How Dividend Stocks like Coca-Cola Can Help You Rest Easy Amid Stock Market Unrest

Reuben Gregg Brewer, The Motley Fool

Tue, Apr 15, 2025, 1:55 AM 5 min read

Coca-Cola (NYSE: KO) is a famous company with an iconic brand known the world over. Operating in the consumer staples space, consumers tend to keep buying its products right through periods of stock market and economic turmoil. That's how Coca-Cola has managed to support and grow its dividend through the years despite often material headwinds.

While Coca-Cola is an elite company, it is far from the only consumer staples maker that can help you rest easy amid stock market unrest. Here are a few others.

If the stock market falls into a bear market are you going to stop buying toothpaste, toilet paper, and soda? If the economy succumbs to a recession, will you stop using soap, laundry detergent, and food? That answer, I hope, to those two questions is no. And this is why consumer staples makers are so attractive during troubled times (if not all the time).

Many of the products that companies like Coca-Cola sell aren't actually necessities. In this case you could just drink tap water instead of soda. However, the cost of most consumer staples products is fairly modest while the benefits are material, even if those benefits are really just emotional. Brand loyalty tends to run high in the consumer staples niche. Even better, consumer staples products are bought frequently because they get used regularly.

If you are having trouble sleeping at night amid market uncertainty, you should consider adding some more consumer staples stocks to your portfolio mix.

Coca-Cola is a solid choice for highly conservative investors. It has an above-market dividend yield of 2.9% backed by a dividend that has been increased annually for more than 50 years, making this beverage giant a Dividend King. The company has a global distribution network, strong R&D skills, and massive marketing heft. The only problem is that the stock looks a little expensive right now, with its price-to-sales and price-to-earnings ratios both above their five-year averages. If you're willing to pay up for safety, you might want to buy Coca-Cola.

But beverage peer PepsiCo (NASDAQ: PEP) has similar business strengths and a more diversified portfolio that includes snacks and packaged foods. It is also a Dividend King. However, the real attraction lies in its valuation, with PepsiCo's P/S and P/E ratios both below their five-year averages. Its dividend yield is an even higher 3.7%. And with PepsiCo investing in growth through bolt-on acquisitions, it is continuing to grow its business with the same playbook that has worked well for more than five decades.