NEW YORK (TheStreet) -- With the Federal Reserve indicating interest rate increases, conflict in Yemen, oil price drops, and a bull market that has run for a full six years, positive stock market returns in 2015 are far from guaranteed.
So here are 11 dividend stocks that combine stable cash flows with high dividend yields (all above 3%) and low stock price volatility. The stocks below reward investors each year with steady or rising dividend payments. Each of these 11 stocks has not reduced its dividend payments in over 25 years.
Stocks that score high marks for safety while also offering a strong dividend yield make good choices for investors looking to build a portfolio that performs well in bull markets while providing partial downside protection in bear markets.
Coca-Cola (KO) is the world leader in ready-to-drink beverages. The company has a total of 22 brands that each generate $1 billion or more in sales per year. Coca-Cola controls five of the top 10 soda brands in the U.S. The company's dominance in beverages goes beyond soda, however. Of Coca-Cola's 22 billion-dollar brands, 14 are non-carbonated beverages. Coca-Cola's non carbonated portfolio includes: Minute Maid, Powerade, Dasani, Vitamin Water, Simply Orange, Gold Peak Tea, and FUZE Tea.
Coca-Cola grew core earnings-per-share 7% in fiscal 2014. This number is on the low end of the company's long-term expected earnings-per-share growth rate of 7% to 9%. Going forward, Coca-Cola plans to grow earnings in several ways. First, the company is focusing on increasing efficiency by re-franchising its bottling operations in North America and restructuring the global supply chain. Coca-Cola hopes to generate $3 billion in savings per year up to 2019 by focusing on efficiency. Secondly, the company continues to pour money into advertising and acquiring other high quality beverage brands to push growth in both developed and emerging markets.
Coca-Cola currently has a price-to-earnings ratio of 19.8 and a dividend yield of 3.3%. The company's dividend yield is at its highest level since 2010, making now a good time to enter into a position in Coca-Cola. The company has a low stock price standard deviation of 18.5% and a beta of 0.51, which means that the stock tends to be less volatile than the rest of the market (a beta of above 1 indicates volatility greater than that of the market; under 1 indicates less volatility than the market).
Coca-Cola's combination of low stock price volatility, low beta, and stable cash flows make it a good choice for risk averse investors. When the stock market fell 38%% in 2008, Coca-Cola stock fell 28%; a relative improvement of 10 percentage points. The company's relatively lower risk does not mean Coca-Cola offers low returns. The stock will likely give investors total returns of 10% to 12% a year from earnings-per-share growth (7% to 9%) and dividends (3%). Coca-Cola's combination of high total returns and low risk make it a long-time favorite of The 8 Rules of Dividend Investing.