This could be a good time to consider dividend-paying investments for your portfolio. If the Federal Reserve does lower rates as early as next month, stocks with long streaks of boosting payouts can deliver higher payouts at a time when fixed income options are going the other way.
You don't need a lot to hop on the dividend train. Even putting $500 to work in Coca-Cola (KO -0.67%) or Realty Income (O -0.26%) can pay off for long-term investors. Let's take a closer look at these two income generators that also have the potential to drum up capital appreciation.
1. Coca-Cola
There's no need to get you up to speed when it comes to investing in Coca-Cola. The king of pop has been in business for 135 years, and its reach spans 200 brands sold across more than 200 countries and territories. It's not just the namesake carbonated cola that put it on the map. Beyond the sparkling variety, Coca-Cola has hydration, coffee, tea, juice, and dairy products. The beverage stock owns 30 different brands topping at least $1 billion in annual sales apiece.
Today, 2.2 billion Coca-Cola-owned beverages will be served. Like its old slogan, Coca-Cola as an investment is the real thing.
Coca-Cola checks a lot of the boxes to quench the thirst of dividend investors. Let's lead with the payout itself. The current 2.9% yield is healthy, and the actual distributions are close to a lock to keep rising. Coca-Cola is a Dividend King, stretching its streak of annual hikes to 63 years in 2025.
Image source: Getty Images.
There are some knocks for sugary soft drinks and consumption trends, but zoom out to look at the whole picture. Revenue growth has been positive in each of the last four years. It's been a flat start to 2025, but the fizz is coming. Analysts see revenue topping 5% over the final six months of the year.
The bottom line has been an even bigger star in Coca-Cola's run. The positive surprises aren't flashy, but they're consistent. Just check out Coca-Cola's last six financial updates.
| Period | EPS Estimate | Actual EPS | Surprise |
|---|---|---|---|
| Q1 2024 | $0.70 | $0.72 | 3% |
| Q2 2024 | $0.81 | $0.84 | 4% |
| Q3 2024 | $0.75 | $0.77 | 3% |
| Q4 2024 | $0.52 | $0.55 | 6% |
| Q1 2025 | $0.72 | $0.73 | 2% |
| Q2 2025 | $0.84 | $0.87 | 4% |
Data source: Yahoo! Finance. EPS = earnings per share (adjusted).
Coca-Cola may not seem cheap at 22 times next year's profit target. It's a premium to the single-digit growth that investors should expect on both ends of the income statement in the next couple of years. However, I will argue that it's a cheap multiple for one of the world's top brands. Offering low-priced refreshment makes it a company that should fare well even in a slow economy. With a trailing net margin north of 25% and a long runway of annual dividend hikes to come, don't dismiss the pop star. It's time to get fizzy with it.
2. Realty Income
If Coca-Cola turns heads with its run of 63 straight years of payout boosts, Realty Income has delivered 111 quarters of hikes over the past three decades. Its current yield of 5.5% is also nearly double what the Coke folk are distributing. Realty Income also is one of the few companies announcing monthly disbursements, a handy move for folks leaning on the frequency of dividend checks.
Realty Income is a real estate investment trust (REIT). It manages a portfolio of more than 15,000 commercial real estate properties. This might seem like a tough spot to be in if the economy takes a tumble in the coming quarters, but its long streak of dividend increases shows how well it's been able to manage the volatility. Its largest industry concentrations are convenience stores, supermarkets, and dollar stores that fall into the non-discretionary basket of consumer purchasing habits. It estimates that 91% of its lease payments come from retail chains and service providers that are either recession-resilient or not challenged by the threats of e-commerce.
Its current annualized distributions of $3.228 per share are easily covered by the $4.24 to $4.28 in adjusted funds from operations per share that Realty Income is targeting for all of this year. Yielding a lot more than even the most generous of money market funds is compelling, but it's not a fair comparison. Before bouncing back in 2025, the REIT saw its share price decline slightly for three consecutive years. The monthly distributions in that time were not enough to cover the downticks. However, those down years combined with its long track record of payout boosts make this a good time to consider Realty Income with money market fund rates sliding over the past year.
