September is generally considered a tough month for stocks due to a combination of investors returning from vacations, mutual funds dumping losers before the end of the fiscal year, and tax loss selling. However, there are still plenty of income-generating stocks that are worth buying in this volatile month. Let's take a look at three stocks that fit that bill: American Eagle Outfitters (NYSE:AEO), Coca-Cola (NYSE:KO), and Magellan Midstream Partners (NYSE:MMP).

A boy holds a blackboard displaying "buy" and "sell" arrows.

Image source: Getty Images.

A "best in breed" American retailer

Leo Sun (American Eagle Outfitters): American Eagle Outfitters' stock more than doubled over the past 12 months, fueled by a streak of solid comps growth that outpaced many of its peers in retail apparel. Here's how well AEO's namesake brand and its lingerie and activewear brand, Aerie, fared over the past year.

  Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
American Eagle 0% 1% 5% 4% 7%
Aerie 26% 19% 34% 38% 27%
Total 2% 3% 8% 9% 9%

Source: AEO quarterly reports.

Last quarter, AEO attributed the accelerating growth of its namesake brand to strong demand for its jeans and bottoms, rebounding sales of men's apparel, and "speed sourcing" strategies to counter fast-fashion rivals like H&M. It attributed the growth of Aerie to robust sales of its apparel, bras, underwear, and swimwear. 

AEO also owns the smaller Tailgate and Todd Snyder brands, which give it footholds in the university apparel and high-end menswear markets, respectively. The retailer also continues to grow its sales as it expands both its gross and operating margins while consistently growing its digital sales by the double digits. 

Wall Street expects AEO's revenue and earnings to grow 6% and 29%, respectively, this year. Those are solid growth rates for a stock that trades at just 16 times forward earnings. AEO currently pays a forward dividend yield of 2.2%, and it spent just 41% of its earnings on that dividend over the past 12 months -- which gives it plenty of room for future hikes.

This stock's perking up

Dan Caplinger (Coca-Cola): It's hard to find a dividend stock with a more impressive history of treating shareholders well than Coca-Cola. The beverage giant rewards its shareholders currently with a dividend yield of 3.5%, and the company has never been stingy about giving its investors more over time. For the past 56 years, Coca-Cola has consistently delivered higher dividend payments each and every year, putting the soft-drink mogul among the top ranks of blue-chip dividend stocks.

Coca-Cola has been under pressure lately because of concerns about the health impacts of its sugary carbonated beverages, and that's forced the drink giant to consider alternatives. The most exciting recent news on that front was Coca-Cola's decision to acquire retail coffee-chain company Costa for $5.1 billion, making a big push to challenge industry players that have focused more squarely on coffee for years. With the move, Coca-Cola will get instant exposure in thousands of stores in international markets in Europe, Africa, and the Asia-Pacific region. Proponents of the deal believe that Coca-Cola's distribution and marketing prowess could provide synergy with Costa's perception of quality. Skeptics point to an ultra-competitive market for coffeehouses, but Costa has thus far done well and has room for further growth.

Two glasses of cola.

Image source: Getty Images.

Growth is important for dividend stocks, and Coca-Cola is charting a course for potential success. Meanwhile, shareholders can keep collecting dividend checks as they wait to see how lucrative Costa might become for Coca-Cola's overall business.

Dip a toe in the midstream

John Bromels (Magellan Midstream Partners): Many infrastructure companies offer competitive dividend yields. Master limited partnership (MLP) Magellan Midstream Partners is no exception, currently yielding about 5.4%, thanks in part to some of the tax incentives that MLPs enjoy. Like many midstream MLPs, Magellan owns a large network of pipelines and terminals in the U.S. Unlike other companies, though, it doesn't handle gas, focusing instead on transporting crude oil and refined petroleum products. Magellan owns the largest network of refined product pipelines in the country. But what makes Magellan a particularly good buy is its reliability.

Most of Magellan's revenue is fee based, which means that customers pay Magellan to move their products along its network. That insulates Magellan from the day-to-day fluctuations in the price of oil. Thanks to the size of its pipeline network and high terminal utilization rate, it also ensures a steady revenue stream to fund Magellan's distribution (the MLP version of a dividend).  

And that distribution keeps growing at a compounded annual rate (CAGR) of 12% since 2001. Management is projecting an 8% increase for 2018, which will still allow for a coverage ratio of 1.2 times. That means that investors are getting a good growth rate without much risk.

Magellan's high yield, solid business model, commitment to growing its distribution, and excellent coverage make it a solid choice to buy in September. 

Dan Caplinger has no position in any of the stocks mentioned. John Bromels owns shares of Coca-Cola. Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Magellan Midstream Partners. The Motley Fool has a disclosure policy.