Volatility is again picking up, and it’s a good idea to focus more on safety. There’s no better way to do so than to buy Dividend Aristocrat stocks like Exxon Mobil (NYSE:XOM), PepsiCo (NASDAQ:PEP), and Johnson & Johnson (NYSE:JNJ). These stocks have what it takes to deliver strong returns in 2026.
Now, many investors are simply rushing for the exits the moment they see any volatility. That’s not a smart idea in this environment. You should instead lean more into safer dividend stocks to add ballast to your portfolio.
The current administration is one that cares deeply about the stock market’s gyrations. Thus, if the choice is made that higher inflation is worth the cost of keeping this rally going, the people holding cash will keep on losing. Of course, you can park your money in TIPS, but they’re not going to snowball your holdings like the following three dividend stocks are.
Exxon Mobil (XOM)
Investors like Warren Buffett were religiously investing in dividend oil stocks, even as the rest of the market was convinced that oil was out of fashion. They’re now vindicated as oil proved all too important to let go, especially for the U.S. The IEA now believes oil demand will keep rising until 2050. And that’s just demand. Oil often finds other reasons to go up…
XOM stock is up nearly 26% year-to-date already. Those gains came before things got hot in the Middle East, and I expect further bullish action in the coming months, regardless of how quickly you expect the chaos to calm down. If key oil terminals and facilities start getting hit in the Gulf, $100 per barrel or higher is possible.
What’s special about Exxon is that it does not have much Middle East exposure. The company produces its oil mainly domestically. It’s going to reap the benefits of an oil price surge without having to deal with any munitions landing in its refineries.
You’re paying 23 times earnings, which doesn’t do it justice. A U.S.-based Dividend Aristocrat oil stock during a prolonged Middle East crisis can trade above 35 times earnings.
XOM stock yields 2.67% and has 27 consecutive years of dividend growth.
PepsiCo (PEP)
PepsiCo is finally recovering after a multi-year lull. PEP stock broke a two-decade trajectory and fell 35% from its 2021 trough. The market placed the blame on GLP-1 drugs, though I see the decline as a reversion to the mean. PepsiCo was overbought in the post-COVID mania, couldn’t maintain its growth, and the market promptly took it to oversold levels.
PEP stock is now finally recovering, and doing so quite strongly. It is almost halfway through making a full recovery. I see it above $200 by the end of this year as investors shift towards dividend stocks.
Fundamentals-wise, PepsiCo doesn’t have anything interesting to offer. Revenue growth is expected to be at 3.8% annually in the coming years, with EPS growth at 6.6% annually. These growth rates are much better than the negative sales growth in the 2010s, where PEP stock still kept climbing.
Something similar can happen in 2026, as PEP stock’s dividend carries more weight than the growth. It gives you a 3.45% forward dividend yield and a 3-year dividend growth rate of 7.5% annually. PepsiCo has doubled the cash it returns to shareholders in the past decade.
Part of why I see PEP stock going above $200 is because of that dividend.
If you look at that dividend yield a year ago, it wouldn’t be that attractive because Treasury yields were higher and the stock was declining. PEP stock is now undergoing a recovery, and the dividend yield is competitive against Treasuries. Plus, holding equities gives you a hedge against inflation.
PepsiCo has 53 consecutive years of dividend growth and is a Dividend King.
Johnson & Johnson (JNJ)
JNJ stock has delivered explosive outperformance over the past year and is up by 68% from its May 2025 trough. For a long time, the market was deeply skeptical about J&J because of its heavy reliance on Stelara, its blockbuster immunology drug that lost patent exclusivity in 2025. That patent cliff was baked into the stock as a reason to avoid it. But J&J managed to grow revenue by 6% in 2025 to $94.2 billion despite Stelara being a 620-basis-point headwind to sales, which genuinely impressed analysts. The fear was priced in, and when J&J shrugged it off, the rerating was swift.
J&J’s pharmaceutical arm crossed $60 billion in 2025 sales and is now the clear engine of the business. Drugs like Darzalex (multiple myeloma), Carvykti (a CAR-T therapy), Tremfya, and Spravato have all been strong commercial performers. They replaced Stelara’s contribution faster than the market expected. J&J is also building an oncology franchise targeting $50 billion in oncology sales by 2030.
I see the monster growth set to continue since JNJ stock was trading sideways for years, and investors stayed away to avoid falling behind. Now that the performance is back in earnest, JNJ stock can get a lot hotter.
You get a 2.09% forward yield, with 63 consecutive years of dividend growth. The forward P/E ratio is still less than 22x.
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