Dividend kings are getting a fresh look from investors this week. Coca-Cola (NYSE: KO) and Illinois Tool Works (NYSE: ITW) both report third-quarter earnings before the opening bell on Tuesday, October 27. Each has raised its dividend for more than 60 consecutive years.
The timing is interesting. Over the past two weeks, investors have been selling AI and large-cap growth names. But much of that money hasn’t left the market. It’s rotated into consumer staples, utilities, and other defensive sectors. That looks like a flight to safety. But it may also be a flight to quality.
Those are not the same thing. A flight to safety is about avoiding losses. A flight to quality is about owning businesses with durable cash flow, pricing power, and disciplined capital returns. Dividend kings sit where those two ideas overlap.
Still, these two stocks are set up very differently. Coca-Cola is up about 32% in 2026 and is on pace for its best year since 1996. Illinois Tool Works has posted a more modest gain and trades about 8% below its 52-week high. One looks like a momentum play. The other looks like a potential catch-up trade.
Why Dividend Kings Can Anchor Your Portfolio When Markets Wobble
A dividend king is a company that has raised its payout for at least 50 consecutive years. That is a short list. Getting on it means growing the dividend through recessions, oil shocks, a financial crisis, and a pandemic.
That track record matters because it reflects management behavior, not just results. A board that has raised the dividend for six decades treats the payout as a commitment. That discipline usually shows up in the balance sheet, capital allocation, and cost control.
For investors, the benefit is twofold. First, the dividend provides a cash return no matter what the stock price does. That income can be reinvested at lower prices during a pullback. Second, dividend kings tend to be less volatile than the broader market. That makes it easier to stay invested when headlines turn negative.
There is a behavioral advantage, too. Investors who own reliable dividend payers are less likely to sell at the wrong time. A rising income stream gives them a reason to hold. In a market where sentiment can flip in a single session, that patience is an edge.
The trade-off is that dividend kings rarely lead bull markets. But when leadership narrows, and growth stocks stumble, they start to look a lot more attractive.
Coca-Cola Delivers Defensive Income With Growth-Stock Momentum
Coca-Cola is not supposed to be a momentum stock. But that is exactly what it has become in 2026. The shares are up about 32% this year and hit an all-time high above $95 last week.
The chart shows an uptrend that has held all year. Coca-Cola has made a steady series of higher highs and higher lows. The stock sits well above its rising 200-day moving average, now near $81.70. The MACD remains above its signal line, so the trend is still intact.
The rally rests on real results. Second-quarter unit case volume rose 5%, and management raised full-year guidance. Coca-Cola has also beaten EPS estimates for six straight quarters. Analysts expect third-quarter EPS of about $0.88 on revenue near $12.9 billion.
There are early signs of fatigue, though. Shares slipped from last week’s high, and the MACD histogram is shrinking. The stock also trades near 29 times trailing adjusted earnings, up from about 23 at the end of 2025. Investors will want proof that volume held up after the World Cup boost.
Meanwhile, the dividend keeps compounding. Coca-Cola raised its payout for the 64th straight year in February, to 53 cents per quarter. That works out to $2.12 annually, or a yield near 2.3%. When investors go looking for safety, this is often where they start.
Illinois Tool Works Offers a Discounted Entry Into a Proven Compounder
Illinois Tool Works tells a different story. The stock has posted a modest gain this year, well behind Coca-Cola. It trades about 8% below its 52-week high of $303.16. That gap is what makes ITW a potential catch-up trade.
The chart supports that view. ITW has traded in a range between roughly $255 and $300 for most of the year. In October, it bounced off the low end and reclaimed its 200-day moving average near $270. The MACD has crossed above both its signal line and the zero line. That suggests momentum is turning higher.
The pullback reflects sentiment more than execution. On October 9, JPMorgan downgraded ITW to Neutral and cut its price target to $277 from $350. The firm worries manufacturing PMIs have limited room to improve. Wall Street’s consensus rating is Hold.
That caution contrasts with the fundamentals. Last quarter, revenue rose 6.1% to $4.30 billion, and EPS climbed 10.1%. Management raised full-year EPS guidance to $11.35 to $11.55. Analysts expect third-quarter EPS of about $2.97.
Shareholder returns are a big part of the appeal. In August, ITW raised its dividend 7% to $1.72 per quarter. That was its 63rd consecutive annual increase. The board also approved a new $6 billion share repurchase authorization. The forward yield is roughly 2.5%.
This is a classic gap between perception and fundamentals. A solid report could carry shares back toward the top of the range. A miss would likely send them back to test support near $255.
Two Ways to Own Quality in a Nervous Market
Coca-Cola and Illinois Tool Works offer investors two paths to the same destination. Both have more than 60 years of dividend growth. Both raised guidance this year. And both report on the same morning.
Coca-Cola is the momentum choice. The uptrend is intact, but the stock is extended, and expectations are high. Buying here is a bet that the rotation into consumer staples still has room to run.
Illinois Tool Works is the catch-up choice. Sentiment is cautious, but the chart is improving. A solid quarter could carry shares back toward the top of their range.
Whichever way earnings break, the dividends are not in question. In a market rotating toward safety, that reliability is the point. And if this flight to safety is really a flight to quality, dividend kings are exactly where investors should look.
