If you have been reading the news lately, you most likely know that the conflict with North Korea has been escalating rapidly over the last days. Unfortunately, there is no way to know for certain how these things may turn out, but let´s hope for everyone´s sake that this is just another episode of inflamed rhetoric by a decaying dictatorship and it does not become anything more serious.
And it´s not only the risk of war in North Korea: the financial crisis in Cyprus could extend to Europe and from there the rest of the world, and there is always the risk of a new recession, another financial bubble or any kind of economic crisis. There are even strong rumors, god forbid, about Justin Bieber launching a new album.
The sad truth is that we live in a world full of uncertainty, almost anything could happen, and some bad things will inevitably happen sooner or later. Considering this, it`s understandable to feel concerned about how different scenarios may affect your portfolio. After all, if you don`t take care for your financial future and the wellbeing of your beloved ones, nobody else will.
Just remember that some media outlets are mostly interested in attracting attention by almost any means, not in providing an unbiased and realistic assessment of current events for their audiences. So take those fatalistic reports with a grain of salt: don`t panic, and make your investment decisions with a cool head and a long term focus.
Still, if you are one of those people who believe in hoping for the best but preparing for the worst, here are three rock solid dividend plays which are strong enough to survive under a dire scenario.
Always The Coca-Cola Company (NYSE:KO)
The first version of the The Coca-Cola Company (NYSE:KO) drink was developed around 1886, so this is a product, and a company, which has proven its capacity to grow and thrive through all kinds of economic, political and even military environments. Coke announced last year it´s fiftieth consecutive annual dividend increase, and it has an active stock repurchase program, so investors are well rewarded for holding this stock for the long term.
According to Interbrand, The Coca-Cola Company (NYSE:KO) is the most valuable brand in the planet, and the company’s portfolio features 15 billion dollar brands including Diet Coke, Fanta, Sprite, The Coca-Cola Company (NYSE:KO) Zero, Vitaminwater and PowerAde among others. In addition to that, Coke owns a gigantic global distribution network which keeps competitors at bay and can be enormously valuable when it comes to introducing new products on an international scale.
Emerging markets are a huge opportunity for growth, consumption of these kinds of products tends to rise rapidly with growing personal income, so considering population size and economic growth, countries like China, India and Brazil bode well for the company in the middle term. For this reason, Coke is investing heavily in marketing and distribution to capitalize the opportunity for volume growth in emerging nations.
In the US and Europe, where markets are more saturated and consumers are changing their habits towards a healthier lifestyle, the company´s challenge is to adapt and innovate by delivering new alternatives in consonance with the new consumer trends.
But this unique company has successfully gone through much tougher challenges in the past, so it´s cash flows and dividends will most likely continue growing in the long term. Coke`s 2.8% dividend yield is as safe as it gets.
Energy for Your Dividends
The energy business is always exposed to fluctuating profit margins because of volatile commodity prices in an industry characterized by high fixed cost. But Exxon Mobil Corporation (NYSE:XOM) is by no means an average integrated energy play, the company is well known for its capital allocation discipline and strong focus on efficiency and profitability. This produces profit margins which are well above industry averages.