Consumer staples have begun to recover in 2026 after a challenging year in 2025, driven by easing sector-specific pressures and potential fiscal stimulus boosting demand. The Consumer Staples exchange-traded fund (NYSEArca: XLP) has gained 7.5% in just the first six trading days of the year. This marks the strongest short-term performance since 2022, according to BTIG. The sector has historically lagged behind tech stocks, with a 70-percentage-point performance gap over the past three years, suggesting a contrarian opportunity for long-term investors.
While technology stocks have captured much investor attention recently, the consumer staples sector is poised for growth. Defensive in nature, these stocks not only provide stability during economic uncertainty but also offer reliable dividends, making them attractive to conservative growth and income investors. A significant shift is underway, as investors reassess their portfolios after a volatile 2025, which saw a steep correction in the market.
Why Consumer Staples Are Gaining Traction
The S&P 500 has achieved double-digit returns over the past three years, but the market’s current state raises concerns about sustainability. Many investors recall the steep declines that occurred in early 2025, which included a brief bear market. In light of these fluctuations, reallocating a portion of investment portfolios into consumer staples could provide a safer avenue with promising upside potential.
A recent analysis by 24/7 Wall St. identified five high-yielding dividend stocks within the consumer staples sector, all rated as “Buy” by top Wall Street firms. These companies, known as Dividend Kings, have consistently increased their dividends for at least 50 years. The focus on quality dividend stocks is significant, as dividends have historically accounted for approximately 32% of the S&P 500’s total return since 1926.
Top Dividend Kings to Consider
**Altria Group Inc.** (NYSE: MO) is one of the largest producers of tobacco products globally. Despite facing market challenges, Altria has maintained its pricing power while expanding its focus on smoke-free products. With a dividend yield of 7.30%, Altria offers a compelling entry point for value investors. The company has a substantial portfolio, including well-known brands such as Marlboro and Black & Mild. Recently, Altria engaged in a $2.4 billion stock repurchase plan, partially funded by selling shares of Anheuser-Busch InBev N.V. Goldman Sachs has set a target price of $72 for Altria.
**Hormel Foods Corp.** (NYSE: HRL), founded in 1891, has seen its shares decline by 25% in 2025, making it an attractive investment option. With a dependable dividend yield of 5.05%, Hormel’s diversified product offerings, from fresh meats to shelf-stable items, appeal to a broad market. The company is also restructuring its portfolio to enhance performance. Barclays has given Hormel an Overweight rating with a target price of $31.
**Kimberly-Clark Corp.** (NYSE: KMB) has experienced a 23% decline in its stock price in 2025, nearing a 12-year low. Despite this, Kimberly-Clark has raised its dividend for an impressive 53 consecutive years, currently yielding 5.04%. The company’s extensive range of personal care products, including Huggies and Kleenex, positions it well in the market. Kimberly-Clark is also in the process of acquiring Kenvue Inc. for $48.7 billion, with completion expected in the second half of 2026. Argus has set a Buy rating with a target price of $120.
**PepsiCo Inc.** (NYSE: PEP) reported solid earnings in the third quarter and boasts a dividend yield of 3.81%. Following a significant investment from Elliott Investment Management, PepsiCo is focusing on unlocking value through its core strengths. The company’s diverse offerings, from Frito-Lay snacks to beverages, position it well for continued growth. UBS has set a Buy rating with a target price of $170.
**Procter & Gamble Co.** (NYSE: PG), a company with a legacy of over 185 years, has increased its dividend for 70 straight years. With a current yield of 2.82%, Procter & Gamble’s extensive portfolio includes well-known brands like Tide and Gillette. The company operates globally, selling products in approximately 180 countries. UBS has assigned a Buy rating with a target price of $161.
As investors navigate the complexities of the current market, the consumer staples sector presents opportunities for those seeking stability and reliable income through dividends. The five companies highlighted here exemplify strong fundamentals and a commitment to shareholder returns, making them attractive options for long-term investment strategies.
