As the overall market suffered declines at the beginning of the week, some companies that many traders consider to be safer investments held up quiete well. In particular, both PepsiCo (NASDAQ:PEP) and Procter & Gamble (NYSE:PG) reached all-time highs during the Monday trading session, and the success of their respective companies could point to more gains ahead for their share prices.

P&G is A-OK

Shares of Procter & Gamble increased another 1.5% during Monday’s trading session. That brought the stock’s year-to-date gains to about 13%, and even though that is lagging the market overall, P&G has continuously been hitting all-time highs since last summer.

A couple of trends have helped Procter & Gamble a lot over the last few years. The COVID pandemic raised demand for the products like staples, toilet tissue, personal care and home cleaning items that P&G produces, especially must-have products such as top brands like Charmin, Gillette, and Mr. Clean command a sizable market share both in America and in areas around the globe.

More recently, as inflation has increased dramatically, businesses that have pricing strength have a competitive advantage over companies that don’t. Procter & Gamble has developed a loyal customer base that is better able to absorb increased prices, and that has allowed them to pass through the higher costs for raw materials better than rival consumer goods providers.

Procter & Gamble has generated significant free cash flow, a lot of which it shares with its investors through dividends. The stock yields 2.2% as of today. While not immune from added cost pressures, P&G has done a great job managing expenses, and it is no surprise to see nervous traders bidding the stock to record levels.

Some fizz in PepsiCo’s stock

Elsewhere, stock prices of PepsiCo were up about half a percent on Monday. The soft-drink and snack giant’s stock has been in a long bull market throughout much of the 2010s, routinely reaching record highs along the way.

PepsiCo has been firing on all cylinders lately, with consumers dramatically increasing their demand for its products. During the third quarter, PepsiCo produced organic revenue growth of 9%, with international markets seeing significantly higher sales volumes. Even with the higher costs, operating cash flow was up a considerable amount from last year’s levels, and PepsiCo was able to increase its forecast for full-year earnings and sales growth.

Dividend investors love the way PepsiCo treats them. The stock currently has a 2.5% dividend yield, and the beverage and snack company has raised its yearly dividend payout every year for nearly 50 years now.

Investors should not expect Procter & Gamble and PepsiCo to generate the sort of near-term explosive gains that higher-growth stocks sometimes produce. Yet, the benefits of safer stocks like these two have become much more evident — and it is easy to see why these two stocks are at record highs as a consequence.

Author: Steven Sinclaire

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