The best household and personal care stocks tend to have well-known brands and reliably pay dividends. As consumer staples companies, they sell products that people keep buying regardless of how the economy is faring. Consumers generally treat household and personal care products as necessities rather than as discretionary items.
Top household and personal care stocks in 2023
|Procter & Gamble||(NYSE:PG)||Diversified household products seller and owner of brands such as Gillette, Tide, and Pampers.|
|The Estée Lauder Companies||(NYSE:EL)||Maker of high-quality cosmetics and skin care products.|
|Church & Dwight||(NYSE:CHD)||Household products company that owns brands such as Arm & Hammer, OxiClean, and Trojan.|
|Unilever||(NYSE:UL) (NYSE:UN)||Large household products company and owner of Hellmann’s, Ben and Jerry’s, and other brands.|
|Clorox||(NYSE:CLX)||Maker of its namesake cleaning products, Glad trash bags, and Kingsford charcoal.|
1. Procter & Gamble
Procter & Gamble is probably the best-known household products company in the world. P&G has been around for nearly 200 years and owns more than 20 billion-dollar brands, including Tide, Crest, and Bounty. The company benefits from a huge distribution network and relationships with a wide range of retailers and other end sellers. It’s also one of the largest advertisers in the world.
With diversification across multiple categories, including health, beauty, grooming, and cleaning products, Procter & Gamble is well-positioned to perform strongly on a consistent basis. It’s also a Dividend Aristocrat, having raised its dividend every year for 63 consecutive years. P&G's dividend yield at the time of this writing is an attractive 2.6%.
2. The Estée Lauder Companies
Estée Lauder has been a consistent winner in cosmetics, with its luxury positioning helping it to gain market share in China and deliver strong profit margins. The company's stock price has more than tripled over the past five years, a rare amount of growth for a mature personal care company. Even during the COVID-19 pandemic, which was particularly challenging for cosmetics companies, Estée Lauder managed to increase its revenue.
As the global economy emerges from the pandemic, Estée Lauder in 2021 should be able to consolidate its market share gains and strengthen its lead over competitors. Cosmetics sales should also rebound as social events are once again occurring.
3. Church & Dwight
Church & Dwight is smaller than many of its peers, but the company has delivered a strong return on invested capital and without deviating its focus from personal care and household goods.
The company’s portfolio of products is among the most stable in the industry, and sales of many of its products increased during the pandemic. The company has been expanding the types of products offered by its well-known brands such as Arm & Hammer. It also owns other top brands, including Trojan, OxiClean, and Orajel.
Church & Dwight last year increased its organic revenue (revenue not accrued through acquisition) year-over-year by 10% and is expecting to continue to increase its organic revenue by 4% to 5% year-over-year in 2021. The company in 2021 is forecasting that its earnings per share will increase by 6% to 8%.
Unilever owns a sprawling assortment of household and personal care brands, including the popular supermarket and drugstore brands Lipton, Vaseline, and Magnum ice cream.
Unilever is generally more aggressive about acquiring and selling companies than its competitors. The company in 2016 acquired both the direct-to-consumer Dollar Shave Club and Seventh Generation, the sustainable cleaning products brand. It’s currently aiming to make acquisitions in the plant-based foods category and planning to spin off its global tea business, including the Lipton brand.
The company produced mixed results in 2020, with the pandemic boosting the sales of some of its products and lowering the sales of others. Unilever in 2020 gained market share in more than 60% of its businesses, putting it in a strong position to capitalize on the post-pandemic reopening of the economy.
Unilever's organic sales rose by 5.7% year-over-year in the first quarter of 2021. The company's dividend yield at the time of this writing is a noteworthy 3.3%.
Clorox has arguably been the biggest winner of any household products company during the pandemic as consumers around the world hoarded cleaning products. Clorox's share price surged early in the crisis, and the company delivered double-digit sales and earnings growth through 2020. Last year’s windfall puts the company in a strong position for 2021.
While the company expects sales growth to slow as the pandemic subsides, Clorox should benefit from enhanced cleaning procedures in restaurants, offices, and other commercial businesses that are reopening. Over the long term, the company's "IGNITE" strategy is focused on accelerating long-term growth through innovation, cost savings, and expansion of its portfolio.
Clorox's 2.7% dividend yield, in addition, makes this stock a solid choice for income investors.
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What to know about household and personal care stocks
Some categories of household and personal care items will perform better than others during the economic reopening. Sales of cleaning products are unlikely to top last year’s performances, while the cosmetics industry should rebound strongly.
The emergence of e-commerce has made it easier to launch new household and personal care brands, and while the industry is seeing innovation in a number of sectors, successful new companies such as Dollar Shave Club generally get acquired by one of the leading household and personal care companies. Over the long term, the advantages these legacy companies enjoy tend to only get stronger. The brand recognition, distribution networks, and marketing power of the top household and personal care companies are difficult to match.
For investors, household and personal care companies have low stock price volatility and pay reliable dividends. If you’re looking for defensive consumer staples stocks that can deliver attractive long-term growth, then investing in these household and personal care companies may be a good choice for you.