If you are an investor like me, your goal is to invest until you reach a point where you can simply enjoy passive income. It cannot only cover the monthly expenses but also allow you to enjoy retirement. While achieving this goal can be a dream of many, it needs a lot of planning and financial discipline to become a reality. Part of this strategy is to look for dividend-paying stocks that are reliable and stable. This means looking for companies that have thrived amidst different market conditions and have steadily paid dividends. Here are the three best dividend stocks to buy to pump up your retirement portfolio.
PepsiCo (PEP)
One of the strong buy dividend stocks is PepsiCo (NASDAQ:PEP). The company is a well-known name in the industry and already has a stronghold in the food and beverages segment. It is one of the biggest consumer food companies in the world. PepsiCo recently raised the earnings and sales outlook for the year and reported impressive quarterly numbers. It generated a revenue of $22.32 billion and an EPS of $2.09. The management now expects organic revenue of 10% as compared to the prior expectation of 8%.
One solid reason to choose this company is its diversified business. It has a strong mix of healthy snacks and beverages which are driving growth. Its organic sales were up 13% in the quarter and it enjoys a dividend yield of 2.71%. Investors looking for a steady and reliable dividend income will love PEP stock.
The stock is exchanging hands for $188 today and is up 5% year-to-date (YTD). One good thing about the stock is that it moves steadily which means you will never see a huge upside or downside. It is one growth stock that can sustain in any market situation. Even if we are headed into a recession, Pepsi will continue to perform. This is because of its brand name and the wide range of product offerings.
Coca-Cola (KO)
When it comes to dividends, Pepsi’s rival Coca-Cola (NYSE:KO) isn’t far behind. The company is currently in the seventh consecutive decade of dividend growth and has increased the dividend payout for 61 consecutive years. This is no small feat. KO stock is trading at $61 today and is down 1.5% YTD. There aren’t any major swings in the stock movement which means you will enjoy stability with the stock.
The company has a solid portfolio over 200 brands and its global presence helps generate solid revenue and profits. It saw a 5.7% year-over-year rise in net revenue in the recent quarter and hit $12 billion. Its organic revenue growth was 11% and the management raised the full-year forecast to between 8% to 9% as compared to the previous forecast of 7% to 8%.
One reason to bet on the stock right now is its global presence. If anything is going on with the U.S. economy, the company can still rely on the global market for consistent sales. To add to that, the company has a 3% dividend yield which could boost your retirement portfolio. It has a dividend payout ratio of 56% and with an improvement in the revenue and balance sheet, the dividend payout could steadily rise. While the stock has been flat for a while now, it looks undervalued to me and is a solid long-term buy. This is one of the best dividend stocks to load up on this year.
McDonald’s (MCD)
The one company that has stood strong even during inflation is McDonald’s (NYSE:MCD). It has posted excellent growth and financials which make it one of the top stocks to own today. It saw a 11.7% rise in comparable store sales in the international market and has also seen higher customer traffic. Despite rising prices, it kept attracting consumers and this combination of growth and earnings is enviable. The company saw a 14% rise in net sales and the revenue hit $6.5 billion.
I’ve said in the past and I’ll say it again, the company thrives on the franchise model and benefits from the rental charges. This is one reason it will continue growing sales and revenue numbers in the coming years. There is potential to push the profit margin higher as the economy stabilizes.
MCD stock is trading at $289 today and is very close to the 52-week high of $299. The stock is up 10% year to date and over 85% in the past five years. Yes, it is at a premium right now, but I do not think it will drop anytime soon. The stock is only going to move upwards. With a dividend yield of 2.09% and a quarterly dividend payout of $1.52, the stock is worth an addition to your portfolio. There is a chance of increasing the payouts in the coming quarters and the upside potential of the stock is massive.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.