For investors who prefer a “SPY and chill” strategy, the past week has been challenging. The SPDR S&P 500 ETF Trust (NYSEARCA: SPY) has seen a decline of approximately 1.3% over the five days ending August 21. While this performance is better than many individual stocks within the index, it serves as a reality check for passive investors.
In contrast, those invested in funds like the Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP) have experienced a modest gain of just over 0.5% during the same period. This trend marks a continuation of a growth narrative that began to shift positively in early summer.
This shift may also indicate where institutional investors are likely to focus their attention for the remainder of 2025 and into 2026. Although the tech trade isn’t entirely over, it appears to be taking a breather, particularly if the Federal Reserve signals that the anticipated number and pace of rate cuts may be less aggressive than expected.
This situation could be prompting a flight toward the relative safety and value of dividend stocks. Investors seeking stable growth for the remainder of the year should consider these blue-chip dividend kings.
A Dividend King at a Turning Point
Procter & Gamble Co. (NYSE: PG) serves as a prime example of a blue-chip stock that is regaining favor among investors. PG stock has risen by 2.4% in the past month. While this is a modest increase, the stock remains down both year-to-date and over the last 12 months.
However, the company recently reported a solid earnings report in July, showcasing that both organic growth and pricing contributed equally to its success. Additionally, the company offers a safe dividend that has increased for 70 consecutive years.
Structurally, P&G is navigating a changing tariff landscape while facing a cyclical downturn in consumer spending, particularly among lower-end consumers who may be opting for house brands.
With a current consensus price target of $175.94, PG stock presents investors with about 10% upside potential, alongside a 2.66% dividend yield. This growth potential is stronger than the stock’s performance over the last five years, making it an attractive entry point.
However, at 24x earnings, investors are paying a slight premium compared to the sector average. Therefore, it may be wise to wait for a confirmed break above a resistance level around $161, which appears to be a target for options traders.
Value, Yield, and Buybacks Drive the Case
Shares of PepsiCo Inc. (NASDAQ: PEP) have also risen about 4% in the last month. Like many consumer staples stocks, Pepsi reported solid earnings in July. However, investors remain concerned about lower year-over-year earnings, especially with uncertainties surrounding the impact of GLP-1 drugs on its core consumer base.
Nonetheless, when value outweighs growth, positive numbers still matter. Pepsi maintains pricing power and a diverse portfolio that includes both beverages and snacks, setting it apart from its main competitor, Coca-Cola.
Analysts have set a consensus price target of $158.73, indicating an upside of around 6.5%. Coupled with the company’s dividend yield of 3.82%, investors can anticipate a low double-digit return, which is a welcome change from the negative growth reported over the past three years.
Additionally, the company’s strong share buyback program is expected to create further upside for the stock. At 17x forward earnings, PEP stock is trading at a discount to its historical averages and the overall sector.
2025’s Rally Has Room to Run
Johnson & Johnson (NYSE: JNJ) is not flying under the radar. The stock has surged over 23% in 2025 and nearly 9% last month. Investors are finally moving past the company’s long-standing talc lawsuit and are focusing on a healthcare company that appears more streamlined after spinning off its consumer products division.
Part of this renewed focus includes the company’s recent decision to invest $2 billion in North Carolina to bolster its U.S. manufacturing capabilities, a move in response to the Trump administration’s tariff plans.
At 16x earnings, JNJ stock is attractively valued, even though it trades slightly above its consensus price target of $176.29. On August 21, the stock received a bullish upgrade from Citigroup, which reiterated its Buy rating and raised its price target from $185 to $200.
This adjustment suggests an upside of over 10%, along with the company’s 2.9% dividend yield. Like the other stocks mentioned, Johnson & Johnson is a dividend king, having raised its dividend for 64 consecutive years.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
