Geopolitical concerns are flaring up around the world. There are economic concerns in the United States, as consumers are increasingly cost-conscious. In this environment, the best stocks to buy might be boring ones.
A good place to start your search if you have $1,000 or more to invest is consumer staple Dividend Kings like Coca-Cola (KO 0.03%) and Procter & Gamble (PG 1.93%).
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Why consumer staple Dividend Kings?
Consumer staples are largely life necessities, like food, water, and toiletries. You aren't going to stop buying these products, even in a recession or if geopolitical conflicts flare. You need them to live comfortably.
Dividend Kings, meanwhile, have proven they have sustainable businesses. The evidence is the more than 50 years of annual dividend increases that are required to become a Dividend King. You simply can't build a record like that by accident; it requires a strong business model that is executed well in good times and bad.
Coca-Cola and P&G
Beverage giant Coca-Cola and consumer product giant Procter & Gamble give you access to two important segments of the consumer staples sector. They are both Dividend Kings and among the world's largest consumer staples companies. They have industry-leading brands, innovation skills, marketing teams, and distribution capabilities.
NYSE: KO
Key Data Points
Coca-Cola's dividend yield is 2.5% right now, while P&G's is nearly 2.6%. By comparison, the S&P 500 index (^GSPC 1.52%) is yielding just 1.1%. The generous yields on offer here can give you something to watch other than stock prices.
NYSE: PG
Key Data Points
Coca-Cola's beverage business is holding up fairly well right now, with organic sales up 5% in the most recent quarter. P&G's consumer products business isn't doing nearly as well, with organic sales flat in its most recent quarter. That helps explain why Coca-Cola's stock is up 12% over the past year while P&G's shares are down 5% even after a recent rally.
Either one is a solid choice
Coca-Cola's price-to-earnings ratio is about in line with its five-year average, suggesting investors are paying a fair price for the stock. P&G's P/E ratio has dipped below its five-year average, suggesting it might be a little cheap right now. A $1,000 investment will let you buy 12 shares of Coca-Cola, for investors who want to stick with the strongest companies, or six shares of P&G, for those with a bit more of a value bias. Either way, you are buying a well-run company with an attractive yield and a strong core business.
