Since the start of the year, investors have rotated out of high-flying tech stocks and into more defensive areas of the market, including consumer staples. As of March 11, the S&P 1500 Consumer Staples index is up 11%, while the tech-heavy Nasdaq Composite (^IXIC 0.93%) is down 2.2%.
In uncertain markets, investors often gravitate toward leading consumer brands for their resiliency and dividends. Two high-yielding consumer staples stocks to consider buying right now are Coca-Cola (KO +0.28%) and Procter & Gamble (PG +0.10%).
Here’s why both look like rock-solid long-term holdings.
Image source: Getty Images.
1. Coca-Cola
Despite a choppy consumer spending environment, Coca-Cola has delivered steady sales. It has a diversified brand portfolio that extends well beyond its Coca-Cola-branded products, including Dasani, Minute Maid, and Powerade. The company had only one down year in unit sales volume in the last 50 years, and that was during the COVID-19 pandemic in 2020.
One reason Coca-Cola produces consistent sales is execution. It doesn’t just distribute the same beverages to all markets. It tailors each product to fit local cultures. This requires exceptional research, data, and precision marketing.
Coca-Cola has delivered 19 consecutive quarters of value share gains. It has seen notable strength recently from Coca-Cola, Sprite Zero, Fresca, Dasani, fairlife, Powerade, and BodyArmor.
The company generates returns on invested capital that are nearly double those of its consumer packaged goods competitors. It posted organic sales growth of 5% last year and just raised the dividend for the 64th consecutive year. That makes it a Dividend King, or a company that has increased its dividend for 50 years or more.Â
With an attractive forward dividend yield of 2.76% and an exceptional record of driving consistent sales, Coca-Cola can provide ballast to a portfolio loaded with growth stocks.
Today’s Change
(0.28%) $0.22
Current Price
$77.30
Key Data Points
Market Cap
$333B
Day’s Range
$77.19 – $78.05
52wk Range
$65.35 – $82.00
Volume
470K
Avg Vol
18M
Gross Margin
61.75%
Dividend Yield
3.32%
2. Procter & Gamble
Procter & Gamble is another top consumer staple that has been around for ages, delivering 69 consecutive years of dividend increases, also making it a Dividend King. It currently offers an above-average yield of 2.78% on a forward-looking basis and plans to distribute about $15 billion to shareholders in dividends and share repurchases this year.
P&G’s competitive edge is built on strong brands and superior product performance. This has led to name-brand recognition in the grocery aisle. Its product roster includes category leaders such as Tide, Pampers, Gillette, and Crest.
P&G could be a major beneficiary of artificial intelligence (AI). The company is investing in AI-powered molecular discovery. This initiative could accelerate product development, potentially lowering costs, boosting margins, and stimulating demand through a steady flow of new products.
The company has been struggling in a slow consumer spending environment, with flat adjusted sales last quarter. But it’s holding or gaining market share across most of its product categories, suggesting growth will return when consumer spending picks up again. P&G’s strong brands and AI opportunities should drive growing earnings and dividends for years to come.
