"Tariff" has probably been the most used word in the business and investing world since U.S. President Donald Trump announced his new tariff plan on April 2.
The newly announced tariffs caused the stock market to plummet in the following days, and another word began to circulate more and more: recession. Concerns about how new tariffs could affect prices, supply chains, and economic growth have caused many people to believe a recession is more likely to happen. JPMorgan even recently raised its recession probability to 60%.
Even as recession chances increase, I'm not shying away from the market. The following two dividend stocks are worth considering regardless of market conditions.
1. Coca-Cola
Even as the broader market dropped following the tariff announcements, Coca-Cola's (KO 0.01%) stock trended in the opposite direction. It's now up over 14% year to date as of closing on April 10.
NYSE: KO
Key Data Points
Part of Coca-Cola's recent rise is due to investors looking for "safe" stocks, with so much uncertainty in the market and economy. There's no completely recession-proof stock, but Coca-Cola is as recession-resistant as you'll find. It has rock-solid financials, a world-class distribution network, and products that sell regardless of economic conditions.
When money is tight, people cut back on a lot of expenses. They hold off on updating their electronics, buying new clothes, eating out, and other frivolous spending. They don't usually stop buying Coca-Cola's products.
There have been instances when Coca-Cola's revenue has slowed or dropped (like during the COVID-19 pandemic), but for the most part, its business is built to weather any ups and downs the economy throws its way.
KO Revenue (Annual) data by YCharts.
Revenue aside, the true appeal of Coca-Cola's stock is its dividend. It pays out a $0.51 quarterly dividend, with an average yield of around 2.9% over the past 12 months. You may not be able to control or predict stock price movements, but Coca-Cola's dividend is as reliable as it comes. It has increased its annual dividend for 63 consecutive years, a feat that only eight companies have surpassed.
When uncertainty is high, you want to invest in companies that provide stability (and ideally, income), which Coca-Cola provides.
2. AT&T
AT&T's (T 0.40%) stock has been a pleasant surprise over the past 12 months, up over 64%. That's a nice change from the stock's struggle in the years leading up to its recent run.
NYSE: T
Key Data Points
Let's start with the bad news. AT&T's business relies a lot on imported goods for its equipment, so new tariffs will likely cut into its margins. Other industries have the pricing power to pass on higher costs to customers, but the competitive nature of the telecom business means AT&T will likely absorb these higher costs to avoid potentially losing customers to competitors.
The good news is that AT&T's business has turned around to the point where its free cash flow is sufficient enough to take on these higher costs without threatening its dividend. Much like Coca-Cola, the appeal of AT&T's stock is its dividend. Even after slashing the dividend by nearly half in 2022, it has maintained one of the highest yields in the S&P 500.
T Dividend Yield data by YCharts.
AT&T is a relatively safe option for investors because the telecom business has become essential to everyday American life. Everything from your smartphone to the internet to business connectivity relies on it, and AT&T remains a leader in the industry.
Its postpaid phone business has been thriving, with 1.7 million net adds in 2024. And its fiber business has been picking up steam, with 1 million net adds in 2024 (its seventh consecutive year adding at least that amount).
AT&T's slimmed-down business (it spun off its WarnerMedia division in 2022) has allowed it to focus on its core telecom business, which has proved to be one of the best moves the company has made in the past decade. Investors now know they're getting a company that's fully committed to its core business and to returning shareholder value.
