2025 has not been the easiest for investors. While they’ve had to navigate tariff uncertainty, investors have also seen major ups and downs in the stock market. The market is expected to maintain momentum this year, but you need to be careful when it comes to building a portfolio. Instead of chasing a quick advantage, invest in stocks that can stand the test of time.
There are several dividend-paying stocks with higher yields, low prices and strong fundamentals. Such stocks create the right setup for an income-focused investor. If you’re looking for the best dividend stocks to buy this year, consider Coca-Cola Co. (NYSE: KO), Chevron Corp. (NYSE: CVX ) and Procter & Gamble Co. (NYSE: PG). They also happen to be Buffett’s favorite stocks. Let’s dive deep into them.
Various photos / iStock Editorial via Getty Images ·Various photos / iStock Editorial via Getty Images
Warren Buffett’s favorite stock, Coca-Cola, has never disappointed income investors. The stock has a yield of 2.84% and has raised dividends for 63 consecutive years.
Coca-Cola has a payout ratio of 67.85% and pays an annual dividend of $2.04 per share. As an investor, one of the most attractive things about a company is the cash flow it generates. The company has nailed the business model and manages to keep operating expenses to a minimum, thereby maintaining a high cash buffer. Changing hands for $72, the stock has gained 16% over the past year and is very close to its 52-week high of $74.
It is a steadily growing business with impressive financial statements. Coca-Cola has a global presence and enjoys strong brand loyalty. The company has a diversified product portfolio that includes energy drinks, fruit juices, bottled water, tea, coffee, alcoholic beverages and sports drinks. While maintaining an asset-light model, it has kept operating costs to a minimum and built a presence in over 200 countries.
In the third quarter, it posted a 6% increase in organic sales and a 5% increase in revenue. EPS rose 30% to $0.86. It ended the quarter with free cash flow of $2.4 billion. With a 5-year dividend growth rate of 4.46%, KO stock will continue to reward shareholders for years to come. It is one of the safest dividend gems to own this year.
Marina113 / iStock Editorial via Getty Images ·Marina113 / iStock Editorial via Getty Images
Oil and gas giant Chevron Corporation is an upstream and downstream business. It is an integrated oil company with a solid history, solid fundamentals and an attractive yield. Chevron has a dividend yield of 4.10% and has raised dividends for 38 consecutive years. It has a payout ratio of 86.01% and pays $6.84 per share in annual dividends.
There are several reasons to like Chevron stock. First, oil demand isn’t going down anytime soon. Countries around the world need oil, and Chevron has ample growth potential. Despite oil price volatility, Chevron has been able to reward investors. It has an impressive balance sheet that allows the company to take on debt when oil prices fall. With the Hess acquisition, Chevron added Bakken and Guyana shale assets to its portfolio.
Regardless of how the market moves this year, Chevron is a dividend stock to buy and hold for the next decade. Given its strong presence in the sector and a history of generating steady cash flow, Chevron is a solid buy.
CVX shares are trading at $166.66 and have gained 6.8% over the past year. The company has an attractive outlook and the ability to stay strong even during oil price declines. UBS has a buy rating on the stock with a $197 price target.
us.pg.com ·us.pg.com
A household name today, Procter & Gamble has a solid presence and enjoys brand loyalty. It owns brands such as Pampers, Tide, Crest and Gillette. Many of its products dominate the consumer goods industry today. Demand for these products may fluctuate, but it will never end.
This makes Procter & Gamble a reliable stock. It has a dividend yield of 2.82% and has grown dividends for 69 years. It pays an annual dividend of $4.23 per share and has a payout ratio of 60.62%. The company has the ability to raise long-term payments.
The stock has underperformed since November and is down 9.76% over the past year. This is due to the inflationary environment, but could be a problem in the short term. It’s a cyclical headwind that could be nearing its end. The company recently announced second quarter results with revenue of $22.2 billion and EPS of $1.88. Net sales were up 1% year-over-year, while organic sales were flat. The company returned $4.8 billion in dividends and share buybacks.
Changing hands for $149, it’s a dip buy. Analysts are bullish on the stock and have raised price targets. Wells Fargo has a $165 price target with an overweight rating, while JP Morgan has a $165 price target and an overweight rating.
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