The 3 Dividend Kings I'd Buy Right Now for a Lifetime of Passive Income

It takes a company with a strong business plan executed well in good times and bad to get on the list of Dividend Kings. You simply can’t increase a dividend every single year for 50-plus years without doing something right. Which is why the Dividend King list is a great place to start your search for dividend stocks that can provide you with a lifetime of passive income.

Three attractive choices today are Coca-Cola (KO 0.72%), Federal Realty (FRT -0.74%), and, for more aggressive investors, Hormel Foods (HRL -1.15%).

1. Coca-Cola has an attractive yield at an attractive price

Coca-Cola doesn’t have the highest yield. Nor does it have the cheapest valuation. But its roughly 3.1% yield is well above the market’s skinny little 1.2% yield. And its price-to-sale and price-to-earnings ratios are both a little below their five-year averages. All in, for conservative income investors, Coca-Cola looks like an attractive buy.

That’s notable because Coca-Cola doesn’t go on sale very often. And when it does, it usually isn’t put on the deep discount rack. That’s because the company is an industry leader in the beverage space and has been for decades. In fact, despite a roughly 10% pull back in the share price, the company is actually performing relatively well as a business right now compared to its closest rival, PepsiCo (PEP 0.45%).

To be fair, PepsiCo looks more attractive valuation wise, following a big 25% price decline, and it has a higher 4% dividend yield. More aggressive investors might prefer it over Coca-Cola (I bought PepsiCo, for example). But if you are looking for reliable income without taking on too much risk, Coca-Cola should be the one that makes your short list.

2. Federal Realty is the King of REITs

Another low-risk passive income choice is Federal Realty, a real estate investment trust (REIT) that owns strip malls and mixed-use developments. Its nearly 4.6% dividend yield is about 50% larger than the yield you’d collect from Coca-Cola (and also higher than the yield from PepsiCo). What’s notable here is that Federal Realty is the only REIT to make it onto the Dividend Kings list.

Federal Realty’s big draw is that it is focused on quality over quantity. Usually owning just 100 or so properties, it has some of the best assets in the best markets. It also has a great track record of development and redevelopment, capital investments that make properties more valuable.

However, Federal Realty isn’t a buy-and-hold investor. This REIT buys properties in need of a little love, gives them that love, and then sells if it gets an attractive offer. The proceeds are then reinvested in a new property. There’s a lot going on here, but Federal Realty is conservative throughout its business model. And that has resulted in a very reliable, and growing, dividend for decades. It is a stock I happily own and have no plans to sell anytime soon.

3. Hormel Foods is a turnaround opportunity

Going from two conservative options to a higher-risk turnaround, it’s time to talk about Hormel, another consumer staples Dividend King. The shares are down more than 50% since hitting a peak in 2022 and the yield is historically high at 4.7%. Given the price drop, it probably won’t be surprising to find that the company isn’t hitting on all cylinders today.

That said, the board of directors is taking action. It has brought back a successful former CEO tasked with getting the business back on track and training the next CEO. It could take some time for the turnaround story here to play out, but Hormel has plenty of time. Not only is it a financially strong company, but The Hormel Foundation controls roughly 47% of the company’s shares.

In other words, Hormel the company is more focused on pleasing The Hormel Foundation rather than short-term-focused Wall Street. Since the foundation uses the dividends it collects to support its philanthropic efforts, it has the same basic goals that long-term dividend investors have.

If you can stomach buying and holding through an admittedly difficult period, Hormel could be a turnaround story worth owning. And the key to the story is that Hormel, thanks to The Hormel Foundation, can take the time to do what’s best for the company, not what is expedient. I’m happily holding on despite this being my worst-performing investment right now (I might sell it briefly to capture my losses for tax purposes).

Low-risk and high-risk options in Dividend King land

Dividend Kings come in all shapes and sizes, with the four companies here presenting what I believe to be some of the best investment opportunities today. Coca-Cola and Federal Realty are great, low-risk income options to consider. PepsiCo and Hormel are higher-risk, higher-reward stories, if you can stomach some near-term uncertainty.