Market Crash: The 3 Best Dividend Stocks to Buy Right Now

The article highlights three Dividend Kings as defensive portfolio ideas: PepsiCo, Black Hills, and Colgate-Palmolive, emphasizing their long dividend-increase streaks of 54, 56, and 63 years, respectively. PepsiCo yields 3.9%, Black Hills 3.7%, and Colgate-Palmolive 2.3%, with Black Hills also in a merger agreement with NorthWestern Energy Group that would create a company serving over 2 million customers. Colgate reported $5.3 billion in Q1 2026 net sales, while the piece remains broadly risk-off amid inflation and interest-rate uncertainty.

Analysis

The real signal here is not “defensives exist,” but that the market is rewarding durationless cash flow and visible capital return over growth optionality. In a late-cycle tape with rate uncertainty, high-quality staples and utilities tend to get re-rated as quasi-bond proxies, but the trade is crowded: if yields back up even modestly, these names can de-rate faster than their operating fundamentals change. The alpha is less in owning the sector basket and more in identifying which balance sheets can sustain payout growth without eating into reinvestment capacity.

PEP and CL are the cleaner defensive expressions, but their upside is capped because investors already know the cash flow story; the second-order benefit is to suppliers and adjacent private-label competitors if consumers trade down while still buying “small indulgences.” BKH is more interesting as a corporate-action story than a pure utility play: if the merger closes, the combined asset base should lower perceived single-regulatory-system risk, but deal execution and rate sensitivity create a binary window over the next several months. NWE is the cleanest relative loser in the combination since scale and customer diversification would shift to the merged entity.

The consensus gap is that “defensive” does not equal “safe” if inflation stays sticky. Packaging, freight, and input inflation can compress staples margins just as revenue growth slows, so the market may be underestimating earnings risk even while paying up for yield. In other words, these names can work as total-return ballast, but the better trade may be relative rather than outright: long the highest-quality dividend compounders and short the weakest rate-sensitive utility or consumer proxy that lacks pricing power.

Key Decisions for Investors

• Long CL vs short NWE into the next 1-3 months: own the higher-quality defensive cash flow with better pricing power and less balance-sheet/event risk; target 8-12% relative outperformance if rates stay range-bound.
• Initiate a small long PEP position on weakness, but cap size: treat it as a yield carry trade, not a growth story; use a 6-12 month horizon and trim if Treasury yields move up 50 bps or more.
• Avoid chasing BKH ahead of merger clarity; instead, consider a tactical long only after approval-related spread compression if regulatory odds improve, since the upside is event-driven and the downside is execution/rate risk.
• Pair long CL / short a consumer or utility dividend proxy with weaker pricing power over the next quarter; the thesis is that margin pressure will show up before dividend narratives crack.
• If using options, sell cash-secured puts on PEP or CL 5-10% below spot for 2-3 months to monetize rich defensive demand while keeping entry discipline.