If you're a retiree, you may be concerned about how safe it is to invest in the stock market right now. Valuations are high, economic conditions are questionable, and it's getting more difficult to find quality investments to hang on to and that you won't need to worry about.
But in times like these, there are still safe, high-yielding stocks that you can put your money into and collect a dependable dividend from, while having confidence that their yields will remain high. Two of the best dividend stocks you can buy today (and also happen to pay more than double the S&P 500 average of 1.1%) are AbbVie (ABBV +1.09%) and Coca-Cola (KO 0.13%).
Here's what makes these dividend stocks stand out.
Image source: Getty Images.
1. AbbVie
Drugmaker AbbVie spun off from Abbott Laboratories in 2013, and it has continued to not only pay but also grow its dividend since then. And if you go back and include the time it was part of Abbott, then it qualifies as a Dividend King, having raised its payout annually for at least 50 consecutive years.
The company doesn't make just modest increases, either. At the start of 2021, it was paying investors $1.30 per share each quarter. Over five years, AbbVie has boosted that dividend by 33%, to $1.73 today. That translates into a yield of 3.2% right now.
AbbVie has experienced some volatility in its earnings (due to acquisitions), which makes its payout ratio at the moment look concerningly high at well over 100%, but this is a much safer dividend stock than that ratio would suggest. In the trailing 12 months, the company's free cash flow has totaled nearly $20 billion -- far higher than the $11.5 billion it paid in dividends over that time frame.
NYSE: ABBV
Key Data Points
The healthcare stock has a diverse mix of products that make up its strong, consistent numbers. And it has added to its pipeline over the years via acquisitions, setting it up for more potential growth in the years ahead. The stock's low beta value of 0.35 is another great reason to love it for the dividend income, as it isn't likely to show wild swings in value. In 2022, when the S&P 500 crashed by 19%, shares of AbbVie rose by more than 19%.
Overall, AbbVie can be a rock-solid income investment to hang on to for both the short term and the long haul.
2. Coca-Cola
A top name that undoubtedly comes to mind if you're considering dividend investing is Coca-Cola. It's also a Dividend King, having raised its annual payout for an impressive 63 straight years. In five years, it has grown its payout by 24%, which is a more modest rate than AbbVie's but still a solid pace that helps retirees offset the effects of inflation. Currently, it yields 2.9%.
This is another low-volatility stock, as Coca-Cola's beta is 0.39. And in 2022, its share price rose by more than 7%, as it also defied the stock market's decline that year, highlighting its resilience to challenging market conditions.
NYSE: KO
Key Data Points
Coca-Cola has been able to raise prices amid inflation and largely weather the economic storm in recent years. While its sales haven't been through the roof, it has been able to steadily increase its top line by 3% in 2024 and 6% the year before that.
This is the type of steady growth that can be counted on for dependable and consistent gains for investors, and leads to more dividend growth in the future. Coca-Cola's payout ratio sits at around 67% today, leaving plenty of room for more rate hikes. This is another stellar investment that can be ideal for risk-averse investors who just want to collect a dividend and not worry about anything else.
