There are plenty of good things to say about Walmart (NYSE:WMT) from an investment perspective, but there are some better alternatives out there. Walmart investors love the company's stability, cash flows, and dividends. That's completely fair, but what if you discovered that there were similarly stable stocks that currently pay higher dividends and might even deliver better growth? 

Walmart's wide geographical footprint and enormous breadth of product categories create a diverse set of revenue sources. It's a defensive and mostly recession-proof stock, and the company's investment in online sales channels in recent years has been an excellent development for long-term competitive positioning with constant pressure from the likes of Target (NYSE:TGT) and Amazon (NASDAQ:AMZN).

Walmart is a dividend aristocrat that pays shareholders a 1.5% dividend yield, which is slightly below the S&P 500 average. The company has a low 31% dividend payout ratio, indicating that cash is being managed very conservatively and that the quarterly dividend could conceivably be at least doubled without negatively affecting operations.

Walmart shares have a 24.5 forward P/E ratio and a 5.0 price-to-book ratio. Everything about this company screams stability, there's very limited opportunity for any sort of rapid growth, and none of the valuation metrics seem especially cheap or expensive. I have nothing bad to say here, but I still think there are better alternatives. Here are three.

front door of a large big box variety store.

Image source: Getty Images.

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) is a fellow dividend aristocrat that makes money across a wide swath of the healthcare sector including a large portfolio of branded pharmaceuticals, medical and orthopedic devices, over-the-counter medications, home health products, and cosmetic and beauty items for consumers. These business lines make J&J a recession-resistant behemoth, though that level of diversification also limits the company's growth potential. 

In that regard, J&J is very similar to Walmart. However, the stock differs in two very important ways. First, Johnson & Johnson pays a much higher dividend yield at 2.5%. The market does seem to be acknowledging that the healthcare giant's 72% payout ratio means that it is more likely to cut (or at least less likely to raise) its distributions if financials suffer in the future, but a 72% payout ratio is still completely manageable. Furthermore, J&J's forward P/E ratio is only 17, and other valuation metrics indicate a similar discount to Walmart's pricing, despite the companies having comparable growth outlooks. 

Johnson & Johnson is a diverse and stable company with positive demand catalysts in coming years due to demographics and growing middle classes around the globe. It will pay you higher dividends and is more likely to appreciate, based on valuation.

PepsiCo

PepsiCo (NASDAQ:PEP) maintains a large portfolio of well-known beverages, snacks, and food brands that are sold around the world. Pepsi can't boast the same level of diversification as Walmart or J&J, but its broad offering and global footprint are enough to make this a stable defensive stock. Income investors who want steady dividends should love the fact that this company is unlikely to endure fluctuating sales or rapid declines in demand.

Pepsi sets itself apart from Walmart with a 2.9% dividend yield, nearly double that of the big-box company. The 78% payout ratio might be on the high end for investors who are worried about long-term dividend growth, but Pepsi has been a Dividend Aristocrat for 47 years with an extensive history of steady growth. That's a great company to own, with nearly double the yield.

Realty Income

Realty Income (NYSE:O) is a REIT that primarily leases single-tenant retail properties. Retail real estate isn't the most stable place to plant your flag these days, with coronavirus keeping people out of stores and e-commerce challenging brick-and-mortar everywhere. Still, Realty Income Corp does as well as you can in this space. The company targets recession-resistant tenants with Walgreens (NASDAQ:WBA), Dollar General (NYSE:DG), 7-11, Dollar Tree (NASDAQ:DLTR), CVS (NYSE:CVS), and Walmart among their top 20 tenants by revenue. However, they are also heavily exposed to AMC and Regal Cinemas, as well as multiple gym chains.

Realty Income is a riskier proposition than the companies mentioned above, but investors are compensated with a much higher 4.65% dividend yield, and distributions are monthly rather than quarterly. The REIT managed to collect about 93% of rent due in the most recent quarter, despite the challenges presented by the coronavirus. Even with all the operational hardships, dividends over the past quarter were still only 85% of FFO. Modest growth is forecast for 2021, so this is a great recovery play for income investors who aren't scared to take on some risks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.