Dividend stocks are a great retirement tool. They pay you a piece of the company's profits for being a shareholder, cash that you can use to pay your living expenses or do with as you please. The best dividend stocks can make you richer, too, because they produce growing returns, meaning both share price gains and larger dividends over time.
Consumer staples are a gold mine for these types of investments. These household brand names have been selling everyday products for decades -- and consumers are essentially programmed to buy them repeatedly.
Here are five blue chip dividend stocks that can help you retire richer and give you some jingle in your pocket.
1. Altria Group
Tobacco giant Altria Group (MO -0.37%) sells Marlboro brand cigarettes and other nicotine products like cigars, oral pouches, and chewing tobacco in the U.S. The company has raised its dividend for 53 consecutive years despite decades of people steadily quitting smoking. That's because Altria can slowly increase prices to offset the yearly declines in shipment volumes. You can see that operating profits have steadily marched higher.
Data source: YCharts
The stock is down more than 20% during the past five years, an unfortunate combination of a high valuation and a notable misfire when management spent $13 billion on the failed Juul vaping business investment. However, that was the past. Today shares trade at a forward price-to-earnings ratio (P/E) of just 9, a juicy valuation for expected mid-single-digit percentage earnings growth and a dividend yield of more than 8%.
2. Starbucks
Coffee has proven to be a reliable consumer product. Starbucks (SBUX 0.47%) originated on the West Coast but has become a household brand across America and other parts of the world. Aside from the company hitting the skids during the pandemic, profits and dividends have continually marched higher over time.
Data source: YCharts
The stock pays a solid yield at 2.2%, but the payout growth is where investors will benefit the most over the coming years. Management has raised the dividend by an average of 13% annually over the past five years. The stock's dividend payout ratio is a little high today at 85%, but the company has a healthy growth outlook. Analysts believe earnings will grow by more than 16% annually, creating room for future dividend increases.
3. Procter & Gamble
Regarding household staples, Procter & Gamble (PG -0.78%) is arguably the most dominant company in the world. It sells hundreds of products under famous brands like Tide, Crest, Pampers, and many more, and sells them worldwide. These products are typically living necessities; after all, a person probably won't start wearing dirty clothes or stop washing their hair to save money.
Data source: YCharts
Procter & Gamble is a famous dividend stock because the company has raised its dividend for 67 consecutive years. It's a steady behemoth that runs a tight financial ship. The stock's yield won't blow you away at 2.5%, but the manageable 74% payout ratio and a fortress-like balance sheet can assure investors that the dividend checks will keep coming (and growing) for years to come.
Clorox
The same framework applies to Procter & Gamble's industry peer, Clorox (CLX -0.69%). Clorox focuses more on cleaning products, selling famous brands like Clorox, Pine-Sol, Kingsford Charcoal, and Burt's Bees. Again, these are products people buy without giving much second thought. Most consumers aren't going to stop cleaning their homes regardless of what the economy is doing.
Data source: YCharts
This is another blue chip stock with 46 years of continuous dividend growth and a 3% yield. The business is working through a hangover; sales surged during the pandemic when people were double- and triple-cleaning surfaces and the drop-off from that hurt sales. However, Clorox's long track record of growth and simple product portfolio should mean the business gets on track over the coming years. Analysts forecast double-digit annual percentage earnings growth rates.
5. Coca-Cola
Beverages giant Coca-Cola (KO) is one of the market's longest-running success stories. The company has grown from selling its namesake beverage in the 1800s into a global conglomerate selling soda, water, juice, tea, and coffee. It's also a Warren Buffett favorite, occupying the fourth-largest slot in his holding company Berkshire Hathaway's portfolio. The company has raised its dividend for 61 straight years and counting.
Data source: YCharts
Coca-Cola is one of the world's most famous brands and has the rare reach where its logo is recognizable virtually anywhere on Earth. It's also a cash cow because it owns the brands and manufactures the syrups but outsources the more expensive bottling process to outside partners. It spun off its bottling operations during the 2010s, which temporarily shook up its operating profits, but you can see the long-term trajectory is intact. Analysts believe the company can increase earnings at a mid-to-high-single-digit annual percentage rate over the coming years, making this a proven and simple buy-and-hold investment idea.
