The S&P 500 index (SNPINDEX: ^GSPC) is trading near all-time highs despite the geopolitical conflict in the Middle East, high oil prices, and increasing concerns around a global recession. If you are like me, you probably watch all this with wonder, trying to understand why Wall Street is so positive given all of the negatives in the world today. Now could be a time to downshift on risk, leaning into investments that have proven track records, like Johnson & Johnson (NYSE: JNJ) and Coca-Cola (NYSE: KO).
Dividend Kings have proven they can handle adversity
Johnson & Johnson is one of the world’s largest healthcare companies. Coca-Cola is one of the world’s largest consumer staples companies. While they operate in entirely different industries, there are two things that tie them together from an investment standpoint. First, healthcare and food are both necessities that you will continue to buy regardless of the stock market or economic environment.
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Second, J&J and Coca-Cola are both Dividend Kings, with each having increased its dividends annually for more than five decades. You simply can’t build a dividend record like that by accident. It requires a strong business model that gets executed well in both good times and bad. Coca-Cola’s yield is 2.7%, and J&J’s is 2.3%. Both are well above the S&P 500 index’s tiny 1.1% yield.
Two strongly performing Dividend Kings
Coca-Cola is actually performing very well right now as a business. Despite industry headwinds, it was able to grow case volume 3% in the first quarter of 2026, with organic sales up 10%. While the business may not be able to maintain that impressive pace, it is very clear that Coca-Cola continues to be a well-run business. Given that the price-to-earnings ratio is below its five-year average, the stock appears reasonably priced.
Johnson & Johnson doesn’t look as attractively priced, with a P/E ratio slightly above its five-year average. However, sales increased 9.9% in the first quarter of 2026. And while earnings were down slightly, management increased its full-year earnings guidance by 7% after just one quarter. The goal is double-digit growth by the end of the decade. There’s a reason why investors are positive about the stock, and if the business continues along the current track, it seems likely that earnings will catch up to the price soon enough.
