-over-year downtick this past quarter, marking an improvement from the prior quarter's 3% drop. P&G executives called the performance a "very strong finish to the fiscal year" that came despite the tough cost and consumer spending environment.

Better margins

Investors don't have to worry about these companies struggling to pass along higher costs to consumers. Their gross profit margins are rising today, in fact, thanks to price hikes in excess of their own increased costs.

P&G's bigger scale and prime market position have for more than a decade allowed it to generate an industry-leading operating profit margin. The company now converts roughly 22% of sales into profits, compared to 14% for its smaller peer. Following the cash tells a similar story.

KMB Operating Margin (TTM) Chart

KMB Operating Margin (TTM) data by YCharts.

P&G's operating cash flow is multiples higher than Kimberly-Clark's and has been accelerating in recent quarters. That bodes well for shareholder returns through dividend payments and stock buybacks.

The cheaper stock

Unsurprisingly, P&G's shares are priced at a premium relative to Kimberly-Clark's, reflecting its more impressive growth profile and stronger finances. You can buy Kimberly-Clark for 2.1 times annual sales while you'll have to pay nearly 5 times sales for P&G. In addition to that discount, you'll also receive a higher dividend yield with Kimberly-Clark. At today's prices, the owner of hit brands like Kleenex and Huggies is paying 3.7% annually compared to P&G's 2.4% yield.

Investors who favor value stocks and are looking for higher income might prefer Kimberly-Clark stock. The business is growing, after all, and has a good shot at boosting its profitability over the next year or so as cost inflation continues to slow down.

Growth-focused investors who don't mind paying a premium will gravitate toward P&G, though. The market leader has demonstrated a knack for using innovation to extend its market share dominance in areas like skin care, laundry care, and home cleaning supplies.

And its smaller dividend yield is offset by other positive factors like its cash flow, which supports aggressive spending on dividend hikes and stock buybacks. Between these two quality dividend stocks, P&G seems well worth its higher valuation.