The calendar has changed, but Proctor & Gamble Co (NYSE:PG) hasn’t. PG stock is only up 7% over the past year. That trails the S&P 500 SPDR S&P 500 ETF Trust (NYSEARCA:SPY) badly.

Additionally, key rival Unilever N.V. (NYSE:UL) cleaned up against PG. UL stock surged 34% over the past year. And don’t expect a better outcome in 2018. While the market has roared out of the gates in January, PG stock is actually down fractionally so far.

There are three major obstacles holding PG stock. For one, interest rates are rallying, which motivates investors to sell down their dividend growth stocks.

On top of that, Proctor & Gamble has failed to grow the business organically in any meaningful way for a decade now. And instead of trying to change course, P&G’s management spent untold millions on a brutal proxy fight to keep activist investors from adjusting the company’s strategy.

The results of these three factors are clear for PG stock; expect more mediocre returns going forward.

PG Stock’s Yield Isn’t Enough

For years, many investors have piled into stodgy defensive stocks for their safe dividends. Procter & Gamble has been a beneficiary of this trend. Since the great financial crisis, bonds and savings accounts have paid virtually no interest. This has forced conservative yield-seeking investors to move into the stock market.

But now things are changing. The Federal Reserve started hiking rates at the end of 2015, and the increases are accelerating. We’re now up to five rate hikes in total, including three within the past 12 months. This is moving up rates on CDs and other short-term savings vehicles sharply.

That wasn’t enough to crack the dividend stock plays though. But in recent weeks, long-term interest rates are also starting to shoot up as the Fed hikes and Trump’s stimulatory policies are finally filtering through. Over the past four months, the U.S. government’s 10-year treasuries have gone from yielding just 2.0% up to 2.6% now.

The rate is now hitting levels not seen since 2014, and we aren’t that far from reaching back to levels not seen since the housing bubble blew up. As you’d expect, rate-sensitive stocks such as REITs are among the worst performers in the market lately.

This is highly problematic for P&G stock. When 10-year treasuries were yielding 2% or less, as they did for much of the past eight years, PG stock offered a much juicier interest rate, by comparison.

But now it’s PG at 3.0% versus the safety of 10-year U.S. bonds at 2.6% or 30-year U.S. bonds at 2.9%. For people focused primarily on the income, PG stock hardly pays enough of a premium to justify the risk of losing capital if PG stock slumps.

Procter & Gamble’s Dividend Growth Is Slowing

Now there’s a second component to a classic dividend growth play like PG stock. Unlike a bond, dividend stocks raise their yields over time. P&G is one of the market’s leading achievers. The

y’ve increased their dividend without fail dating back to 1957. Thus, in theory, even if a bond and P&G stock yield the same today, P&G will produce more income over the years.

However, this is starting to break down. Over the past five years, P&G has averaged just 4% dividend growth annually. P&G’s last two dividend hikes were particularly paltry, as the payout went up by just 3 and 8 cents respectively.

Needless to say, if they pay you 2.76/share now, and only bump it by 5 cents next year, it hardly moves the needle. Your yield would only move from 3.0% to 3.1% – still barely ahead of risk-free bonds.

Dividend Growth Requires Earnings Growth

Investors have been griping that P&G management isn’t doing enough to reward its shareholders. But this may be a misplaced argument. At the end of the day, there is one primary factor that determines how much you can pay out. That’s how much you earn. During the past five and ten years, P&G has seen revenues outright decline over both periods.

The company has done slightly better on earnings, growing EPS at a compounded rate of 0.3% and 1.5% over the past 10 and 5 years.

Ultimately, there are only two ways to raise your dividend. Increase your earnings or increase your payout ratio. For now, even with stagnant earnings, P&G can maintain its aristocratic track record by increasing its payout ratio yearly. But the company is running out room to yank that lever.

Their payout ratio is up from 40% to 75% since 2007, putting them well into the sustainability danger zone. The company will struggle to offer even minimal dividend increases past the next couple of years unless management fixes the business’ entrenched problems.

Management Isn’t Aligned with Shareholders

I detailed management’s bitter fight with activist investor Nelson Peltz late last year. P&G narrowly won a proxy vote that gave them a mandate to keep running their operations as they have in the past. And for P&G, that’s far from good news.

P&G has been running a strategic plan for the past few years that was supposed to revive the company’s fortunes. It centered on selling off a large number of underperforming brands, along with usual turnaround fodder such as cost-cutting and revamping their marketing efforts.

Regardless, P&G’s results have continued to struggle, and Peltz wanted a more aggressive shake-up of the company’s affairs. Instead, P&G engaged in one of the most expensive fights in corporate history to beat back his effort.

All signs point to a lackadaisical management team that is content to collect their large salaries and accept mediocre performance from P&G stock going forward. Unfortunately, P&G’s lack of growth has led to returns that have badly trailed the market in recent years.

And now, even more troublingly, the company’s unprecedented string of annual dividend hikes is looking hard to sustain. PG stock is still good for a 3.0% dividend today, but it doesn’t offer much else at all. There are way better alternatives within the consumer staples category of stocks for yield-seeking investors.

At the time of this writing, the author held UL stock and had no positions in any of the other aforementioned securities. You can reach him on Twitter at @irbezek.