Dividend investing will probably never go out of style. This is not only because people generally like the idea of making some money without doing anything, but also because companies that consistently pay out and increase their payouts often have excellent underlying businesses. That’s primarily why dividend-paying stocks have outperformed their non-dividend-paying peers over long periods. Therefore, investing in high-income stocks is not a bad way to start the year 2025.
Here are two excellent candidates to consider: Coca-cola (NYSE: KO) and Visa (NYSE: V).
Brands matter. Few companies in the world have a stronger brand than Coca-Cola, the soft drink market leader. Coca-Cola’s name, reputation and presence in virtually every known country means it will continue to attract a fair amount of business. That is the company’s competitive advantage. Plus, it’s not just a leader in soft drinks, although that’s how it made its name. Coca-Cola has significantly diversified its portfolio. It offers virtually everything from alcohol to coffee and tea, sports drinks, energy brands and water.
Coca-Cola’s diversification is an essential part of its strategy. It allows you to meet the needs and preferences of different markets. And with growing concerns about the health impact of some of its most popular offerings, this strategy has also helped it reduce its exposure to these less healthy options. This way, the company can survive and thrive in a more health-conscious market. Admittedly, Coca-Cola probably isn’t a particularly attractive growth stock. Don’t expect the stock to keep pace with the leaders in artificial intelligence.
However, what it does offer is consistency and reliability. Coca-Cola posts stable revenues and profits.
KO earnings data (quarterly) from YCharts.
It has done this for a long time, backing up its incredible dividend history. Coca-Cola is the dividend king with an active streak of 62 consecutive payout increases. The company’s forward yield is 3.11%, well above the S&P 500The average is 1.32%. Coca-Cola’s payout ratio seems a little high at 74%, but the company has often maintained a fairly high payout ratio while continuing to increase its dividend. Investors have nothing to worry about: Coca-Cola will remain a great earning stock beyond 2025. It’s no surprise that the company remains one of Warren Buffett’s favorites.
Like Coca-Cola, Visa has one of the most powerful brands in its market. Millions of credit cards in circulation carry the logo of the financial industry giant, which reduces a fee for each transaction it helps facilitate through its payments network. It is true that the company’s business may be susceptible to recessions. When things get tough and consumers start spending less, Visa’s payment volume can drop, resulting in lower revenue and profits for the company.