All It Takes Is $17,000 Invested in This High-Yield Dividend King Stock to Generate Over $500 in Yearly Dividends

With major indexes like the S&P 500 (^GSPC +0.26%) and Nasdaq Composite (^IXIC +0.54%) hovering around all-time highs, collecting a 3% dividend yield may not seem like much. But generating passive income from reliable dividend-paying stocks provides an excellent way to participate in the market and book a return without needing to sell stock.

A red-hot stock market can overshadow the value of dividends. But when stock prices are falling, or the market enters a multiyear slowdown, dividends can provide crucial dry powder that can be reinvested or used to supplement income.

In April, Procter & Gamble (PG -0.78%) raised its quarterly dividend to $1.0885 or $4.354 per year, marking the company’s 70th consecutive annual increase. That makes P&G one of the longest-tenured Dividend Kings — which are companies with at least 50 consecutive years of boosting their payouts.

With a 3% yield, you can expect a $17,000 investment in P&G to produce about $510 in annual dividend income. Here’s why P&G stands out as one of the best blue chip dividend stocks to buy now.

A consumer products powerhouse

P&G is the largest consumer packaged-goods company in the world — with a portfolio of category-leading brands across beauty, grooming, healthcare, fabric and home care, and baby, feminine, and family care.

P&G’s size gives it pricing power with consumers and crucial retail partners, which have incentive to carry its products on their shelves or online to attract customers. P&G products such as Pampers diapers, Charmin toilet paper, Bounty paper towels, Dawn dish soap, Tide detergent, Crest toothpaste, Gillette razor blades, and Olay skin care are known as destination products. These are the kinds of everyday-use products that can instigate a trip to a store like Walmart, Costco Wholesale, or Target. So these retailers want to carry P&G’s products and, ideally, offer specialized versions through exclusive stock-keeping units (SKUs) to influence buyer behavior.

But goods manufacturers like P&G are also competing amid a surge in value-focused buying behavior toward private-label brands such as Walmart’s Great Value, Sam’s Club’s Member’s Mark, and Costco’s Kirkland. P&G’s size has allowed it to be fairly resilient even in the face of inflationary and consumer spending pressures. But there’s no denying P&G is in a multiyear slowdown.

P&G’s results and guidance have been disappointing

On July 29, P&G reported full-year fiscal 2026 year-over-year net sales growth of just 3%, organic sales growth of 1%, diluted earnings per share (EPS) growth of 2%, and core EPS growth of 1%.

For fiscal 2027, P&G is guiding for just 1% to 3% organic sales growth, a 1% to 5% increase in diluted net EPS, and flat to 3% growth in core EPS, with a midpoint of $7 per share.

PG Revenue (TTM) data by YCharts

P&G’s margins have held up well, but its revenue growth has slowed dramatically. However, P&G continues to generate ample earnings and free cash flow to cover its dividend, although its dividend increases have been fairly small in recent years.

Despite the industrywide challenges, P&G continues to focus on what it can control. It is generating $2.8 billion in before-tax savings in fiscal 2026 across cost of goods, sales, general, and administrative expenses. On Aug. 4, P&G announced the $3.8 billion acquisition of personalized health and supplements solutions company Thorne, which will be added to its healthcare segment. The acquisition shows that P&G can continue to take market share and grow its brand portfolio even during a slowdown, which is more challenging for smaller, less diversified companies.

A high-quality stock at a discounted valuation

P&G’s stock price has gone practically nowhere for five years, which has compressed its valuation to multiyear lows and pole-vaulted its dividend yield to multiyear highs.

P&G now trades at just 22.2 times earnings and a 20.9 forward price-to-earnings (P/E) ratio, compared with a 10-year median P/E of 25.3. And because P&G has already guided for weak results in fiscal 2027, even mediocre results will look relatively good given the context of the current operating environment.

Add it all up, and P&G stands out as an excellent high-yield value stock for income investors to scoop up now.