There's no question that Coca-Cola (NYSE: KO) is one of the most reliable dividend stocks on the market. It's one of Warren Buffett's favorites, and the beverage giant has been paying a dividend since 1920, with increasing dividends in each of the last 55 years, making it one of the vaunted dividend aristocrats.
With an enviable portfolio of big-name brands and a global marketing and distribution network, Coca-Cola should be able to continue paying dividends for years to come. However, with a yield of 3.3%, investors can find better payouts elsewhere, and some investors may be concerned about the backlash against sugary drinks.
If you're looking for some top dividend payers that will treat you even better than Coke, keep reading to see why our contributors recommend Chevron (NYSE: CVX), Williams-Sonoma (NYSE: WSM), and General Motors (NYSE: GM).
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Oil is thicker than soda
Dan Caplinger (Chevron): Coca-Cola has gone through difficult times lately, but it's not the only business to endure tough industry conditions. Chevron has also been under the weather, due largely to crude oil prices that remain well below their levels from several years ago. Even though oil has doubled from its lows below $30 per barrel, energy investors haven't been satisfied with the resulting profit gains -- and the net impact has been weak performance from Chevron's stock, which has essentially been treading water since 2016. That's pushed the oil giant's dividend yield above the 4% mark.
Chevron has worked hard to grow, but it's faced resistance. Its most recent attempt to grow involved seeking to purchase Anadarko Petroleum (NYSE: APC), whose assets in the Permian Basin would have complemented Chevron's holdings nicely. However, a hostile bid from rival Occidental Petroleum ended up winning the day, sending Chevron back to the drawing board.
Meanwhile, Chevron has seen the impact of lower prices on its financial results. Both revenue and earnings were down markedly during the first quarter of 2019, but strength in exploration and production -- especially in the U.S. -- helped to offset weaker results from downstream operations like refining. Shale production in the Permian has been key to Chevron's overall health, and even though its discipline prevented it from making a too-high counteroffer to grab up Anadarko, the oil giant has plenty of resources to make other acquisitions and bolster its long-term prospects accordingly. That should make dividend investors happy going forward.
A strong e-commerce story
Daniel Miller (Williams-Sonoma): One company that rewards investors with a higher dividend yield than Coca-Cola -- which is also a fine dividend stock -- is Williams-Sonoma, a specialty retailer of high-quality home products. Williams-Sonoma's 3.4% dividend yield just barely tops Coca-Cola's, but its recent decision to boost the dividend by 11.6%, as well as increase its stock repurchase program, should give investors confidence in the company's multichannel business and its ability to continue increasing its dividend.
As the retail world continues to evolve and move toward e-commerce, Williams-Sonoma boasts a strong online presence. In fact, the company's e-commerce net revenue increased 10.9% during fiscal 2018 to $3.1 billion, or a record 54.3% of total net revenues. Management has proven it can drive e-commerce sales higher over the long term as well, with an impressive 25% e-commerce revenue compound annual growth rate (CAGR) since 2000!
While there's plenty of growth to be had in the U.S., investors can also drool at the overseas potential. Consider that as of the company's 2018 investor presentation, only 6% of total revenue came from overseas. Management has focused on identifying markets of opportunity overseas and believes there to be a $350 billion addressable market for international expansion. As the company continues to improve its brand awareness and accelerates its already strong e-commerce presence, investors can remain confident the dividend will consistently rise in the coming years.
Look in the bargain bin
Jeremy Bowman (General Motors): General Motors has done almost everything right in recent years, yet the market continues to treat the automaker with skepticism. The Chevrolet owner has built up a valuable autonomous vehicle division in Cruise, pivoted to high-margin trucks and crossovers, and kept a watchful eye on its cost structure with preemptive layoffs and plant closings.
However, in the wake of reemerging trade tensions with China and now Mexico, investors have punished the stock, pushing it down 11% over the last three months and more than 20% off its 52-week high. As a result, GM's dividend yield has risen to 4.3%, and the stock trades at a P/E of just above 5 based on this year's projected earnings per share of $6.50-$7. At that valuation, investors seem to be betting that profits have peaked, which looks like a mistake.
Though GM hasn't raised its dividend since 2016, the payout is well funded with a payout ratio of less than 25%. That should give investors assurance that the carmaker is a reliable income investment, but any number of factors could also cause the stock to jump, especially the launch of its highly anticipated autonomous ridesharing service in San Francisco later this year. Elsewhere, an easing of trade tensions or continued earnings growth could also help push the stock higher over the next year.
GM remains a profit machine, and its future is brighter than the market believes. With the stock down and the yield back above 4%, now looks like a great time to grab some shares of the venerable automaker.
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Dan Caplinger has no position in any of the stocks mentioned. Daniel Miller owns shares of General Motors. Jeremy Bowman owns shares of General Motors. The Motley Fool recommends Williams-Sonoma. The Motley Fool has a disclosure policy.