Dividend investing will likely never go out of style. This is not only because people generally like the idea of earning some money while doing nothing, but also because companies that consistently pay and increase their payouts usually have excellent underlying businesses. That’s primarily why dividend stocks have outperformed their non-dividend-paying peers over long periods. So, investing in top income stocks is not a bad way to kick off 2025.
Here are two excellent candidates to consider: Coca-Cola (NYSE: KO) and Visa (NYSE: V).
Brand names matter. Few companies worldwide have a stronger brand than Coca-Cola, a soft drink market leader. Coca-Cola’s name, reputation, and presence in practically every country known to man means it will continue to attract a good amount of business. That’s the company’s competitive edge. Further, it isn’t just a soft drinks leader, although that is how it made its name. Coca-Cola has significantly diversified its portfolio. It offers practically 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 it to cater to the needs and preferences of different markets. And with rising concerns over the health impact of some of its more popular offerings, this strategy has also helped it decrease its exposure to these less healthy options. So, the company can survive and thrive in a more health-conscious market. True, Coca-Cola probably isn’t a particularly attractive growth stock. Don’t expect the stock to keep up with artificial intelligence leaders.
What it does offer, though, is consistency and reliability. Coca-Cola records steady revenue and profits.
KO Revenue (Quarterly) data by YCharts.
It has done so for a long time, which is how it has supported its incredible dividend track record. Coca-Cola is a Dividend King with an active streak of 62 consecutive payout increases. The company’s forward yield is 3.11%, well above the S&P 500‘s average of 1.32%. Coca-Cola’s payout ratio looks a bit high at 74%, but the company has often maintained a pretty high payout ratio while still increasing its dividends. Investors have nothing to worry about: Coca-Cola will remain an excellent income stock beyond 2025. It’s little wonder the business 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 bear the logo of the financial industry giant, which cuts a fee for every transaction it helps facilitate through its payment network. True, the company’s business can be susceptible to recessions. When the going gets rough and consumers start spending less, Visa’s payment volume can drop, leading to lower revenue and earnings for the company.