this S&P 500 Index (SNPINDEX:^GSPC) The dividend yield is just 1.1%. Coca Colaof (NYSE: KO) The yield is 2.6% Procter & Gambleof (NYSE: PG) The yield is 2.7%. Most importantly, however, Coca-Cola and P&G are both dividend kings, with each company having more than 50 years of annual dividend growth behind them. That’s why now might be a good time to buy one or both of these.
Coca-Cola produces beverages such as soda. Procter & Gamble makes consumer products such as deodorant, toilet paper and toothpaste. You won’t stop buying the products these companies sell because of geopolitical conflicts or economic downturns. They are necessities of life. This fact gives these two dividend kings a very solid business foundation.
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That said, both companies are industry leaders in their respective fields, offering higher-end products. However, because these products cost relatively little, they are often viewed as affordable luxury goods and have a very loyal customer base. At the same time, both Coca-Cola and P&G have strong distribution, marketing and innovation capabilities that should help them maintain growth in the coming years. In turn, this should allow their dividends to continue growing.
The fact that Coca-Cola and Procter & Gamble are industry-leading consumer staples companies is well known on Wall Street. In fact, according to Motley Fool research, they are one of the largest consumer products companies in the world. But today you can buy them at reasonable prices.
Coca-Cola currently trades at 25 times earnings, slightly below its five-year average price-to-earnings ratio of 26 times. P&G trades at just under 23 times earnings, below its five-year average of around 25 times. Neither is a great value, but they look at least reasonably priced, if not a bit cheap. An investment of $1,000 would buy you 12 shares of Coca-Cola stock or 6 shares of Procter & Gamble stock.
Even the most conservative investors should be interested in Coca-Cola and P&G amid rising uncertainty, given their seemingly unstoppable dividend growth, well-beating market-beating yields, attractive valuations, and strong business fundamentals. If there is a recession and/or bear market, you can focus on the dividends you receive rather than the stock price. This way, you can sleep well at night and wait for the market to resume its steady, long-term rise again. Just like it has done after every previous recession and bear market.
