2 Dividend Stocks to Double Up on Right Now

Soft drink giant Coca-Cola (NYSE: KO) and sporting apparel veteran Nike (NYSE: NKE) have a lot in common. I'm not talking about their long and storied business histories, their proven ability to deliver market-beating returns in the long run, or their household-name status in American culture.

No, I'm looking at more practical qualities. These industry titans have boosted their dividend payouts every year for decades and show no signs of ending those shareholder-friendly streaks -- and they are starting to look cheap right now.

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KO Dividend data by YCharts

Unstoppable dividend growth

First things first. Nike has raised its payouts every year since 2002. The quarterly payout per split-adjusted share is up from $0.015 to $0.40 after that 23-year streak.

Coca-Cola's streak is even longer. The company's management claimed a 62-year run of consecutive increases in last year's announcement of payout boosts. The 63rd straight increase will surely follow later this month. Accounting for eight stock splits along the way, I'm looking at an adjusted payout of $0.00156 per share, per quarter in 1962. The quarterly payout is up to $0.42 per share today.

Coca-Cola's dividend has grown nearly 270-fold at a compound annual growth rate (CAGR) of 9.3%. Nike's growth spurt is a bit shorter but more intense with a 15.3% CAGR.

Both stocks are fantastic examples of the wealth-building power you see in consistent long-term growth. Their stocks have also been very kind to investor portfolios over the decades, but that's a story for another day. Just keep in mind that reinvesting dividends into more shares of the same stock would have doubled your Coca-Cola returns over the last decade:

KO data by YCharts

Rare buying windows

These ultra-familiar names are trading at unusually modest stock prices at the moment. Coca-Cola shares have backed down 12% from an all-time high in September 2024. Nike is down 56% from a peak value in November 2021, at the start of the recent inflation crisis.

Very few investors expect Coca-Cola's price drop to last. Less than 0.8% of its shares are on loan to short-selling Coke bears, and the analyst community pegs its stock as a near-unanimous "buy" recommendation.

Nike's market profile is a bit more muted, with 2.6% of the stock sold short and analysts balanced between "buy" and "hold" ratings. The stock is also more affordable, with dramatically lower price-to-sales and price-to-free cash flow ratios than Coca-Cola.

Long story short: Nike looks like a promising turnaround story with a fantastic dividend history. Coca-Cola is a more obvious top performer, with an even longer dividend-boosting streak. Their dividend yields are fairly modest right now, at 3.1% for Coke and 2% for Nike, but those figures only apply to brand-new purchases. The real wealth-building magic lies in watching those payouts grow in the long run.

If you don't already own these classic income investments, this could be a good time to start a position. And if you do, it might be time to double up on your Nike and Coca-Cola holdings.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $336,677!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,109!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $546,804!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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*Stock Advisor returns as of February 3, 2025

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.