Key Points
- Dividend kings like Procter & Gamble, PepsiCo, and Johnson & Johnson offer stable yields and upside potential into year-end.
- Institutional investors may rotate from tech into defensive dividend stocks as Fed rate-cut expectations shift.
- Strong earnings, consistent dividend growth, and attractive valuations make these blue chips compelling buys.
For investors who take a SPY and chill approach, it’s been a bad week. The SPDR S&P 500 ETF Trust (NYSEARCA: SPY) is down about 1.3% in the five days ending August 21. That’s better than the performance of many of the individual names in the index, but it’s a reality check for passive investors.
However, investors in funds like the Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP) have seen a gain of just over 0.5% in that time. That’s a continuation of a growth story that began turning around in early summer.
It may also be predicting where institutional investors will be looking to invest for the rest of 2025 and 2026. The tech trade isn’t dead, but it may be taking a breather, especially if the Federal Reserve indicates that the number and pace of rate cuts is less than expected.
That could be causing a flight to the relative safety and value of dividend stocks. Investors looking for stable growth for the rest of the year should look at these blue-chip dividend kings.
A Dividend King at a Turning Point
Procter & Gamble Co. (NYSE: PG) is a good example of a blue-chip stock that’s become fashionable, or at least tolerable, once again. PG stock is up 2.4% in the last month. That’s a modest gain and the stock is still down both year to date and over the last 12 months.
However, the company is coming off a solid earnings report in July in which both organic growth and pricing contributed equally to the company’s growth. The company also offers a safe dividend that has increased for 70 consecutive years.
On a structural level, P&G continues to navigate an evolving tariff environment. At the same time, it’s facing a cyclical downturn in consumer spending, particularly for its lower-end consumers who may be trading down to house brands.
With a current consensus price target of $175.94, PG stock is offering investors about 10% upside to go along with a 2.66% dividend yield. That's stronger growth than the stock has made over the last five years and could make this a good entry point.
However, at 24x earnings, investors are paying a slight premium to the sector average. Therefore, they may want to wait for a confirmed break above a level of resistance around $161, which seems to be a target of options traders.
Value, Yield, and Buybacks Drive the Case
Shares of PepsiCo Inc. (NASDAQ: PEP) are also up about 4% in the last month. Like many consumer staples stocks, Pepsi reported solid earnings in July. Still, investors are concerned about lower earnings year-over-year, particularly with uncertainty surrounding the impact of GLP-1 drugs on the company’s core consumer.
However, when value outweighs growth, positive numbers are positive numbers. Pepsi continues to have pricing power and a portfolio that includes beverages and snacks, differentiating it from its primary competitor, Coca-Cola.
Analysts have a consensus price target of $158.73, an upside of around 6.5%. Adding in the company’s dividend yield of 3.82%, investors can get a low double-digit return, which is better than the negative growth the company’s been reporting in the last three years.
It also doesn’t account for the company’s strong share buyback program, which should create more upside for the stock. At 17x forward earnings, PEP stock is trading at a discount to its historical averages and to the overall sector.
2025’s Rally Has Room to Run
Johnson & Johnson (NYSE: JNJ) isn’t sneaking up on anybody. The stock is up more than 23% in 2025 and nearly 9% last month. Investors are finally moving on from the company’s long-running talc lawsuit. They are beginning to focus on the healthcare company that looks more focused after it spun off its consumer products business.
Part of that focus includes the company’s recent decision to invest $2 billion in North Carolina to expand the company’s U.S. manufacturing presence. This was done in response to the Trump administration’s tariff plans.
At 16x earnings, JNJ stock also looks attractively valued even if it's trading slightly above its consensus price target of $176.29. However, on August 21, the stock got a bullish upgrade from Citigroup.
The firm reiterated its Buy rating on JNJ and raised its price target from $185 to $200.
That’s an upside of more than 10%, along with the company’s 2.9% dividend yield. Like every stock on this list, Johnson & Johnson is a dividend king that has raised its dividend for 64 consecutive years.
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Companies Mentioned in This Article:| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Procter & Gamble (PG) | $156.47 | -1.4% | 2.70% | 24.06 | Moderate Buy | $175.94 |
| PepsiCo (PEP) | $147.90 | -1.2% | 3.85% | 26.98 | Hold | $158.73 |
| Johnson & Johnson (JNJ) | $178.75 | -0.3% | 2.91% | 19.12 | Moderate Buy | $176.29 |
| SPDR S&P 500 ETF Trust (SPY) | $644.46 | -0.1% | 1.11% | 25.94 | Moderate Buy | $644.23 |
| Consumer Staples Select Sector SPDR Fund (XLP) | $81.34 | -1.4% | 2.47% | 20.82 | Moderate Buy | $81.52 |
About Chris Markoch
Experience
Chris Markoch has been an editor & contributing writer for DividendStocks.com since 2018.
- Professional Background: Christopher Markoch is a freelance writer and market analyst with over 30 years of experience in marketing communications, including work with financial services firms and banks. His unique blend of communication expertise and market knowledge allows him to break down complex financial topics for individual investors.
- Credentials: He holds a Bachelor of Arts in Business and Organizational Communication from The University of Akron in Akron, Ohio.
- Finance Experience: Chris has been an editor and contributing writer for DividendStocks.com since 2018 and has also written for InvestorPlace. He began writing about finance and investing in 2017, bringing a strong focus on helping readers make confident, informed decisions.
- Writing Focus: He specializes in value investing, dividend-paying stocks, and retirement-focused strategies. His work is geared toward individual investors looking to build stable, income-generating portfolios.
- Investment Approach: Chris emphasizes value and income investing while maintaining a focus on context and clarity. He believes that fundamentals and technicals are important, but they only become truly useful when paired with an understanding of a company’s story. That perspective shapes both his investing decisions and the guidance he offers to readers.
- Inspiration: “The story behind a company or stock is important to me,” Chris says. “The fundamentals or technical action are interesting, but without the why, they lack context for retail investors. That’s what I aim to deliver.”
- Fun Fact: Christopher admires thought leaders like Keith Fitz-Gerald and Shah Gilani for their sharp market insight.
- Areas of Expertise: Value investing, retirement stocks, dividend stocks, individual investing
Education
Bachelor of Arts in Business and Organizational Communication, The University of Akron, Akron, Ohio
Past Experience
InvestorPlace