President Donald Trump’s trade policies have introduced plenty of volatility to the stock market this year. Steeper tariffs could impact consumer spending and the broader economy in ways that could harm many corporations’ financial results. And even though equities have performed well this year, we might not be out of the woods just yet.
That’s why it’s a great idea to invest in stocks that can navigate these challenges and perform well over the long run. Among them are companies that have been paying out dividends for a long time — a testament to their stability and reliability. Specifically, Dividend Kings are those companies that have raised their dividends for at least 50 consecutive years. They are a great way to navigate the uncertainty in the stock market.
Coca-Cola(NYSE: KO) and Abbott Laboratories(NYSE: ABT) are two great examples along those lines. These two companies can offer stability and income to investors, as they belong to the exclusive group of Dividend Kings. Here is what investors need to know about Coca-Cola and Abbott Laboratories.
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Coca-Cola’s business is steady and consistent, exactly what many investors look for in a volatile environment. Coca-Cola is a leading consumer staples company with a diverse portfolio of beverages that includes soft drinks, water brands, alcoholic beverages, sports drinks, and more. The demand for the company’s products is relatively stable, allowing it to generate consistent revenue and earnings. It may seem odd to describe Coca-Cola as an innovative company, but that’s precisely how it has maintained its strong position in the industry for decades.
Consumer tastes and preferences constantly evolve. Had Coca-Cola not innovated and launched new products and brands, it likely wouldn’t have been nearly as successful over the long run.
The company is still at it. This year, it launched an orange cream-flavored Coca-Cola and introduced a tea-flavored Sprite, among other products. As management has pointed out, the popularity of most new products tends to fade over time, so it’s essential to stay ahead of consumer demands. Coca-Cola has proven it can do that about as well as any of its competitors. That, combined with its existing lineup and the company’s brand name — which grants it a strong economic moat — makes the company’s prospects look attractive.
Furthermore, Coca-Cola’s business is somewhat insulated from the impact of tariffs, as the company manufactures most of its products in each region where it operates, including the U.S. Turning to Coca-Cola’s dividend track record, the company has increased its payouts for an impressive 63 consecutive years. Coca-Cola is a great pick considering today’s precarious environment, and the stock is worth holding on to for a long time.
Abbott Laboratories, a medical device specialist, has performed well this year — the stock is up by 16% year to date. The company’s financial results have been pretty strong. In the second quarter, Abbott Laboratories’ revenue increased by a solid 7.5% year over year to $11.1 billion. Sales from the company’s medical device segment grew by an even better 13.4% year over year to $5.4 billion, or almost half of Abbott Laboratories’ top line. Abbott Laboratories’ medical device unit is diversified across several therapeutic areas, with diabetes care leading the way, thanks to Abbott’s FreeStyle Libre Franchise, a series of continuous glucose monitoring (CGM) devices.
The healthcare giant’s FreeStyle Libre has been its biggest growth driver for years, but there is still plenty more where that came from. Abbott estimated a couple of years ago that less than 1% of the world’s diabetics have access to CGM technology, even though these devices lead to better health outcomes for diabetes patients. Abbott’s FreeStyle Libre franchise should be a powerful long-term tailwind for the company.
The company’s diversified business, with segments across pharmaceuticals, diagnostic devices, and nutrition, further strengthens its operations. Abbott Laboratories benefits from a competitive edge from several sources, including its deep footprint in the healthcare sector and thousands of patents that prevent competitors from copying its innovative devices. This grants Abbott Laboratories some degree of pricing power. Thanks to its moat and attractive growth prospects, Abbott Laboratories should generally perform well over the long term.
Lastly, the healthcare giant has increased its payouts for 53 consecutive years. Rounding it all out, Abbott Laboratories looks like a reliable income stock to buy right now.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.
