Why Costco, Verizon, Kroger, and Other Safe Dividend Stocks Are Rising
Key Points
Previously high-flying semiconductor stocks have plunged in recent days. Intensifying competition from Chinese chipmakers and mounting concerns that artificial intelligence (AI)-related spending may not produce its promised returns are prompting investors to seek shelter in more defensive businesses.
That’s driving up the prices of dividend stocks like Kroger (NYSE: KR), Verizon (NYSE: VZ), and Costco Wholesale (NASDAQ: COST), all of which saw gains of roughly 2% on Tuesday.
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Shifting to defense
Companies like Alphabet are being punished for stepping up their capital expenditures, as investors grow increasingly impatient with the ballooning spending plans of hyperscalers and other tech giants.
At the same time, tech leaders like ASML Holding, with competitive moats once thought to be unassailable, are facing new threats from upstarts in China and elsewhere.
In turn, investors who were previously gung-ho on AI stocks are now moving to dial back risk. That’s leading many of them to more defensive dividend stocks.
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Costco’s shares are up 13% so far in 2026. In today’s inflationary economic environment, the warehouse store leader’s well-curated merchandise, low prices, and treasure hunt-style shopping experience are resonating with bargain-focused shoppers.
Verizon’s flat-rate unlimited mobile plans and bundled wireless and internet offerings are helping it win more subscribers. The telecom titan’s free cash flow is up 16% in the first half of 2026, and its shares are up 19% so far this year.
Kroger benefits as people choose to dine at home rather than at restaurants. The grocery giant is cutting prices to boost sales. That’s weighing on its margins. But with its shares down 6% in 2026 and trading at about 11 times forward earnings projections, Kroger’s stock is approaching bargain territory.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, and Costco Wholesale. The Motley Fool recommends Kroger and Verizon Communications. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
