With market volatility on the rise, investors are turning to safe-haven assets like dividend stocks. Dividend Kings, in particular, are reliable investments because the companies have raised dividends for the past 50 years or more, reflecting the stability of their businesses. Procter & Gamble (PG), Johnson & Johnson (JNJ), and Coca-Cola (KO) have earned the title of Dividend King. All three have increased their dividends for over 60 years in a row, making them the most consistent income-generating stocks on the market.
These companies are considered defensive stocks, meaning they tend to be resilient during periods of macroeconomic downturns due to the necessity of their products. This has also allowed their business to remain stable, allowing them to pay and increase dividends for the past 50 years and beyond.
Dividend Stock #1: Procter & Gamble
The first on my list is Procter & Gamble, a household name and a staple in the consumer goods industry. It is well-known for its portfolio of trusted brands, including Tide, Pampers, Gillette, and Crest. Over the last 68 years, PG stock has provided consistent and growing dividends to shareholders, making it a popular choice among long-term investors and dividend seekers.
Valued at $395.3 billion, P&G stock has dropped 0.6% year-to-date, compared to the S&P 500 Index’s ($SPX) fall of 4.1%.
P&G’s annualized forward dividend yield is 2.41%, compared to the consumer staples sector average of 1.89%. Plus, P&G’s forward payout ratio (the amount of money a company pays out as dividends) is 54.6%. A low dividend payout ratio indicates that the company has sufficient funds to reinvest in the business after paying dividends. Procter & Gamble is well-known for its strong financial results, which include consistent revenue growth, profitability, and impressive cash flow generation. In the second quarter of its fiscal 2025, the company’s core adjusted earnings per share (EPS) rose by 2% year-over-year.
The company generated 84% of its earnings in free cash flow (FCF) during the quarter. The company returned $2.4 billion in dividends and $2.5 billion in share repurchases during the quarter. P&G expects to generate 90% of earnings as free cash flow in fiscal 2025, paying out $10 billion in dividends and spending $6 billion to $7 billion on share repurchases. The company anticipates core EPS growth of 5% to 7% in fiscal 2025.
On Wall Street, Procter & Gamble stock is rated a “Moderate Buy.” Of the 27 analysts who cover the stock, 16 rate it as "Strong Buy," two as "Moderate Buy," and nine as "Hold." The average target price for PG stock is $182, or 8.6% higher than current levels. Furthermore, its high target price of $209 suggests a potential 24.7% increase over the next 12 months.
Dividend Stock #2: Johnson & Johnson
Founded in 1886, Johnson & Johnson is a multinational healthcare conglomerate. While the consumer products division has been spun off, the healthcare and medical devices segments are more than enough to keep the company's business stable. Valued at $392.7 billion, JNJ stock has gained 12.8% year-to-date, compared to the overall market loss.
J&J’s annualized forward dividend yield is 3.04%, far exceeding the healthcare sector average of 1.6%. Furthermore, its forward payout ratio of 44.9% is low, indicating that the company’s earnings can support current dividend payments with room for future increases. 2024 marked the company’s 62nd consecutive year of dividend increases. J&J’s revenue has consistently grown, thanks to strong demand in its pharmaceutical and medical device segments. The company has a strong pharmaceutical pipeline with drugs like Stelara, Darzalex, and Imbruvica leading the way.
In 2024, operational sales increased by 5.9% year on year, with adjusted earnings up 0.6%. J&J’s medical device segment has experienced significant growth, particularly in robotic surgery and orthopedic solutions. The MedTech segment’s revenue increased 4.8% year on year, driven by 15 new products introduced in 2024. Furthermore, the company has collaborated with Nvidia (NVDA) to use its AI platforms in J&J’s surgical suites, aiming to boost MedTech segment growth in the years ahead. The company generated $19.8 billion in free cash flow during the year, allowing it to pay dividends of $11.8 billion to its shareholders.
Overall, Wall Street rates JNJ stock as a “Moderate Buy.” Of the 22 analysts covering JNJ, eight rate it as a "Strong Buy," two as a “Moderate Buy,” and 12 as a "Hold.” The mean target price for JNJ is $169.18, which is 3.7% above current levels. Its high target price of $190 implies potential upside of 16.5% over the next 12 months.
Dividend Stock #3: Coca-Cola
Coca-Cola (KO) is one of the best-known beverage brands in the world. As a global beverage industry leader, the company has developed a diverse portfolio of beverages, including carbonated soft drinks, juices, bottled water, sports drinks, and ready-to-drink teas and coffee. The company’s asset-light model has enabled it to maintain strong margins and high profitability. Coca-Cola’s business strength has led to the company paying and increasing dividends for the past 63 years in a row, with the most recent 5.2% quarterly dividend increase last month. Valued at $300 billion, KO stock has gained 9.7% year-to-date, compared to the broader market.
In the fourth quarter, adjusted earnings per share increased by 12%, while full-year 2024 comparable EPS increased by 7% to $2.88. Adjusted free cash flow came in at $4.7 billion in 2024. In 2025, the company expects to generate $9.5 billion in free cash flow while growing adjusted EPS by 2% to 3%. This should allow it to reinvest in growth while rewarding shareholders with dividends and share buybacks.
Coca-Cola’s annualized forward dividend yield of 3% exceeds the consumer staples sector average of 1.9%. Furthermore, its forward payout ratio of 63.9% indicates that dividend payments are sustainable, leaving room for dividend growth.
Overall, Wall Street is optimistic about KO stock, rating it a “Strong Buy.” Of the 22 analysts who cover KO, 20 rate it a “Strong Buy,” one as a “Moderate Buy,” and one as a “Hold.” The average target price for KO is $76.36, 9.5% higher than current levels. Its high target price of $85 implies a potential 21.9% gain over the next 12 months.
