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Coca-Cola’s 63-year dividend streak and high yield make it a solid buy.
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Constellation Brands’ strong market position in beer and wine makes its recent stock sell-off a great buying opportunity.
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10 stocks we like better than Coca-Cola ›
Investing in top consumer brands that pay reliable dividends can be more rewarding than some investors realize. For example, Hartford Funds found that 85% of the S&P 500‘sreturn since 1960 would have come from reinvesting dividends.
Regular cash deposits in your brokerage account come in handy when market volatility gears up, as it inevitably will. We’ll look at two top consumer goods stocks that offer high yields, making now a great time to buy more shares or start a new position.
Coca-Cola (NYSE: KO) is one of the best dividend stocks to hold for the long term. It has increased its dividend for 63 consecutive years, making it one of the elite Dividend Kings (a company with at least a 50-year streak of growing its dividend). After reaching a 52-week high of $74 this year, the stock has pulled back, providing a good buying opportunity.
Coke is a very profitable business that owns dozens of top beverage brands, including Sprite, Dasani, Simply, and several others across different categories. Over the last year, it generated $12 billion in net income on $47 billion of revenue. The company usually distributes around three-quarters of its earnings in dividends.
Coca-Cola has a capital-light business strategy. Finished or bottled products make up only 15% of its unit case transactions. Most of its unit sales, or 85% of the total, come from selling concentrate syrups to its bottling partners. Selling syrup is a lucrative business, allowing Coca-Cola to earn a high profit margin of 25% over the last year.
It has delivered steady sales through many economic cycles, making it a resilient dividend payer. Its local distribution capabilities around the world make it relatively immune to the impact of tariffs on imported goods. Moreover, the strength of its brands allows it to pass higher costs on to the consumer by increasing selling prices that don’t materially impact sales volume.
The stock offers solid value right now, trading at almost 23 times this year’s earnings and offering an attractive forward dividend yield of 3% based on its current quarterly payout of $0.51.
Constellation Brands (NYSE: STZ) has gotten a lot of investor attention this year after Warren Buffett’s Berkshire Hathaway disclosed a small stake in Q4 2024. The stock has fallen 37% year to date over weak sales, which has brought the forward dividend yield up to almost 3%. For a long-term shareholder, the dip is an opportunity to invest in this top beer stock at a big discount.
