Many consumer goods companies may have seen their stock prices battered due to persistently high inflation and employment concerns. The Iran war and the corresponding rise in oil prices add a new potential roadblock for consumers.
But consistent dividend-paying stocks can provide a buffer until times improve. Of course, you have to choose the right stock with a long time horizon in mind. And it's not merely those with the highest dividend yield.
Coca-Cola (KO +0.45%) and Altria Group (MO +1.78%) have relatively high dividend yields compared to the S&P 500 index's 1.2%. But I'd aggressively buy Coca-Cola's shares while avoiding Altria Group.
Image source: Getty Images.
Load up on Coca-Cola
Coca-Cola sells its beverages, including soda, water, and juice, in more than 200 countries. Its sales, adjusted to remove foreign-currency translation effects and the impact of acquisitions/divestitures, grew 5% last year.
Digging deeper, volume accounted for only 1 percentage point of the gain, with price increase/mix representing the balance. Still, given the tough economic climate, this isn't concerning, especially since Coca-Cola continues to increase market share.
Positively, the company's adjusted earnings per share jumped 9%. With a payout ratio of 67%, it has plenty of income to cover its dividends.
NYSE: KO
Key Data Points
In fact, Coca-Cola has a long commitment to not only paying dividends but raising them consistently. Last month, the board of directors increased the quarterly rate by about 4% to $0.53 a share.
That brought the company's streak to 64 straight years with a dividend increase. Coca-Cola has earned a place as a Dividend King, an elite group of companies that have raised dividends for at least 50 consecutive years.
At the new dividend rate, Coca-Cola's stock has a 2.7% dividend yield, 1.5 percentage points higher than the S&P 500.
Avoid Altria Group
Altria Group makes and sells tobacco products. While smokeable products (includes cigarettes and cigars) generate most of the company's revenue, it also sells oral tobacco and e-vapor products.
Altria's revenue has been dropping, and that includes last year. The company's top line, excluding excise taxes, fell 1.5% in 2025, to $20.1 billion. In 2024, revenue fell 0.3%.
Its core smokeable products segment experienced a revenue decline of 1.6% to $17.4 billion. More troubling, its cigarette volume continued falling and losing market share. The number of cigarettes sold dropped 10% last year to 61.8 billion, and it held a 45.2% share, down 0.7 percentage points.
NYSE: MO
Key Data Points
Using free cash flow (FCF), which is operating cash flow minus capital expenditures, Altria has a cushion to pay dividends. It produced FCF of $9.1 billion in 2025, and it paid dividends of $7 billion.
The company also belongs to the Dividend King group, having raised its payout for 56 straight years. Altria's stock has a seemingly impressive 6.3% dividend yield.
However, while it doesn't seem likely Altria will cut its dividend anytime soon, reviving revenue growth seems very challenging given that its core business has been losing market share. That's why I'd avoid Altria's shares.
