The S&P 500 (^GSPC 0.47%) recently hit a new high, but the bull run over the past few years has driven down dividend yields. At the time of writing, the yield on the widely held Vanguard S&P 500 ETF (VOO 0.44%) is sitting at just 1.22%.
Investors can do much better. To give you a few ideas, here are two S&P 500 stocks that can help boost the average yield on your investment portfolio.
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1. Coca-Cola
Coca-Cola (KO -1.00%) makes an affordable product that sits on countless store shelves all over the world. It’s a durable brand that produces steady sales and profits, which fund growing dividend payments.
Coke has increased its dividend for 63 consecutive years. Because making the concentrate syrup that goes into manufacturing a finished beverage product doesn’t require a lot of capital spending, Coke can pay a high percentage of earnings in dividends. Over the last year, it paid about three-quarters of its earnings and recently raised the quarterly dividend by 5% to $0.51.
It’s not a high-growth business, with analysts expecting just 6% annualized earnings growth in the coming years. But Coca-Cola can maintain steady sales growth over the long term. Management still sees a lot of opportunities in emerging markets, which make up 80% of the global population.
The company has also been effective at adapting its beverage portfolio to appeal to shifting consumer preferences. Coca-Cola’s recent success with products like Simply Pop, a prebiotic soda, shows that it can innovate with new offerings to drive sales with more health-conscious shoppers. It has 30 brands generating $1 billion in annual sales.
The non-alcoholic beverage market is valued at $1 trillion, according to Statista, and expected to grow about 5% annually through 2029. It’s reasonable to assume that Coca-Cola can slightly outperform that estimate given its large portfolio of top brands and global distribution network. The stock’s forward dividend yield of 2.84% makes the stock a compelling buy to build a growing stream of passive income.
2. Nike
The athletic apparel industry has shown steady growth for many years. It was valued at more than $400 billion in 2024, according to Grand View Research, and is expected to grow 9% annually through 2030. Nike (NKE 4.17%) is the top brand with more than $46 billion in trailing revenue, and the recent slide in the share price has the yield sitting close to the highest level in the stock’s trading history.
The stock has fallen 60% over the last few years due to declining sales. Nike faces headwinds in the near term from higher costs from tariffs on imported goods. But this is why investors can get this leading brand at such an attractive forward dividend yield topping 2.17%.
Nike’s new CEO, Elliott Hill, is implementing a strategy to return the business to growth. It is adjusting inventory to be more aligned with demand, which should firm up profits and margins. To return to sales growth, management is shifting Nike’s assortment away from lifestyle products, which have been part of the problem, to sports-oriented products that are seeing stronger demand.
Nike has historically paid less than a third of its earnings in dividends, but the prospect of lower earnings this year has raised its payout ratio. Still, Nike is generating enough earnings to sustain the dividend in the near term. Its current quarterly dividend is $0.40, or $1.60 over the next year. Even with earnings expected to decline to $1.68 in the current fiscal year, based on the consensus Wall Street estimate, Nike can maintain the dividend as it gets the business back on track.
Analysts expect Nike’s earnings to recover to $2.47 in fiscal 2027. With the stock trading at its lowest price-to-sales multiple in more than 10 years, its future earnings could be significantly undervalued. Investors should see solid returns on their investment over the next five years, with a nice dividend yield to sweeten the deal.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.