UBS Sees a Challenging Backdrop for Procter & Gamble (PG) Despite 2026 Improvement Hopes

The Procter & Gamble Company (NYSE:PG) is included among the 15 Best S&P 500 Dividend Stocks to Buy in 2026.

On January 14, UBS analyst Peter Grom cut The Procter & Gamble Company (NYSE:PG) price target to $161 from $176, while keeping a Buy rating on the stock. In his research note, he said the operating environment and market backdrop for Consumer Staples remain challenging, though fundamentals could start to improve in 2026.

Procter & Gamble stands out as a reliable dividend payer. The company’s payout ratio is around 60%, meaning it returns about 60% of its earnings to shareholders through dividends. That level matters because it shows the dividend is supported by earnings, rather than being funded through outside sources. With a 60% payout ratio, P&G still has room to keep raising its annual dividend over time.

This is not an artificial intelligence stock that can triple quickly in a bull market. Procter & Gamble is a mature blue-chip company. Still, it often fits well as a defensive holding because it sells everyday household products like paper towels, laundry detergent, and soap. These are items people continue buying even when budgets tighten, and in a recession, they usually become priorities, not optional spending.

The trade-off is growth. Consumer staples are not a high-growth category, and The Procter & Gamble Company (NYSE:PG)’s large size makes it harder to deliver major expansion. Single-digit revenue growth is typically the normal pace. Even so, for investors looking for stability, that slower growth may be acceptable, especially with the stock’s forward dividend yield sitting around 2.9%.

While we acknowledge the potential of PG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: Dividend Contenders List: Top 20 Stocks and 12 Most Profitable Dividend Stocks to Buy in 2026

Disclosure: None.