The list of troubles is long in the world today. Geopolitical conflicts, rising energy prices, lingering trade wars, and the potential for a global recession are some of the big ones. And yet there are companies that manage to muddle through whatever troubles come their way while continuing to reward investors with reliable, growing dividends. Coca-Cola (NYSE: KO) and Procter & Gamble (NYSE: PG) are two such companies.
What makes Coca-Cola and P&G so special?
Coca-Cola and P&G share one very notable attribute. They are both Dividend Kings, each with over 50 consecutive annual dividend increases. That’s important because a streak like that can’t be built by accident. It requires a strong business plan that is executed well in both good and bad markets. Both of these companies have proven they are resilient businesses through the entire economic cycle many times over at this point.
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In addition, Coca-Cola and P&G are also two of the world’s largest consumer staples companies. That is another sign of their long-term success, given how competitive the sector is. These two industry giants can stand toe-to-toe with any competitor in terms of brand strength, marketing prowess, distribution capabilities, and innovation.
Operating in the consumer staples sector itself is also a big positive. You aren’t going to stop drinking (including affordable luxuries like soda) or stop buying deodorant (or other personal care products) during a bear market or a recession. That’s as true of you as it is of any of the many people who buy products from Coca-Cola and P&G, both domestically and abroad.
Long-term investors should dig in
The current round of trade wars, geopolitical conflicts, rising energy costs, and recession fears may be near-term issues, but in the long term, this tense period is likely to be little more than a blip. Right now, the S&P 500 index (SNPINDEX: ^GSPC) is yielding a tiny 1.1%. Coca-Cola’s yield is 2.7%, and P&G’s yield is 2.9%. Dividend investors will likely find both appealing options.
Both are also trading with price-to-earnings ratios that are below their five-year averages. While neither stock is cheap, per se, both Coca-Cola and P&G could easily be classified as fairly valued. And a fair price for a reliable high-yield dividend stock is probably a good investment opportunity for most conservative dividend investors. That’s doubly true when market and global uncertainties are so high.
