It’s a new month, and a new opportunity to rebalance your portfolio. The S&P 500 is soaring, up 11% year to date and hitting new highs, and artificial intelligence (AI) is driving the momentum.
Here’s the thing: It might be time to become a little fearful. The strong bull run could continue going, but it’s looking heavy, and all investors should be prepared for any kind of eventuality. If you’re highly concentrated in large tech stocks, you might be enjoying the gains, but don’t forget about fortifying your portfolio with safe stocks that can protect it no matter what happens.
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Dividend stocks are often excellent safe stocks, and they can provide reliable passive income no matter what happens to stock prices. If you need some, Realty Income(NYSE: O), Target(NYSE: TGT), and Coca-Cola(NYSE: KO) are three excellent options.
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1. Realty Income
Realty Income is a real estate investment trust (REIT), a type of business structure for companies that lease properties to tenants and pay 90% of their earnings as dividends. You’ll often see lots of REITs in a retirement portfolio.
However, not all REITs are the same, and Realty Income is one of the best. It’s one of the largest REITs in the world, with 15,500 properties, and it leases to large essentials retailers including Walmart and Home Depot. It’s a retail REIT, with almost 80% of its portfolio concentrated in retail properties, but it has expanded into other areas, including industry and gaming. That keeps most of the business in highly resilient categories while diversifying to avoid risk.
It has a large pipeline of new properties to buy and a robust funding program so it can continue to grow and reward shareholders. It sees a $14 trillion addressable market, and it has strategic partnerships with Blackstone and others for funding.
That leads into the dividend. Realty Income has a storied dividend that it pays monthly, and it has kept that payout up without fail for more than 55 years. It raises the dividend quarterly, making it reliable for payments and growth. And finally, it yields an excellent 5.3% at the current price.
2. Coca-Cola
Coca-Cola is the classic Dividend King, an exclusive cadre of stocks that have raised their dividends for at least 50 years consecutively. It’s a status that implies supreme reliability, and Coca-Cola has one of the longest track records at 64 years. That means it has paid and raised the dividend rain or shine, even when its payout ratio topped 100%, which it did early in the pandemic.
The company, one of Warren Buffett’s favorites, makes products that are highly in demand and can withstand all kinds of conditions. Throughout the past few years of macroeconomic volatility and high inflation, it has demonstrated resilience, with strong pricing power. That comes from decades of building a brand people love and developing consumer loyalty.
It also has ongoing growth opportunities from entering new markets and digging deeper into existing markets to expand market share. It has 14% of the market share in developed markets, and only 6% of the market share in developing markets, which it identifies as 80% of the global population. Management says that in those regions, 70% of people don’t consume any commercial beverages, giving it the opportunity to “develop the beverage industry from the ground up.” That provides it with a continued growth runway.
Coca-Cola stock is up 14% this year, outperforming the market, and its dividend yields 2.6% at the current price.
3. Target
Target has been struggling for years, but it’s also a Dividend King, and it has paid and raised its dividend for 54 years, straight through its challenges. At the current price, Target’s dividend yields 3.6%.
And despite continued macroeconomic pressure, the company is starting to make progress on its turnaround plan. New CEO Michael Fiddelke is a company veteran with intimate knowledge of the company, and it looks like he has a good handle on the work that needs to be done. The basic plan focuses on improving the merchandise selection, leaning into digital, and renovating stores to improve the customer experience. Those are fairly obvious ways to fix what may be holding it back, and what’s different now will be in the implementation.
Fiddelke’s first quarter in charge demonstrated results, but he reiterated several times on the first-quarter earnings call that the company’s goal is to set itself up for long-term success. It’s making investments today that should lead to even better performance tomorrow, but the early efforts are boosting confidence. In the 2026 fiscal first quarter (ended May 2), comparable sales were up 5.6%, and adjusted earnings per share went from $1.30 last year to $1.71 this year.
Dividend investors can buy Target stock for less than 17 times trailing-12-month earnings and enjoy passive income while they wait for the price to rise.
Should you buy stock in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $462,983!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,375,447!*
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Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Blackstone, Home Depot, Realty Income, Target, and Walmart. The Motley Fool has a disclosure policy.
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