The first half of 2026 belonged to artificial intelligence. The second part, so far, has been about almost everything.
Technology has been the worst performing sector of the market in early July. Meanwhile, cash has flowed into corners that investors ignored all year: energy, financials, health care and consumer primes. June’s soft jobs report, which showed the economy added only 57,000 jobs, cooled bets on a Federal Reserve rate hike and pushed the rotation further.
For income investors, I think a rotation into defensive, dividend paying stocks Worth a closer look. Three names are particularly prominent.
Each has been the dividend king with consistent annual growth for at least half a century, and each sits at a very different point in this business. Here’s a look at Coca-Cola, Johnson & Johnson and PepsiCo.
Image Source: Getty Images.
1. Coca-Cola: Quality, already rewarded
coca cola (To +1.04%) This is what the rotation looks like when it works. The beverage giant’s turnover is at an all-time high, and business has earned it. first quarter organic Income Growth of 10% year over year, a strong result for a company of this size and so old.
Of course, the dividend is as safe as it gets. Coca-Cola has raised its payout for 64 consecutive years, and the current $2.12 annual dividend only uses about two-thirds of earnings.
today’s change
(1.04%) $0.86
current price
$83.49
key data points
market cap
day limit
$82.41 -$83.73
52wk range
$65.35 -$85.68
volume
12.7K
average volume
16.8M
gross margin
61.82%
dividend yield
2.49%
One drawback is the price – about 25 times further earningsWith a 2.5% yield, Coca-Cola is arguably priced similarly to the defensive giant. You’re buying quality here, but you’re not buying it cheap.
2. Johnson & Johnson: Healthcare Anchor
johnson and johnson (JNJ 0.82%) Provides similar type of durability from different areas. The healthcare giant has increased its dividend for the 64th consecutive year, matching Coca-Cola for the longest such period of the trio.
In fact, its Q1 results pretty much covered the rise. Revenue increased nearly 10% year over year, adjusted earnings per share came to $2.70, and management raised its full-year outlook for adjusted earnings per share to approximately $11.55, helped by strong demand for cancer drug Darzalex and immunology treatment Tremfya.
today’s change
(-0.82%) $-2.12
current price
$256.98
key data points
market cap
day limit
$255.52 -$261.30
52wk range
$154.80 -$269.43
volume
1.5K
average volume
8.2M
gross margin
67.96%
dividend yield
2.04%
With about 22 times forward earnings and a 2.1% yield, Johnson & Johnson sits between its two competitors in terms of valuation, although its yield is the lowest of the three. Its dividend consumes less than half of adjusted earnings, so there’s plenty of room for more growth. Investors will also get an update soon: The company will report second-quarter results this week, on July 15.
3. PepsiCo: Cheap, Unobtainable
If Coca-Cola is the winner of the rotation, PepsiCo (pep 0.35%) This is the name it has gone through so far. The snacks and beverages maker is trading near its 52-week low.
Its second-quarter report on Thursday reveals part of this. Organic revenue grew just 2.4%, in line with the sluggish low-single-digit pace of recent quarters, and volume in its North American beverage business fell 4%.
But there is another side to this also. PepsiCo affirmed its full-year outlook, still expects core constant currency earnings per share to rise 4% to 6% for the year, and raised its dividend for the 54th consecutive year.
today’s change
(-0.35%) $-0.48
current price
$137.38
key data points
market cap
day limit
$135.31 -$137.96
52wk range
$133.75 -$171.48
volume
11.9K
average volume
8.2M
gross margin
53.98%
dividend yield
4.18%
Following the selloff, the stock now yields about 4.3% – comfortably the highest of the three – at around 16 times forward earnings, easily the cheapest. For investors who dislike rotation price It has to be driven further, this is arguably the most direct way to drive it in this group.
Better way to play rotation?
So which of these three is the most appropriate moment? It depends on what the investor wants.
The highest quality Coca-Cola is available to those willing to pay. The most stable, and most likely to update on its business on July 15, is Johnson & Johnson. And the best value for anyone willing to sit with some softness in the near term is PepsiCo.
Personally, in a cycle like this, I lean toward the cheapest, most preferred name, which points to PepsiCo. Its US business isn’t in the strongest shape right now, but a 54% yield with 4.3 years of growth gives good returns for investors who are patient.
Of course, none of this is a done deal. And a market that turns back Development Can leave behind defensive payers as fast as it found them. But if value is a constant force in rotation, all three sit directly in its path.