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Written by Reuben Gregg Brewer for The Motley Fool->
The geopolitical conflict in the Middle East has pushed oil prices higher and increased concerns about a recession.
The S&P 500 index continues to hold near its all-time highs.
Investors should consider shifting into reliable dividend stocks operating in resilient industries.
The S&P 500 index (SNPINDEX: ^GSPC) is trading near all-time highs despite the geopolitical conflict in the Middle East, high oil prices, and increasing concerns around a global recession. If you are like me, you probably watch all this with wonder, trying to understand why Wall Street is so positive given all of the negatives in the world today. Now could be a time to downshift on risk, leaning into investments that have proven track records, like Johnson & Johnson (NYSE: JNJ) and Coca-Cola (NYSE: KO).
Johnson & Johnson is one of the world's largest healthcare companies. Coca-Cola is one of the world's largest consumer staples companies. While they operate in entirely different industries, there are two things that tie them together from an investment standpoint. First, healthcare and food are both necessities that you will continue to buy regardless of the stock market or economic environment.
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Second, J&J and Coca-Cola are both Dividend Kings, with each having increased its dividends annually for more than five decades. You simply can't build a dividend record like that by accident. It requires a strong business model that gets executed well in both good times and bad. Coca-Cola's yield is 2.7%, and J&J's is 2.3%. Both are well above the S&P 500 index's tiny 1.1% yield.
Coca-Cola is actually performing very well right now as a business. Despite industry headwinds, it was able to grow case volume 3% in the first quarter of 2026, with organic sales up 10%. While the business may not be able to maintain that impressive pace, it is very clear that Coca-Cola continues to be a well-run business. Given that the price-to-earnings ratio is below its five-year average, the stock appears reasonably priced.
Johnson & Johnson doesn't look as attractively priced, with a P/E ratio slightly above its five-year average. However, sales increased 9.9% in the first quarter of 2026. And while earnings were down slightly, management increased its full-year earnings guidance by 7% after just one quarter. The goal is double-digit growth by the end of the decade. There's a reason why investors are positive about the stock, and if the business continues along the current track, it seems likely that earnings will catch up to the price soon enough.
The real reason to buy J&J and Coca-Cola, however, is that they allow you to collect reliable and growing dividends. Those dividends are backed by strong businesses with iconic histories. When Wall Street eventually falls into a bear market, which with 100% certainty will happen at some point, you can take comfort in owning great businesses while you focus on the dividends you are collecting instead of stock prices.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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