There was a time when investors who felt anxious about the job market, economy or life in general could always find solace in U.S. Treasuries. They could be secure in the knowledge their money was perfectly safe and at least earning fairly decent interest.

Things sure have changed, haven’t they?

As I’m sure you’ve noticed, the yield on treasuries is pitiful. The yield on a 10-year note is 2.6%, a 5-year bond is yielding about 1.25%, and a 6-month note yields a pitiful 0.04%. And despite last-minute action by Congress and President Barack Obama to avoid a first-ever default, the United States government clearly isn’t the safe haven it once was and in my opinion no longer deserves the highest credit rating of “AAA.” But yields probably wouldn’t improve much even if the United States’ credit quality was lowered to “AA” and interest rates went up.

At this point, I see U.S. large-cap stocks as worthier safe havens. The best companies are sitting on mounds of cash, have little or no debt, pay healthy dividends and are well-diversified across many economies and currencies. Many would have a similar or better credit rating than the U.S. government if it is downgraded, which seems likely.

[See: “A Review of Pase Economic Downturns” from InvestingAnswers.com]

One of my favorite safe-haven companies certainly fits that description. I’m talking about household and personal products giant Procter & Gamble (NYSE: PG). With a market capitalization of $171 billion and a Moody’s credit rating of “Aa3,” I think it may very well be the safest stock money can buy. The company sells several hundred products under household names such as Tide, Charmin, Iams (and many others) to more than five billion people in 140 countries and has a cash reserve of $9.5 billion. Also important, the degree of fluctuation in its stock, which yields 3.5%, is typically half that of the overall stock market.

During what looks to be an extended wait for the economy to truly recover, Procter & Gamble should be a premier safe haven for several other reasons. First, analysts say sales could grow at a relatively healthy 5% clip during the next three to five years, mainly on 8% to 12% annual growth in developing markets (compared with only 2% to 4% in developed markets). Since consumers in the United States and other developed countries haven’t yet resumed normal spending, P&G has been forced to seek more revenue in emerging markets, where there’s still plenty of potential to expand product sales. Currently, 31% of sales occur in emerging markets.

Analysts project earnings will actually grow faster than sales, rising 8% annually during the next three to five years. This is partly because management has been streamlining operations in order to reduce costs. One of the latest cost-cutting measures, announced in May 2011, was to standardize the marketing of new and existing brands, a process that had become increasingly convoluted and thus much more expensive in the past few years. Last December, P&G also revealed plans to save money by halving the number of product production facilities from 300 to 150 globally by 2014 and by slashing the number of global raw materials suppliers from 75,000 to 50,000 by 2012.

Like many consumer products firms, P&G has begun hiking some of its prices in response to rising commodity costs. In April, for instance, the company announced price increases of 7% for Pampers diapers, 3% for Pampers wipes and 5% for Bounty and Charmin paper towels. Still, in July, CEO Bob McDonald reported price hikes weren’t yet hurting sales and that P&G was offsetting 50% to 60% of its higher raw materials costs — projected to increase by $1.8 billion in 2011, for example — through cost-reduction measures.

However, no company, including P&G, can completely shield itself from a tough economy like the one we’re in now. Despite management’s efforts to maximize profitability, analysts warn higher commodity costs are likely to gradually erode the gross margin from its current level of 51%.

Another drag on profits in this economy is a greater need for promotions to encourage consumer spending — something P&G and all its main rivals are doing. Promotions can be effective in the short-term, but they can also train consumers to expect lower prices and hurt profits in the longer-term.

Action to Take –> If you own treasuries, consider reducing your holdings and investing the proceeds in shares of Procter & Gamble. The company is huge, diverse, rock-solid financially and rewarding investors with a healthy dividend and very stable share price. The finances of the U.S. government, on the other hand, are arguably in their worst shape ever. The return on treasuries is lousy and likely to remain so. I see P&G weathering the poor economy and emerging in sound condition, having offered a safe haven for investors — just like the U.S. government used to provide.

P.S. — If you’re an income investor, why would you buy a stock yielding 2% when you can find one paying 26% right here? Watch this presentation for more.