The companies leading the artificial intelligence revolution are attracting investors like a moth to a flame. There's nothing wrong with that. These corporations have excellent prospects. However, it's important not to forget tried-and-true strategies for earning superior long-term returns.
One of them is to invest in robust dividend stocks, which often have strong underlying businesses and generate consistent revenue and earnings. Two excellent dividend stocks that are worth investors' hard-earned money right now are Coca-Cola (KO +0.17%) and Johnson & Johnson (JNJ 1.75%).
Here's what investors need to know.
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1. Coca-Cola
Coca-Cola is a leading consumer staple company. Even when the economy is down, the company's sales volume and total revenue should remain stable. That's what we are seeing here, once again.
After moving in the wrong direction for the last six months, Coca-Cola's shares recently jumped by about 4% after it announced strong third-quarter earnings. While it's usually unwise to invest in a company because of its performance during a single period, the quarterly update highlighted many of the reasons it is an excellent stock to buy in the current challenging economic environment.
Coca-Cola slightly increased its revenue by 5% year over year to $12.5 billion, with unit case volume increasing by 1%. Meanwhile, non-GAAP (generally accepted accounting principles) earnings per share (EPS) popped 6% to $0.82, partly thanks to cost management initiatives that boosted operating margins.
NYSE: KO
Key Data Points
The beverage giant grew its market share in nonalcoholic beverages during the quarter. And while not part of its earnings release, the company announced earlier this month that it would launch 7.5-ounce mini cans of its namesake beverage (and several other famous ones) at a suggested retail price of $1.29 in 2026.
That's what we can expect from Coca-Cola year in year out: a steady, reliable, highly profitable business that manages to gain market share in a highly competitive area while launching new products to help it stay ahead of consumer tastes and preferences. These qualities make Coca-Cola an excellent stock for risk-averse investors focused on the long game, especially given the company's dividend track record.
Coca-Cola is a member of the group of Dividend Kings that have raised their payouts for at least 50 consecutive years. The company's own streak stands at 63, and it likely won't end soon. Coca-Cola is a dividend stock worth doubling up on even after its significant post-earnings gains.
2. Johnson & Johnson
Johnson & Johnson has crushed broader equities this year. It's not that the company isn't facing any issues. It dealt with the loss of patent exclusivity for Stelara, an immunosuppressant and an important growth driver at its peak, in Europe in 2024 and in the U.S. this year.
The company could also see reduced sales from some medicines in the U.S. due to drug price negotiations. And that's on top of the fact that it has yet to deal with the thousands of lawsuits over its talc-based products. Despite all this, Johnson & Johnson's financial results are strong.
In the third quarter, the company's revenue increased by 6.8% year over year to $24 billion, while its adjusted EPS was up 15.7% year over year to $2.80. For a pharmaceutical giant with a recent notable patent cliff, that's not bad at all.
NYSE: JNJ
Key Data Points
Another reason Johnson & Johnson is performing well this year may be that the market sees the company as a safe haven in case of an economic or market downturn. That's accurate. J&J sells noncyclical products -- pharmaceutical drugs and medical devices. Its financial results should remain relatively strong through the peaks and valleys of the economy. Further, Johnson & Johnson's innovative capabilities will enable it to replace and replenish its current product lineup while launching new devices.
The company's pharmaceutical pipeline features about 100 active clinical trials. It is also working on a promising robotic-assisted surgery device, the Ottava, and could join this underpenetrated area within a few years. Johnson & Johnson is well equipped to handle its challenges, given its ability to develop new products and its rock-solid balance sheet. Lastly, the company is also a Dividend King with 62 consecutive years of payout increases. For dividend seekers, Johnson & Johnson is a table-pounding buy.
