With stubborn inflation, uncertainty around what will happen next with interest rates, and higher gas prices, some investors aren't buying into the recent stock market rally. That's understandable as no one wants to get caught flatfooted if momentum stalls and portfolios are left without any defensive positions.
To be clear, a defensive position doesn't mean market crash-proof, as all companies feel ripples from downturns in some shape or form. But there are companies that have proven they can bend but not break during severe market pullbacks and crashes.
Companies that fit that criteria are Dividend Kings, meaning they have increased their dividend payouts for 50 or more consecutive years, which is a sign of a strong business. No matter what's been happening in the economy and the broader world, those companies have always managed to keep boosting their dividend payouts.
Three companies that have hit that elite status are PepsiCo (PEP 1.92%), Black Hills (BKH 1.04%), and Colgate-Palmolive (CL +0.36%).
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1. Drinks and snacks help hike dividend payouts
PepsiCo's rival, Coca-Cola, is also a Dividend King, with 63 years of consecutive dividend increases, and it leads Pepsi, which has increased its dividend payouts for 54 years. Coca-Cola is another quality dividend-paying stock, but I've included Pepsi on this list because it has its rival beat in terms of dividend payout, as many people will want to generate more income during a market downturn. Coca-Cola's dividend currently yields 2.6%, while PepsiCo's yields 3.9%.
Unlike Coca-Cola, PepsiCo also has a broader portfolio of products, including drinks and snacks; its snack division could experience meaningful revenue growth in the years ahead. Grand View Research forecasts the global snack market will climb in value from roughly $719 billion in 2024 to over $922 billion by 2030.
NASDAQ: PEP
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During an economic downturn, people tend to cut back on expenses like vacations and big-ticket purchases, but snacks and drinks remain an affordable luxury. That helps PepsiCo keep its edge. That said, this isn't an investment to own for stock price appreciation, but it will pay you a dividend with a respectable yield, no matter what's happening in the economy.
2. The utility Dividend King
This list primarily consists of consumer goods stocks, but I added Black Hills to offer some variety, as utility providers have critical services people will always need.
The company's subsidiary, Black Hills Energy, provides electric utilities and natural gas to over 1 million customers. It also has a utility partnership with Microsoft in Wyoming, and its energy assets and customer base could also soon expand, as it's in a definitive agreement to merge with NorthWestern Energy Group. Together, the combined company would have over 2 million customers across eight states.
To earn the Dividend King title, Black Hills has increased its payout for 56 consecutive years, with that dividend yielding 3.7%. If the NorthWestern merger is approved, the combined company plans to continue paying dividends.
NYSE: BKH
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3. From toothpaste to dog food
Rounding out this list is Colgate-Palmolive, which has a huge portfolio of products that people will always buy. It makes Colgate toothpaste, Irish Spring soap, and Palmolive dishwashing liquid, and it owns the pet prescription food company, Hill's Pet Nutrition.
The company recently posted strong 2026 first-quarter results, with $5.3 billion in net sales, marking the fourth consecutive quarter of record net sales for Colgate-Palmolive. However, the company issued some warnings for the rest of the year. It expects packaging and material costs to rise and shared a few scenarios in which it could incur additional costs.
NYSE: CL
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Still, the company has been around long enough to handle plenty of uncertainty and has still increased its dividend payout for 63 consecutive years. That dividend payout currently yields 2.3%.
