In today's volatile market and challenging economy, dividend stocks may be just what many investors need. Dividends can be a source of passive income -- something that could come in handy with nearly 40-year-high inflation -- and help smooth out market losses.

That said, not all dividend-paying companies are created equal, and it is essential to pick those unlikely to reduce or cancel their payouts even amid economic troubles. Let's look at two excellent dividend stocks that fit the bill: Merck (MRK 0.92%) and Bristol Myers Squibb (BMY 0.43%).

1. Merck 

Merck is one of the largest pharmaceutical companies in the world with an impressive portfolio of medicines, none more famous than cancer therapy Keytruda. The drugmaker has earned dozen of indications for its crown jewel with no end in sight. Keytruda accounts for a decent share of Merck's total revenue; it is also its fastest-growing product in terms of sales. 

In the third quarter, Merck's top line jumped by 14% year over year to $15 billion. Keytruda's sales came in at $5.4 billion, growing 20% year over year and accounting for a little more than 33% of Merck's top line. Merck does have other key products, including its HPV vaccines Gardasil and Gardasil 9, whose combined sales for the period came in at $2.3 billion, 15% higher than the year-ago period.

Merck also racked up $284 million in sales from cancer medicine Lynparza, 16% higher than the prior-year quarter. The company's animal health unit saw its revenue decrease by 3% year over year to $1.4 billion. However, it's important to note that currency exchange rate fluctuations negatively impacted Merck's animal health segment and the rest of the company's business as well. 

These issues shouldn't last forever, and at any rate, Merck's overall performance was strong as its pharmaceutical business more than made up for its animal health unit. The company's adjusted earnings per share (EPS) increased by 4% year over year to $1.85. Merck has a solid pipeline of medicines, which should allow it to produce more blockbuster products to beef up its lineup. 

Finally, the company's solid business will help continue to support its dividend. Merck shares currently offer a yield of 2.68% -- above the S&P 500's average of 1.82% -- and the company has raised its dividend payouts by almost 20% in the past three years, even amid a pandemic and severe economic challenges. Merck will likely continue to reward shareholders with dividend increases in 2023 and beyond, no matter what the market throws at investors next. 

2. Bristol Myers Squibb

Bristol Myers is another leading pharma giant with an impressive list of medicines, including cancer drugs Opdivo and Revlimid, blood thinner Eliquis, immunosuppressant Orencia, and others. However, some of the company's products are facing generic competition, which is taking a bite out of the company's sales.

Bristol Myers' revenue decreased by 3% year over year in the third quarter to $11.2 billion. The company's adjusted EPS still grew by 3% year over year to $1.99. The company s is also replacing its older drugs with newly approved ones. Bristol Myers has a lineup of newer medicines that generated $533 million in revenue in the third quarter, 61% higher than the year-ago period.

These products will likely keep growing their sales for a long time without running into patent cliffs. Three of them -- cancer medicine Opdualag, plaque psoriasis drug Sotyktu, and heart disease therapy Camzyos -- earned approval this year and will each generate more than $4 billion in annual sales by 2029, according to the company.

Bristol Myers likely isn't done earning key approvals. The company is developing another cancer therapy called repotrectinib, which it expects will be granted the regulatory green light by the end of 2023. So despite the recent patent cliffs, Bristol Myers is more than capable of bouncing back and delivering solid financial results from here on out.

On the dividend side, the company offers a yield of 2.89% and has raised its payouts by almost 27% in the past three years. In short, Bristol Myers is a solid, blue-chip company for long-term-oriented, risk-averse, and income-seeking investors. 

Keep calm and keep investing

This year has been scary for investors, and if predictions of a recession next year come to pass, things could get still worse. But even if that happens, investors should seek refuge by buying shares of companies like Merck and Bristol Myers Squibb.

Thanks to the products they offer that are always in high demand, their steady revenue and profits, and strong and growing dividends, these two stocks can help navigate any market downturn and continue growing long after it ends.