Resilience of Dividend Growth Stocks in Volatile Markets

Historical Performance in Volatile Markets

Dividend growth stocks like Coca-Cola, McDonald's, Procter & Gamble, and Colgate-Palmolive have demonstrated resilience in volatile markets by maintaining strong performance, managing cyclical inflation, and sustaining investment and guidance ranges despite economic pressures.

"So, for example, in the Argentinians of the world, we're competing predominantly locally to win in that marketplace and set ourselves up for the long term, and the inflation, it's very cyclical as these markets cycle through high inflation and high devaluation." --- (KO, earning call, 2024/Q1)

"And as this year progressed, those pressures have deepened and broadened. The QSR sector has meaningfully slowed in the majority of our markets and industry traffic has declined in major markets like the US, Australia Canada and Germany. In several markets, we also continue to be negatively impacted by the war in the Middle East." --- (MCD, earning call, 2024/Q2)

"In summary, again, what continues to be a challenging and volatile operating environment, strong overall results enabling us to increase our earnings projections for the year and to maintain our guidance ranges for organic sales and cash generation, all while sustaining strong investment." --- (PG, earning call, 2024/Q3)

"Noel Wallace: Thanks Dara. You know, clearly a great quarter for Hill’s, a strong performance across the board, quite frankly, and we’re particularly pleased with the strong volume in light of the significant pricing we’ve taken historically." --- (CL, earning call, 2024/Q2)

"And so that's a difference and maybe my point-of-view on to Dave's question, convergence, and how the market develops over time and trying to be deliberate in how we do capital allocation. Now in the near term, I expect we're going to be using every trick in the book as we historically do to ensure that we can deal with the 30% growth." --- (T, earning call, 2024/Q2)

Sector-Specific Resilience

McDonald's, Coca-Cola, PepsiCo, ExxonMobil, and Procter & Gamble demonstrate sector-specific resilience through strategic execution, market share gains, and investment in resilient opportunities, ensuring continued growth and leadership in volatile markets.

"And when we combine our strategy with great value and high-level execution, we are confident we will further our leadership position.As I close, I want to extend a sincere thank you to our franchisees, suppliers and employees around the world for their continued resilience and unwavering commitment to serving our customers and local communities.And with that we'll begin Q&A. Question-and-Answer Session: Operator: Thank you. [Operator Instructions]" --- (MCD, earning call, 2024/Q2)

"Our global system of more than 700,000 individuals operates successfully in more than 200 countries and territories, each with its unique challenges and opportunities.Our 138 year legacy is a testament to our resilience and we see so much future opportunity for continued growth." --- (KO, event transcript, 2024/05/01)

"is very resilient everywhere else. And our teams, I think, are pivoting to maintain our brands top of mind in their baskets at the frequency that we want and continue to gain market share." --- (PEP, earning call, 2024/Q1)

"We'll also continue to invest in resilient advantaged opportunities in our traditional businesses" --- (XOM, event transcript, 2024/05/29)

"We're bringing super premium innovation on the brand, which I think speaks to the segment of the market that is probably most resilient." --- (PG, conference, 2024/05/14)

Macroeconomic Impacts

Dividend growth stocks like PG, JNJ, and KO are significantly impacted by global macroeconomic factors, including geopolitical tensions, government policies, and foreign exchange fluctuations. Economic challenges in specific countries and regions, such as Japan and Argentina, further influence their operational and financial performance.

"As such, we are exposed to and impacted by global macroeconomic factors, geopolitical tensions, U.S. and foreign government policies and foreign exchange fluctuations." --- (PG, sec filing, 2024/Q3)

"Other Macroeconomic Considerations The Company operates in certain countries where the economic conditions continue to present significant challenges." --- (JNJ, sec filing, 2024/Q2)

"If the near-term operating results of this trademark do not achieve our revised financial projections, or if the macroeconomic conditions change causing the discount rate to increase without an offsetting increase in the operating results, it is likely that we would be required to recognize an additional impairment charge." --- (KO, sec filing, 2024/Q1)

"The Contact Lenses/Other operational growth was primarily driven by the continued strong performance in the ACUVUE OASYS 1-Day family of products (including recent launches) partially offset by the impact of the Blink divestiture, U.S. distributor stocking dynamics, competitive pressures and Japan macroeconomic pressures." --- (JNJ, sec filing, 2024/Q2)

"Obviously Argentina was impacted by the macroeconomic conditions, but we have a very tight system." --- (KO, earning call, 2024/Q1)

Investor Sentiment

Investor sentiment towards dividend growth stocks remains positive, as companies like Procter & Gamble and Johnson & Johnson emphasize their commitment to growth and consistent dividend increases, reinforcing investor confidence even in volatile markets.

"the best path forward is to double down on this strategy, remain fully invested to drive irresistible superiority across every part of our portfolio and stay focused on delivering balanced top and bottom line growth and value creation for our shareowners. With that, we'll be happy to take your questions." --- (PG, earning call, 2024/Q3)

"We appreciate the value our investors place on the dividend, and we were pleased to announce this morning that our Board of Directors has authorized a 4.2% increase marking our 62nd consecutive year of dividend increases." --- (JNJ, earning call, 2024/Q1)

Risk Factors

Risk factors for dividend growth stocks like Microsoft and Procter & Gamble include economic conditions, uncertainties, and specific risks detailed in their SEC filings, such as Forms 10-Q and 10-K. These factors can materially impact their performance and dividend growth, especially in volatile markets.

"Refer to Risk Factors (Part II, Item 1A of this Form 10-Q) for a discussion of these factors and other risks." --- (MSFT, sec filing, 2024/Q3)

"A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part II, Item 1A) of this Form 10-Q." --- (PG, sec filing, 2024/Q3)

"Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call and in the Risk Factors section of our Form 10-K, Forms 10-Q and other reports and filings with the Securities and Exchange Commission." --- (MSFT, earning call, 2024/Q3)

Comparison with Other Investment Strategies

Berkshire Hathaway's long-term investment approach contrasts with Amazon's focus on growth opportunities and Mastercard's revenue-driven value-added services. While Berkshire emphasizes enduring investments, Amazon and Mastercard prioritize reinvestment and service expansion, highlighting the resilience and stability of dividend growth stocks compared to other dynamic strategies.

"Nobody does. But I think the odds are very good that it was and but not a cinch that it was a good decision and we've got options to buy more stock and you know when we get through with it, we could it could be a worthwhile investment for Berkshire and we're in it and we're under for keeps." --- (BRK.B, AGM, 2024/05/04)

"So we will always look at alternative ways to invest cash. And if we find better ways than what we're investing in, we'll do it. Joan Morris: This will" --- (AMZN, event transcript, 2024/05/22)

"The only other comment I'll make is, it's a little bit of a reminder out here, which is as we deliver on these Value-added services and solutions, we're obviously generating revenue from the Value-added services and solutions, but there's also driving very compelling kind of cases for us to accelerate our payments growth, right?" --- (MA, earning call, 2024/Q1)

"21 percent tax rate versus 35% working into that. And when you look at the opportunities from the equity markets and what else is happening in the world wanting to be more comfortable with the cash balance, I mean that was something that stuck in pretty hard when it's already at 180,000,000,000 and going to 200,000,000,000, that's not necessarily where you would think to start." --- (BRK.B, event transcript, 2024/05/04)

"There is a very large opportunity in front of us. We also continue to make strong progress on our newer investments." --- (AMZN, earning call, 2024/Q1)

Future Outlook

Procter & Gamble and Coca-Cola are focusing on innovation, AI, and strategic partnerships to adapt and thrive in future markets. Their commitment to constructive disruption and operational effectiveness suggests a positive outlook for maintaining and growing dividends amidst market volatility.

"Next, an approach of constructive disruption, a willingness to change, adapt and create new trends and technologies that will shape our industry for the future." --- (PG, conference, 2024/06/04)

"This means that we intend to be a leader in using AI to support our marketing agenda and enhance overall operational effectiveness, which means we're embracing the need to take risks, responsibly experiment with AI across our system and build on what we learn to drive scale. In parallel, we're also investing in solutions and making progress through collective action with industry partners, nonprofits and governments to create a better shared future." --- (KO, event transcript, 2024/05/01)

"An approach of constructive disruption, a willingness to change, adapt and create new trends and technologies that will shape our industry for the future." --- (PG, earning call, 2024/Q3)

"And when we do this, it leads to results for you, our share owners. I'm inspired by what we've accomplished and excited about the promise of our future." --- (KO, event transcript, 2024/05/01)