3 Dividend Aristocrats I’d Rather Own Than the S&P 500 Right Now

The S&P 500 is up nearly 13% in the middle of an enormous crisis, but you should never get too complacent with the current environment. Instead, I’d continue to stock up on Dividend Aristocrat stocks like General Dynamics (NYSE:GD | GD Price Prediction), Fastenal (NASDAQ:FAST), and PepsiCo (NASDAQ:PEP). Buying them right now can set you up for any unforeseen downturns in the future.

And such a downturn is almost a given if the Strait of Hormuz remains closed. Even if it opens today, the market is too optimistic about the long-term consequences. It will take months for full production to ramp up, and we’re yet to even see the anticipated inflation wave from higher oil prices.

Dividend stocks are thus an important cushion you should always keep in your portfolio. If you are an older investor, it’s even more important to keep your portfolio geared towards safety.

Let’s take a look at why each of the following Dividend Aristocrats is worth stocking up on instead of the SPY.

General Dynamics (GD)

General Dynamics will always have demand, even more so in the coming years. I wouldn’t let the recent decline fool me and instead use it as an opportunity to accumulate. GD stock is down 9% year-to-date and has declined nearly 15% from its peak. Defense contractor stocks have paradoxically seen double-digit declines in the past few months, but the long-term outlook is very bright.

President Donald Trump has proposed a $1.5 trillion defense budget for FY2027. At a minimum, I’d expect at least $1.2 trillion (the base) to go the Pentagon. That’s needed to not only restock the munitions but also create a larger stockpile. If Iran managed to deplete a significant amount of the U.S. stockpile in two months, the stockpile needs to be far bigger for anything in the Pacific.

General Dynamics is deeply integrated into aerospace manufacturing, munitions, and other defense products. I’d expect a notable chunk of the defense budget to flow into GD as the Gulf, Europe, and the U.S. rearm.

You get a dividend yield or 1.91% as it recovers. GD has 31 consecutive years of dividend growth under its belt.

Fastenal (FAST)

This company has a history of outperforming the S&P 500 over long stretches and doing so while paying higher dividend yields. It has also fared better during downturns multiple times in the past. The stock has climbed by 75% in the past 5 years, though it is currently 10% below its high.

Fastenal is involved in industrial and construction supplies. It’s an emerging sector as onshoring and reshoring trends keep accelerating. The company is expected to almost double its revenue growth in the coming years. Fastenal’s 3-year average sales growth was 5.5% annually, but is expected to reach nearly 9% through the next 3 years.

EPS growth is expected to climb to 10.4% annually, up from less than 5% annually in the past 3 years. These numbers may look small, but the company has historically traded at a premium due to how sticky its sales and margins are. Industrial and construction demand is unlikely to disappear anytime soon. If anything, you could expect higher-than-expected growth if the government throws more support behind reindustrialization.

FAST stock gets you a 2% dividend yield with a 3-year dividend growth rate of 12.2% annually. Debt has been rapidly paid off, down from $802 million in 2022 to $446 million in Q1 2026, against $309 million in cash. Once this debt is paid off, you could see even higher dividend growth.

PepsiCo (PEP)

PEP stock gets more tempting the longer your investment horizon is. This company has historically kept up with far bigger peers, and I believe it still has what it takes to keep outperforming. The past few years have been rough due to GLP-1 fears, but PepsiCo never truly had a meaningful sales decline. The problems mostly relate to margins, where PepsiCo is making slow but steady progress.

I’d actually blame interest rates for most of its problems. Once interest rates eventually come down and bring down Treasury yields along with it, PEP stock looks a lot more attractive. You get a steadily-growing business with a dividend yield of 3.7%.

Analysts see an 11.1% upside potential over the next year, but I believe PEP stock is well-positioned to outperform those expectations. The stock is down 21.4% off its highs and posted $1.1 billion in net interest losses last year. Rate cuts will come eventually and get PEP stock back on track.