Key Points
Walmart's focus on value attracts customers during good and bad economic times.
Coca-Cola's asset-light business model allows it to operate with higher margins than competitors.
Altria has been able to use its pricing power to offset declining volume.
The stock market is always volatile, but investing in dividend stocks can help provide some stability. As long as you're investing in quality dividend stocks, you know your payouts are coming as expected. The keyword is "quality" because there are plenty of instances where a company has to cancel or reduce its dividend because it could no longer afford it.
If you're looking for dividend stocks you don't have to worry about, the following three options are worth considering. All three companies are Dividend Kings, which means they have increased their annual dividend for at least 50 consecutive years.
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Being Dividend Kings means these companies have made it through recessions, wars, and everything in between, and still managed to keep their streaks going. It's hard to argue against that consistency.
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1. Walmart
Walmart(NASDAQ: WMT) has perfected two things that resonate with virtually all consumers: convenience and low prices. It has physical stores throughout America, and it's typically the cheapest option in most places. That's why Walmart's business thrives in both good and rough economic conditions.
Although Amazon recently took the crown, Walmart had, for a while, generated more revenue than any other public company. In its latest fiscal year, its revenue was $713.2 billion -- more than Alphabet's and Microsoft's combined revenue over the past four quarters.
WMT Revenue (Annual) data by YCharts
One thing you won't have to worry about is Walmart having the cash to support its dividend. Walmart's dividend yield isn't high -- 0.74% at the time of writing -- but it has 53 consecutive years of increases under its belt.
With a thorough brick-and-mortar business and impressive growth in its e-commerce and non-retail segments, Walmart's is in as good a shape as it has been in a while.
2. Coca-Cola
Coca-Cola(NYSE: KO) has a strong case for being one of the top two most recognizable brands in the world. It has found a sweet spot in being able to distribute its products in almost every corner of the world without taking on the logistical and capital expenses required to make it happen.
Coca-Cola has an asset-light business model, in which it sells syrups and concentrates to distributors, who then deliver the products to local stores and expand distribution. It's largely why Coca-Cola has been able to operate much more efficiently than all its competitors.
Coca-Cola's products sell regardless of economic conditions. It's not going to have consistent double-digit revenue growth, but the dividends will remain steady.
It has the most impressive streak on the list, with 64 consecutive increases. Its payout ratio is around 67%, meaning it returns about two-thirds of its earnings to shareholders. That may sound like a lot, but it's undoubtedly sustainable for a company with cash flow as predictable as Coca-Cola's.
3. Altria
Altria(NYSE: MO) owns classic tobacco brands like Marlboro, Black & Mild, Copenhagen, and a handful of others. For better or worse, tobacco falls into the "sells no matter what" category, which is how Altria has managed to remain dominant for a while.
Maybe more so than the other two companies on the list, Altria has the pricing power to help offset rough patches or falling volume (as we've seen in recent years).
Tobacco users may not be happy with rising prices, but it generally takes a lot for them to switch brands or quit altogether. And in many instances, tobacco companies raise prices in unison, so there isn't as much incentive to switch to a different brand.
Altria routinely has one of the highest dividend yields in the S&P 500. Its current yield is around 6.5%, which is below its 7.7% average over the past five years. It aims for its payout ratio to be around 80% of its adjusted earnings per share, a target it typically meets. Its ratio in 2025 was just over 76%.
MO Dividend Yield data by YCharts
Altria knows its dividend is the reason most people invest in the stock, so it will do everything in its power to make sure that's the priority. It recently announced its 60th dividend increase in the past 56 years.
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Stefon Walters has positions in Coca-Cola, Microsoft, and Walmart. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Walmart. The Motley Fool has a disclosure policy.
