2 Consumer Staples Stocks Giving Investors a Break From the AI Trade

Key Points

• Investors seeking alternatives to the AI trade may consider consumer staples like Coca-Cola and Hershey, which offer dividends and relative value.
• Coca-Cola posted strong second-quarter results driven by its FIFA World Cup marketing campaign, though investors question whether the growth boost will prove durable.
• Hershey's second-quarter earnings beat expectations, fueled by robust salty snacks growth and lower cocoa prices, while both companies maintain strong dividend growth track records.

Heading into 2026, many investors were looking for alternatives to the artificial intelligence (AI) trade. The problem has been that many diversified approaches that are performing well (e.g., emerging markets or small-cap stocks) lead back to tech.

One option for true sector rotation would be to invest in consumer staples. The Consumer Staples Select Sector SPDR Fund NYSEARCA: XLP is up about 10% year-to-date. That’s lower than the broader market, but it may also indicate that the broader rotation has further to go.

Aside from the potential upside in stock prices, there’s another reason to reconsider consumer staples stocks. Many investors have been moving toward safety, which is igniting interest in dividend stocks.

Two stocks that meet that profile have moved in different directions year-to-date. The Coca-Cola Company NYSE: KO is up roughly 26% in 2026. On the other hand, The Hershey Company NYSE: HSY is down about 3% in 2026.

Neither stock is particularly cheap based on valuation. But they’re a bargain compared to many stocks in the artificial intelligence (AI) trade. Plus, as we head into the back half of the year, there are reasons beyond a dividend to buy each stock.

Coca-Cola's World Cup Bet Is Paying Off—But Will It Stick?

Coca-Cola's second-quarter results show the World Cup activation working as intended. Net revenues grew 7% to $13.4 billion, and organic revenues climbed 6%, with unit case volume up 5%. Earnings per share (EPS) jumped 16% to $1.03, while comparable EPS grew 11% to 97 cents.

The volume numbers in the earnings report clearly showed that the company’s FIFA World Cup campaign wasn't a frivolous marketing spend. The trademark Coca-Cola brand grew 5%, and Powerade grew 8%, with the company crediting the tournament's more than 60 billion digital impressions and connected-packaging engagement with over 80 million consumers for a meaningful share of that growth.

KO jumped over 5% after the report. But the rally stalled, as investors may be questioning the durability of the results. Coca-Cola gained value share in total NARTD beverages this quarter, but a World Cup only comes around every four years.

The bull case is that the first-party data collected, more than 25 million records, outlives the tournament and sharpens future targeting. The skeptical read is that a one-summer marketing event flatters this quarter's numbers without changing the long-term growth algorithm.

Management raised full-year organic revenue guidance to approximately 5% growth and comparable EPS guidance to 9%-10% growth, both modest bumps from prior guidance. That's a signal that management sees the World Cup lift as real but not transformative.

Hershey’s Salty Snacks Give the Stock a Sweeter Setup

The Hershey Company delivered a strong Q2 2026 earnings report, and one of the biggest reasons was the company’s investment in its salty snacks business. Revenue of $2.79 billion beat expectations of $2.63 billion and was 6% higher year over year.

On the bottom line, the results were even better. Adjusted EPS of $1.90 were well ahead of the forecasted $1.43. But the big story there was a 57% year-over-year increase. Hershey also reported an adjusted gross margin of 41.6%, which was an increase of 350 basis points compared to the second quarter of 2025

That increase is largely due to the company’s focus on salty snacks, which delivered growth of over 20% at a time when the company’s core confectionery business is growing at a mid-single-digit pace.

But it’s also due to lower cocoa prices, which are down sharply from the 2024-2025 highs. That removes one headwind, as the impact of reduced snacking from increased use of GLP-1 drugs is still more anecdotal than backed by tangible data.

Coca-Cola and Hershey Offer 2 Paths to Dividend Growth

Coca-Cola and Hershey are two strong dividend stocks, though they present distinct cases for investors. Coca-Cola has a dividend yield of 2.39% and an annual payout of $2.12 as of the company’s last earnings report.

Those headline numbers may not sound that attractive, but KO makes up for that with impressive longevity. The company is a Dividend King that has increased its dividend for 64 consecutive years. That covers the stagflation of the 1970s, the dot-com crisis, the Great Financial Crisis, and more. Through it all, Coke has continued to reward shareholders.

Hershey has “only” increased its dividend for 15 consecutive years. That said, investors get a yield of 3.28% and an annual payout of $5.81. Some investors may balk at a payout ratio that is elevated by every measure. But the company has increased its dividend at an annualized 5-year growth rate of around 11%.

The broader point is that Coca-Cola and Hershey give investors two different ways to play the same consumer staples rotation. Coca-Cola offers global scale, marketing strength, and one of the market’s longest dividend-growth records. Hershey offers a higher yield, improving margins, and a salty snacks business that is starting to matter more.

Neither stock is cheap, but both offer something investors may value more if the AI trade keeps cooling: steady demand, recognizable brands, and dividends that can keep compounding through a choppier market.