This year proved volatile for the stock market. The S&P 500 index swooned in March and April but gained 17.9% through Dec. 24. Of course, no one knows what 2026 will bring, but there have been some signs of economic weakness, particularly in the labor market.
Buying the stocks of reliable dividend-paying companies is one way to mitigate the volatility of stock prices. After all, these companies have strong histories of making payouts during various economic climates, which provides a stable source of return.
Coca-Cola (NYSE: KO) and Target (NYSE: TGT) top my list of dividend stocks to buy right now. It’s time to look a little closer at each one to find out why.
Many people around the world recognize the Coca-Cola (NYSE: KO) brand. The company began selling its soda under its namesake brand in 1886. Presently, its beverages include soda, water, coffee, tea, juice, value-added dairy, and plant-based drinks, which it sells in more than 200 countries.
Coca-Cola isn’t a mature company with sliding sales, however. Third-quarter revenue, adjusted to remove foreign currency translation effects and acquisitions/divestitures, grew 6%.
The increase was entirely due to higher prices/changing mix, but that’s because the consumer has been stretched thin by higher prices across the board. I am confident volumes will increase when inflation abates.
The company has built an impressive dividend history. In February, the board of directors announced a 5.2% increase in the quarterly dividend to $0.51 a share, bringing Coca-Cola’s streak to 63 straight years of raising dividends and continuing its Dividend King status. (Dividend Kings have increased payments for at least 50 consecutive years.)
Coca-Cola continues to generate higher profits to support dividend payments. Its quarterly adjusted earnings per share grew 12%, and the company has a payout ratio of 67%. The stock has a 2.9% dividend yield, higher than the S&P 500 index’s 1.1%.
Target (NYSE: TGT) sells everyday basic items but is known for its differentiated, unique merchandise. Unfortunately, its sales have been sluggish for some time. That’s partly due to macroeconomic conditions, including stubbornly high inflation and a weakening labor market, but management also admitted merchandising missteps played a role.
Target will have a new CEO starting on Feb. 1, when current COO Michael Fiddelke will take the helm. He has promised to invest in store upgrades, technology, and return the company to a higher portion of differentiated merchandise, which has traditionally driven store traffic.