Key Points

A near 2.8% dividend yield will tide Coca-Cola investors over as they wait for more clarity on the economy. WM is as tariff-resistant as it gets in the industrial sector. American Electric Power is a leading regulated utility that provides an attractive option for conservative income investors.

The major stock market indexes have staged an epic recovery in recent weeks but are still down year to date (YTD). But that doesn't mean all stocks are participating in the sell-off.

Stable stalwarts Coca-Cola(NYSE: KO), WM (NYSE: WM), and American Electric Power(NASDAQ: AEP) have produced respectable gains in 2025. Here's why all three dividend stocks are worth buying now for risk-averse investors looking to generate passive income.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »Image source: Getty Images.

A classic Warren Buffett holding for your portfolio

Lee Samaha(Coca-Cola): If you want to play it safe and ride out the markets while you wait for more clarity over the tariff dispute and geopolitical conflict, investing in Coca-Cola is an excellent option. At the time of this writing, the stock is up over 16% in 2025, compared to a more than 5% decline in the S&P 500 index (SNPINDEX: ^GSPC), and that reflects the market's recognition that the stock is a haven in turbulent times. And if the weather remains stormy, investors will continue to need a haven.

Moreover, the stock's near 2.8% dividend yield doesn't hurt, either. Coca-Cola's relative immunity from tariffs comes from its tendency to produce locally and sell locally. In addition, its exposure to tariffs on packaging materials like aluminum isn't a needle mover, as the metal is a relatively small part of its costs.

Turning to the other side of the demand/supply equation, its core Coca-Cola beverage is more of a consumer staple than a consumer discretionary product, meaning it's not the sort of product that consumers cut back on in a big way when the economy is under pressure.

If and when the tariff dispute resolves, Coca-Cola stock will probably underperform, so it doesn't make sense to be overloaded in the stock. However, it's a good option if you are looking for a relatively safe way to balance a portfolio or park some cash while waiting for more clarity on the economy.

WM's consistency knows no bounds

Daniel Foelber (WM): The company formerly known as Waste Management is up over 13% YTD at the time of this writing, handily outperforming the S&P 500 with its more than 5% decline.

Story Continues

The largest waste management company in North America reported excellent first-quarter 2025 results on April 28, including a 16.7% increase in revenue and adjusted operating earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 12.2%.

The higher revenue was largely due to WM's acquisition of medical waste giant Stericycle, which was completed in November for $7.2 billion. Going forward, WM will report its results under two segments -- the WM Legacy Business and WM Healthcare Solutions. However, it's worth mentioning that WM Legacy Business is still much larger than WM Healthcare Solutions, with $1.62 billion in adjusted EBITDA in the recent quarter compared to $95 million for WM Healthcare Solutions.

WM has several competitive advantages that make it highly resistant to trade tensions. For starters, the company has a diverse pool of residential, commercial, and industrial customers. Long-term contracts with public and private customers keep WM insulated from short-term fluctuations in the economic cycle.

Unlike other industrial companies that depend on broader economic growth and international trade, WM is focused on the North American market. WM is highly insulated from tariffs and economic cycles. Over time, WM benefits from population increases and higher demand for its services.

WM's stable business model supports steady increases in free cash flow, which WM uses to raise its dividend and repurchase stock. Over the last decade, WM has reduced its share count by 11% and more than doubled its dividend. In December, WM announced its 22nd consecutive annual dividend increase with a 10% raise to $3.30 per share, or $0.825 per quarter.

WM is a cash cow with a recession-proof business model. Before buying the stock, investors should be aware that WM fetches a premium valuation at 34.5 times earnings and has a dividend yield of 1.4%, which is around the S&P 500 average and far from high-yield territory. WM is an ideal fit for risk-averse investors who don't mind paying a premium price for an ultra-reliable company that can generate consistent results no matter what the economy is doing.

Many stocks have been knocked down, but American Electric Power continues to stand strong

Scott Levine (American Electric Power): During times of economic uncertainty, investors will often seek safety in conservative investments that are less susceptible to volatility -- investments such as utility stocks. And this recent market downturn is no different. While the S&P 500 has plunged more than 5% since the start of the year, American Electric Power, a leading electric utility, has soared more than 17% as of this writing.

And while the stock has outperformed the market so far in 2025, investors can still pick up shares of American Electric Power, along with its 3.5% forward-yielding dividend, on the cheap.

As many companies wrestle with the potential for tariffs to complicate their supply chains and contribute to rising input costs, American Electric Power has less to fret about. The business operates as a regulated utility; therefore, it's assured certain rates of return. This provides management with a reliable sense of where the company's headed financially and how to plan accordingly for capital expenditures such as infrastructure upgrades -- about $54 billion from 2025 through 2029 -- and dividend payments.

Illustrating how management has deftly maintained the company's financial health while rewarding shareholders, American Electric Power has averaged a 69% payout ratio over the past five years. This circumspect approach will likely be maintained in the coming years as American Electric Power balances upgrades and growth of its portfolio with trying to grow shareholder value.

Those looking to supplement their passive income streams have a great opportunity right now. Whereas American Electric Power stock has a five-year average operating cash flow multiple of 9.3, it's currently valued at only 8.9 times operating cash flow. Income investors, consequently, don't have to reach deep into their pockets to scoop up this leading electric utility stock and its high-yield dividend.

Should you invest $1,000 in Coca-Cola right now?

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Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Waste Management. The Motley Fool has a disclosure policy.

3 Super-Safe Dividend Stocks to Buy That Have Been Impervious to the Stock Market Sell-Off So Far was originally published by The Motley Fool

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