After approximately a 2.5-year bull market, the Trump administration’s tariffs have significantly impacted the market, leading to notable volatility. Investors are closely following the daily news cycle, as the Dow Jones Industrial Average experienced several 1,000-point fluctuations in April.
During such uncertain times, it may be wise to consider stocks that provide reliable and consistent passive income through dividends, allowing investors to be less concerned about short-term stock price movements.
Here are some of the top dividend stocks suggested for a $2,000 investment.
1. Realty Income – 5.5% dividend yield
Realty Income, a real estate investment trust (REIT), brands itself as "The Monthly Dividend Company." This title is supported by its performance, as Realty Income offers a 5.5% dividend yield and recently paid its 658th consecutive monthly dividend. The company has increased its dividend for 30 consecutive years.
Realty Income’s portfolio includes more than 15,600 properties, operating as a triple net lease company where tenants bear costs like maintenance, property taxes, and insurance. This arrangement benefits both landlords and renters, as renters can customize properties and potentially negotiate lower rents or longer leases due to their additional responsibilities.
Operating properties in all 50 U.S. states, the United Kingdom, and various European countries, Realty Income emphasizes leasing to nondiscretionary, low-cost, service-oriented businesses such as convenience stores, grocery stores, home improvement stores, and dollar stores. The company has also expanded into emerging sectors like gaming and data centers to drive growth.
Realty Income consistently generates enough adjusted funds from operations (AFFO) to support its dividend. AFFO, a key metric for REIT investors to assess cash flow, is crucial in evaluating funds available for dividend distribution. In 2023 and 2024, the dividends paid by Realty Income equaled roughly 75% and 76% of its AFFO, respectively.
2. Coca-Cola – 2.8% dividend yield
The beverage company Coca-Cola has been a mainstay in Warren Buffett’s portfolio, partly due to its consistent performance. In February, Coca-Cola approved its 63rd consecutive annual dividend increase, joining an elite group of dividend stocks. Since 2010, the company has distributed over $93 billion in dividends to shareholders.
Despite market challenges from tariffs, Coca-Cola’s stock outperformed the broader market with an increase of more than 18% this year, as investors viewed it as a safe choice among consumer staples.
Coca-Cola’s global brand diversification includes sodas, water, and alcoholic drinks, and consumers continue to purchase its products throughout economic cycles. The company also indicated a shift to focus on plastic packaging if aluminum tariffs pose a problem. The fourth quarter saw solid revenue growth, primarily in the sparkling beverage division.
Coca-Cola regularly produces sufficient free cash flow and earnings to maintain its dividend, with a payout ratio of approximately 70% in 2024. Excluding an IRS tax litigation charge, Coca-Cola’s adjusted free cash flow was $10.8 billion, with dividends amounting to $8.4 billion.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
