Coronavirus Is Boosting This 'Boring' Business

People are panicking...

They're rushing out to stock up on goods in the event of a coronavirus-related quarantine. Reports are coming in of some stores running out of basic goods like toilet paper and hand sanitizer as the pandemonium ramps up.

With lockdowns across Italy and China, folks think we could see similar widespread quarantines here in the U.S.

The U.S. has already suspended travel from Europe to stop the virus's spread, and cities across the country have implemented measures to slow it down – including things like banning large gatherings and closing schools.

And New York state just deployed the National Guard to create a mile-wide "containment zone" to stop the spread of cases in the suburb of New Rochelle.

A wider lockdown could be coming...

That means people need to stock up on basic goods. And they'll keep doing that until a possible shutdown happens on a nationwide level. Today's company is set to benefit as folks rush to stock up on staples...

Procter & Gamble (NYSE: PG) is a consumer-products giant. Whether you know it or not, you've probably interacted with multiple products under its umbrella of brands.

The company has a wide geographic reach. It has operations in 80 countries, and sells its products in more than 180 countries worldwide. Consumers buy a PG product more than 40 billion times a year.

It owns 22 brands that do $1 billion-plus in annual sales, alone, including: Head & Shoulders, Olay, Pantene, Braun, Gillette, Always, Crest, Oral-B, Ace, Ariel, Dawn, Downy, Gain, Tide, Febreze, Bounty, Charmin, and Pampers.

And it has another 20 brands that do more than $500 million in annual sales.

Even better, these brands are always in demand, in good times and bad. No matter what's going on in the economy, people will always need paper towels (Bounty), toilet paper (Charmin), and toothpaste (Crest).

While these products may not be exciting... they are usually reliable. This helps Procter & Gamble deliver steady sales growth.

In total, Procter & Gamble reported about $68 billion in annual sales in its 2019 fiscal year, which ended in June. That's up 4% from 2017.

And the steady sales lead to steady earnings.

Procter & Gamble has produced reliable earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins of around 25% since 2008. This is a good sign that the company's profitability remains intact.

Procter & Gamble has a solid balance sheet, with $10.3 billion in cash and $30 billion in debt.

And this debt burden is easy to bear. Procter & Gamble's earnings easily cover its interest expense – its net income is more than six times higher than its interest expense. The company could easily handle much more debt if it needed to.

Not only does Procter & Gamble have a strong business, it loves to reward shareholders.

It's paid a dividend every year since 1891. And that payout is still growing... with Procter & Gamble raising its dividend every year for 63 years. Over the last five years, its dividend has grown about 16%.

Procter & Gamble pays out nearly half its earnings in dividends. Over the last 12 months, it earned $4.95 per share and paid out $2.39 per share in dividends. That's about 48% of earnings paid to shareholders in dividends.

But it doesn't just pay a solid dividend. Procter & Gamble also buys back its shares. Since 2014, the company has bought back more than $15 billion worth of its stock, reducing its shares outstanding by about 9%.

This steady business and returned capital have led to solid gains for shareholders. The stock is up more than 40% over the past two years, and recently hit an all-time high.

The gains should continue, given the rush to buy basic goods. And Procter & Gamble's brands are just the kind that people want right now – toilet paper, paper towels, and tissues. Don't be surprised if Procter & Gamble reports a bump in sales because of the coronavirus. This should be a strong short-term tailwind for PG shares. But its steady underlying business should provide long-term gains for years to come.

Sometimes investing is simple.