3 Dividend Stocks for February 2026

Key Concepts

• Dividend King: A company that has increased its dividend annually for at least 50 consecutive years.
• Dividend Aristocrat: A company that has increased its dividend annually for at least 25 consecutive years.
• Wide Moat: A sustainable competitive advantage that protects a company’s profits and market share, as assessed by Morningstar Equity Analysts.
• Payout Ratio: The percentage of a company’s earnings paid out as dividends.
• Fair Value Estimate: An assessment of a stock’s intrinsic worth, determined by Morningstar analysts.
• Free Cash Flow: The cash a company generates after accounting for capital expenditures.

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Dividend Prospects of Coca-Cola, Domino's Pizza, and Texas Instruments – A Monthly Review

This review, presented by David Harrell of the Morning Star Dividend Investor Newsletter, analyzes the dividend potential of three widely-held stocks: Coca-Cola (KO), Domino's Pizza, and Texas Instruments. The analysis focuses on current yields, historical dividend growth, payout ratios, and Morningstar’s fair value estimates.

Coca-Cola (KO) – The Dividend King

Coca-Cola is identified as a “Dividend King,” having consistently increased its per-share dividend for the past 63 years. Currently, the stock yields 2.8%, aligning with its 5-year average, but down from 3.1% a year prior due to share price appreciation. Over the last five years, Coca-Cola has demonstrated an annualized dividend growth rate of 3.9%.

The company’s payout ratio briefly exceeded 80% in 2020 but has since decreased to below 70%. Morningstar analysts project the annual dividend to rise from its current $2.40 per share to $2.65 by 2029. A dividend increase is anticipated this month, aligning with the company’s historical timing. The stock is currently trading near Morningstar’s fair value estimate of $74.

Domino's Pizza – High Growth Potential

Domino's Pizza, also possessing a “wide moat” rating, currently offers a yield of 1.7%. While this yield may not be immediately attractive to all income investors, the company has exhibited exceptional dividend growth, averaging 18.4% annually over the past five years.

Morningstar forecasts continued strong growth, projecting the annual dividend to increase from $6.96 per share to $11.64 by 2029. This projection implies a capacity for a 14.5% annual dividend increase, resulting in a payout ratio of 45% over the forecast period. This is slightly higher than the firm’s historical payout ratio of 31%. Like Coca-Cola, Domino’s is expected to announce a dividend increase this month. The stock is currently trading at a 5% discount to its $436 fair value estimate, earning a three-star rating from Morningstar.

Texas Instruments – Approaching Aristocrat Status

Texas Instruments is nearing “Dividend Aristocrat” status, having achieved 22 consecutive annual dividend increases, including a 4.4% raise last fall. The stock currently yields 2.7%, consistent with its 5-year average of 2.6%, and has demonstrated a 10.4% annualized dividend growth rate over the past five years.

Morningstar analysts forecast the annual dividend to increase from $5.68 per share to $6.46 by 2029. The analysis highlights the management team’s effective capital allocation strategy, specifically focusing on returning excess cash to shareholders. Management aims to convert 25-35% of revenue into free cash flow and distribute 100% of that flow (less debt repayment) to shareholders. Following strong Q4 results and positive revenue guidance, Morningstar increased its fair value estimate from $177 to $210 per share, and the stock is currently trading in line with this revised estimate.

Logical Connections & Overall Assessment

The analysis consistently applies the same metrics – yield, growth rate, payout ratio, and fair value – to each company, allowing for direct comparison. The emphasis on Morningstar’s “wide moat” rating underscores the importance of sustainable competitive advantages in supporting long-term dividend growth. The timing of potential dividend increases being anticipated this month for both Coca-Cola and Domino’s suggests a pattern of consistent shareholder returns.

Notable Quote: “The management team has done an excellent job focusing on redistributing excess cash to shareholders,” – regarding Texas Instruments’ capital allocation strategy.

Conclusion

The review highlights three companies with strong dividend prospects, each offering a unique profile. Coca-Cola provides stability and a long track record, Domino’s offers high growth potential, and Texas Instruments demonstrates effective capital allocation and a commitment to shareholder returns. All three stocks are considered attractive options for income-focused investors, particularly given their current valuations relative to Morningstar’s fair value estimates.