Coca-Cola and the power of diversification
Stock Market Analysis

2 Recession-Proof Dividend Stocks

The terms “recession-proof” and “solid dividends” are like music to most investors’ ears. Here are two household-name stocks that can promise both.

As the world continues to fight against the coronavirus pandemic and braces itself for the inevitable economic consequences of that battle, investors are turning to stocks that offer more reliable virtues: durability, longevity, and a steady input of cash in the form of dividends.

These next two companies embody all of these virtues. They are iconic within their respective industries (and outside of them). They are hugely profitable. And they don’t look to be going anywhere for quite some time. 

1. The Coca-Cola Company

Founded in 1892 and a public company since 1919, Coca-Cola (NYSE: KO) stock can boast of being a “sure thing” just as much as its core products can. The stock has long been a celebrated member of the so-called “Dividend Aristocrats” group — that’s to say, those S&P 500 (NYSEARCA: VOO) companies that have managed to increase dividend payouts for more than 25 consecutive years.

In fact, Coca-Cola passed that milestone a long time ago. In 2020, the company achieved its 57th consecutive year of annual dividend growth. Central to this extraordinary success is its ability to adapt to new market demands while simultaneously doubling down on its flagship brand. The recent swerve among consumers toward healthy drinks seemed to pose a major risk to Coca-Cola’s continued dominance of the beverage industry. Yet under the leadership of CEO James Quincey, the company has invested heavily in a number of organic and sugar-free alternatives. With as many as 500 products in its portfolio, Coca-Cola continues to reign supreme in the refrigerated drinks aisle of practically every supermarket on the planet.

The company currently pays a dividend yield of roughly 2.9%, which is, incidentally, higher than the 2.77% paid out by long-time rival, PepsiCo (NASDAQ: PEP). The combination of strong dividends and encouraging long-term prospects has made the company a favorite among investors noted for their prudence, none more so than Warren Buffett, whose 400 million Coca-Cola shares amount to a stake of almost 10%.

Start our Get Started Challenge to become a fully-fledged investor in just 7 days!

2. Microsoft Corporation

Like Coca-Cola, Microsoft (NASDAQ: MSFT) is a company that has become a permanent fixture in billions of lives. The company’s legendary founder, Bill Gates, has seen his star rise even higher lately as a result of his prescient comments addressing the danger of potential pandemics.

Gates’s sensitivity to systemic threat is reflected in Microsoft’s very structure, which, even under new leadership, has become increasingly diversified across the entire high-tech space. The company’s third-quarter results this spring surprised some investors by revealing that the COVID-19 crisis had shown little negative impact on its bottom line, with the promising cloud service, Azure, growing a full 59% in the quarter. Far from a fluke, these results demonstrate the company’s robustness in the face of unforeseen events.

With a yield hovering around 1.15%, Microsoft dividends are hardly eye-popping. On the other hand, these dividends have been increasing annually for almost a decade. As the company holds forth amid coronavirus uncertainty, there are plenty of compelling reasons to believe that such payouts will continue to go up.


MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in StoneCo. Read our full disclosure policy here.

Jamie O'Donoghue
Jamie O'Donoghue
Jamie is a contributing writer for MyWallSt.