3 Recession-Resistant Dividend Kings With High Yields

Dividend Kings are some of the most solid stocks to own in the market. The title means that the company has raised its dividends for the past 50 years straight. This is not a title that any company wants to forgo, so the dividends that Dividend Kings pay are the most stable in the market.

Moreover, getting that title in the first place means that these companies would have to have very stable businesses. And they do. Dividend Kings are usually consumer staples, utilities, or are in sectors that are very defensive in nature. This also helps them weather recessions well.

Here are three to look into that come with high yields. These yields may not look as high due to Treasury yields, but they’re among the best you’ll get when it comes to Dividend Kings. And the underlying stock also appreciates, unlike Treasuries.

Altria Group (MO)

Altria Group (NYSE:MO) is a tobacco company. And as you’d expect, this company has very sticky cash flows regardless of the economic environment. Even a recession is not going to change people’s smoking habits overnight. If anything, it’ll cause an increase in smoking rates.

One of the biggest arguments for not investing in MO stock is that smoking rates are seeing a gradual decline, especially among the youth. But the notion that young people do not smoke is wrong. It is true they don’t do traditional cigarettes as much, but electronic cigarettes (or vapes) and other alternative products are still popular. Altria is far from dying.

It is now betting on e-vapor and nicotine pouches. Regardless, the main business is still on a gradual slope downwards, as even vapes are becoming less popular.

People are still buying MO stock as it has an 8% stake in Anheuser-Busch InBev (NYSE:BUD) for global beer exposure, and a 41% stake in Cronos Group (NASDAQ:CRON) for cannabis exposure.

On top of that, Altria is considered a premium brand company, and its portfolio is almost exclusively made up of Marlboro. People are willing to pay more for it, and Altria has been using that pricing power to keep its cash flow (and dividends) steady. It’ll take multiple decades for the cash flow to fall markedly. In the meantime, I’d sit on this recession-resistant dividend stock with solid yields.

MO stock comes with a dividend yield of 6.88% and 56 years of consecutive dividend hikes.

PepsiCo (PEP)

PepsiCo (NASDAQ:PEP) is one of the safest stocks in the market right now. The company’s products have solid demand as it dominates snack shelves. Moreover, the valuation is much better now. It trades at just 19 times earnings after a 26.4% decline from its peak, though PEP stock has traded sideways through May.

The recent decline is worse than 2008 or 2020 in terms of value and is quite comparable to the pandemic crash in percentage terms. Even if a recession were to hit, I see little downside risk from here, but plenty of long-term upside. This is a well-established company that should recover from the selloff just fine and deliver solid returns in the coming years.

In the meantime, you could sit on its 4.31% dividend yield with 54 years of consecutive dividend increases. Historically, Wall Street has paid over 26 times earnings for PEP stock, and even though the growth outlook going forward is not as good as its growth from 2019 to 2023, you should keep in mind that PepsiCo had declining revenue for a good stretch of the early 2010s and still kept an upward trajectory due to the bottom line being resilient.

Once interest rate cuts start, that should be the catalyst that finally nudges PepsiCo higher toward its historical trajectory. It posted a net interest loss of $264 million, and if it can receive some relief on that front, along with organic revenue growth turning a corner, Wall Street would have no option but to turn bullish.

Northwest Natural Holding (NWN)

Northwest Natural Holdings (NYSE:NWN) is a natural gas utility company. Utility stocks are one of the safest names you can invest in due to tariffs making the broader industry more volatile. Utility companies do their business almost entirely domestically, and they don’t have much exposure to trade policy. These companies are also detached from natural gas prices, since their main business is natural gas distribution through pipelines. Northwest Natural also does wastewater management and energy storage.

NWN stock is now down over 48% from its highs in 2019. The stock mainly declined due to inflation and rate hikes increasing debt servicing costs. However, most of the bearishness was priced in by late 2023, and the stock has been on an uptrend since. The economic cycle is turning with more rate cuts on the horizon, so more upside is likely in the coming years.

In the meantime, you can sit on its 4.93% dividend yield, which has been raised for 70 consecutive years. The dividend payout ratio of 65% is quite good for a utility business.

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