In times of market turbulence, investors often seek stability. When volatility strikes and economic uncertainty clouds the outlook, turning to safe-haven stocks can offer a sense of protection. Here, dividend stocks come into play. These companies have strong fundamentals, resilient business models, and consistently pay dividends regardless of market conditions. Dividend Kings and Aristocrats, in particular, not only pay dividends, but also increase dividends on a consistent basis, ensuring a steady income.
The first name on my list is McDonald’s Corporation (MCD), which is one of the most well-known global brands. It has long been regarded as a cornerstone in conservative investment portfolios, and with good reason. McDonald’s operates in over 100 countries and has a proven franchise model that generates consistent and recurring cash flows.
Over the last decade, McDonald’s stock has returned 202%, outperforming the S&P 500 Index’s ($SPX) gain of 190%.
McDonald’s has consistently paid dividends to shareholders for more than four decades. It has increased its dividend annually for over 49 years, earning it the elite status of a Dividend Aristocrat. McDonald’s boasts a forward dividend yield of 2.46%, higher than the consumer discretionary average yield of 1.89%. Its forward dividend payout ratio (the percentage of net income paid out as dividends) is 53.4%, which is sustainable and allows for dividend growth.
Its dividend growth is supported by strong free cash flow and a disciplined capital return strategy. Even during economic slowdowns, McDonald’s continues to generate solid earnings from its affordable food offerings, making its dividend both attractive and sustainable. Over the last five years, McDonald’s earnings have increased at a compounded annual growth rate (CAGR) of 12.5%. Analysts expect McDonald’s earnings to increase by 4.7% in 2025, before rising by 8% in 2026.
Overall, Wall Street rates MCD stock a “Moderate Buy.” Out of 34 analysts covering the stock, 13 have a “Strong Buy” rating, two have a “Moderate Buy” rating, 18 suggest it is a “Hold,” and one says it is a “Strong Sell.” Analysts have assigned a mean target price of $334.07 to MCD, implying a roughly 16% upside from current levels. Its Street-high estimate of $370 implies the stock can go as high as 29% in the next 12 months.
The Coca-Cola Company (KO), founded in 1886, is one of the world’s most iconic consumer brands, with brands including Coca-Cola, Diet Coke, Fanta, Sprite, Minute Maid, Costa Coffee, and others, is second on my list of safe-haven stocks. With a business model built on a global scale, strong brand loyalty, and steady demand, Coca-Cola has kept its earnings stable to pay consistent dividends.
KO stock has returned 75.5% in the last decade. It is also the longest-held stock in Warren Buffett’s Berkshire Hathaway (BRK.B) portfolio.
Coca-Cola’s defensive qualities stem from its product lineup and global footprint. Coca-Cola’s beverages are consumed on a daily basis in more than 200 countries, allowing it to maintain its earnings and an exceptional dividend track record. The company’s strong cash flow, even during global recessions or inflationary periods, supports its reliable payout and regular dividend hikes.
It has increased its dividend for 62 consecutive years, making it a Dividend King. It has a forward dividend yield of 2.93%, compared to the consumer staples sector average of 1.89%. Coca-Cola’s adjusted earnings increased 7% in 2024, allowing the company to pay dividends totaling $8.4 billion. Furthermore, a forward payout ratio of 63.8% indicates that the company’s dividend payments are currently sustainable and likely to increase. Analysts expect that Coca-Cola’s earnings will increase by 3% in 2025, followed by another 7.8% in 2025.
Overall, analysts have rated Coca-Cola stock a “Strong Buy.” Out of 23 analysts covering the stock, 20 have a “Strong Buy” rating, two have a “Moderate Buy” rating, and one has a “Hold” rating. The mean target price of $80 suggests upside potential of 18% from current levels. Furthermore, the high price estimate of $86 implies the stock can go as high as 26% over the next 12 months.
The third on my list is PepsiCo (PEP), a global beverage and snack powerhouse with a diverse portfolio that includes household names such as Pepsi, Gatorade, Lay’s, Quaker, and Doritos. PepsiCo also has an impressive track record of returning capital to shareholders. It is one of the elite Dividend Kings, having increased dividends for over 53 years in a row. The company’s consistent earnings, which are driven by its balanced portfolio of food and beverages, provide a solid foundation for future dividend growth. PepsiCo stock has returned 38% over the last 10 years.
PepsiCo has an impressive dividend yield of 4.4%, which is supported by strong cash flow and prudent financial management. PepsiCo’s resilience stems from its ability to perform well across economic cycles. Whether the economy is booming or struggling, consumers continue to purchase affordable comfort foods and beverages. PepsiCo’s forward payout ratio of 68% suggests that the company can continue to pay dividends while also reinvesting in its business. PepsiCo’s adjusted earnings rose by 9% in 2024. The company even announced a 5% annual dividend increase in 2024. Analysts expect PepsiCo’s earnings to fall 3.3% in 2025 before rising 6.4% in 2025.
Overall, analysts have rated Pepsico stock a “Moderate Buy.” Out of 20 analysts covering the stock, six have a “Strong Buy” rating, 13 have a “Hold” rating, and one suggests a “Strong Sell.” The mean target price of $147.63 suggests upside potential of 14.4% from current levels. Furthermore, the high price estimate of $169 implies the stock can go as high as 31% over the next 12 months.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
