💸 Boring Compounders
Today is Dividend Day.
The series where I teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Consumer Staples
Consumer Staples are everyday products like toothpaste, toilet paper, laundry detergent, diapers, soda and more.
They’re products people must buy regardless of the economy, making the companies that sell them interesting dividend payers.
That’s because they tend to have:
Recession-resistant demand (non-discretionary products)
Pricing power (ability to raise prices without losing customers)
Decades of consecutive dividend increases
The stable demand lets these companies generate predictable free cash flow and consistently pay out dividends.
This visual shows the process:
2️⃣ Staples vs The Market
Consumer Staples companies also tend to be defensive during market downturns.
Imagine getting that dividend when the entire index is dropping.
The reason is because of inelastic demand.
This means revenue holds steady even when consumers cut back on vacations, cars, and gadgets.
This is why in the long run these companies have outperformed the broader index.
3️⃣ An Investing Quote
Building a dividend portfolio is about creating a machine that works so you don’t have to.
You want a portfolio full of companies that you know will keep making money in the future.
Warren Buffett’s logic applies perfectly to the defensive nature of staples - I don’t know what will happen with AI, but I know people will keep buying peanut butter and trash bags.
"I don't look to jump over seven-foot bars; I look around for one-foot bars that I can step over."
— Warren Buffett
4️⃣ Boring Compounders
Consumer staples are boring businesses.
They sell the same products for decades.
But heading into 2026, these business are becoming more and more attractive.
Why?
Non-discretionary demand: People buy toothpaste and trash bags even in recession
Brand loyalty: Decades of trust create switching costs that private labels struggle to match
Trinity Fund has done some excellent research in this area.
You can access their report here.
5️⃣ Example of a Dividend Stock
Let’s look at Procter & Gamble (PG).
They’re a Dividend King as they’ve raised dividends for 68 consecutive years.
PG owns 10 different billion-dollar brands including Tide, Pampers, Gillette, and Crest.
Key numbers from Fiscal.ai:
Profit Margin: 19.2%
Forward P/FCF: 21.9x
Dividend Yield: 2.9%
Payout Ratio: 61.2%
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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