Consumer staples underperformed in a big way in 2025 but may see a more favorable environment in 2026 with easing sector-specific pressures and fiscal stimulus potentially boosting demand. The sector has a 70-percentage-point performance gap relative to tech stocks over the past three years, suggesting a contrarian opportunity for long-term investors. The top stocks in the industry offer defensive qualities during economic uncertainty while providing steady dividends. While perhaps better suited for more conservative growth and income investors, the consumer staples sector has roared out of the gate to start 2026. The Consumer Staples exchange-traded fund (NYSEArca: XLP | XLP Price Prediction) has gained 7.5% in just six trading days to start the year. According to BTIG, it is the strongest short-term run since 2022. Three to four weeks later, returns were positive in every instance, except during the 2000 tech bubble and the 2008 financial crisis, when the market was melting down.
Over the past three years, the S&P 500 has produced double-digit returns. While many investors are overjoyed to see their brokerage statements rise seemingly every month, the reality is that at some point, something has to give. Investors do not have to go that far back to remember that in 2025, from February to early April, we saw a steep correction and at one point an intraday bear market, which denotes a 20% decline in an index. It makes sense to shift part of investors’ portfolios to safer consumer staples stocks, which not only offer solid upside potential as total-return plays but also pay significant, dependable dividends that can provide steady passive income.
We screened our 24/7 Wall St. consumer staples research database, looking for the stocks with the biggest upside potential that also come with the largest dividends. Five of our favorite companies came up. All make sense now, and all five are rated Buy at top Wall Street firms that we cover. Plus, investors get a bonus: all five are Dividend Kings, meaning they have raised their dividends to shareholders for at least 50 years.
Why do we cover quality consumer staples dividend stocks?
Since 1926, dividends have accounted for approximately 32% of the S&P 500’s total return, while capital appreciation has accounted for 68%. Therefore, sustainable dividend income and the potential for capital appreciation are essential to total return expectations. A study by Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past 50 years (1973 to 2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
Altria
This is one of the world’s largest producers and marketers of cigarettes and other tobacco-related products. Altria Group Inc. (NYSE: MO) has been navigating market uncertainties with pricing power and a focus on smoke-free products, offering defensive income during economic uncertainty. This stock offers value investors a compelling entry point and a generous 7.30% dividend yield.
The company primarily sells cigarettes under the Marlboro brand, as well as:
- Cigars and pipe tobacco, principally under the Black & Mild and Middleton brands
- Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
- on! Oral nicotine pouches
- e-vapor products under the NJOY ACE brand
It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.
Altria used to own over 10% of Anheuser-Busch InBev N.V. (NYSE: BUD), the world’s largest brewer. Last year, the company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of its holdings but still leaves 8% of the outstanding shares in its back pocket. Altria also announced a $2.4 billion stock repurchase plan partially funded by the sale.
Goldman Sachs has a Buy rating with a $72 target price.
Hormel Foods
This American food processing company was founded in 1891 in Austin, Minnesota. With shares down 25% in 2025, Hormel Foods Corp. (NYSE: HRL) offers dual pricing power through both branded products and private label manufacturing, and a very reliable 5.05% dividend. It develops, processes, and distributes various meat, nuts, and other food products to retail, food service, deli, and commercial customers globally.
It operates through three segments:
- Retail
- Food Service
- International
Hormel is a Dividend King with over 50 years of dividend increases and a consumer staples company focused on protein-based packaged foods. Its yield is historically high, and the Hormel Foundation’s oversight ensures dividend reliability. Reports indicate that it is restructuring its portfolio and cutting costs to improve performance.
The company provides various perishable products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacon, and shelf-stable products, including canned luncheon meats, nut butter, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others.
It sells its products under these brands:
- Hormel
- Always Tender
- Applegate
- Austin Blues
- Bacon 1
- Black Label
- Bread Ready
- Burke
- Café H
- Ceratti
- Chi-Chi’s
- Columbus
- Compleats
- Corn Nuts
- Cure 81
- Dan’s Prize
- Di Lusso
- Dinty Moore
- Don Miguel
- Doña Maria
- Embasa
- Fast N Easy
- Fire Braised
- Fontanini
- Happy Little Plants
- Herdez
- Hormel Gatherings
- Hormel Square Table
- Hormel Vital Cuisine
- House of Tsang
- Jennie-O
- Justin’s
- La Victoria
- Layout
- Lloyd’s
- Mary Kitchen
- Mr. Peanut
- Natural Choice
- Nut-rition
- Old Smokehouse
- Oven Ready
- Pillow Pack
- Planters
- Rosa Grande
- Sadler’s Smokehouse
- Skippy
- Spam
- Special Recipe
- Thick & Easy
- Valley Fresh
- Wholly
Barclays has an Overweight rating with a $31 target price.
Kimberly-Clark
Kimberly-Clark Corp. (NYSE: KMB) is an American multinational personal care corporation that produces mostly paper-based consumer products. The stock experienced a 23% decline in 2025, pushing it close to a 12-year low. The stock has raised its dividend for 53 consecutive years, which currently sits at a rich 5.04%. Kimberly-Clark manufactures and markets personal care and consumer tissue products worldwide. It operates through three segments.
The Personal Care segment offers a diverse range of products, including:
- Disposable diapers
- Swim pants, training and youth pants, baby wipes
- Feminine and incontinence care products, as well as related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Depends, Plenitud, Softex, Poise, and other brand names
The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins, and related products under these brand names:
- Kleenex
- Scott
- Cottonelle
- Viva
- Andrex
- Scottex
- Neve
The K-C Professional segment offers wipers, tissues, towels, apparel, soaps, and sanitizers under the Kleenex, Scott, WypAll, Kimtech, and KleenGuard brands.
Kimberly-Clark announced in 2025 that it is acquiring Kenvue Inc. (NYSE: KVUE) in a $48.7 billion deal expected to close in the second half of 2026. The acquisition will create a combined consumer health and wellness company, with Kenvue shareholders receiving cash and stock. Kenvue shareholders will get $3.50 in cash plus 0.14625 shares of Kimberly-Clark stock for each Kenvue share they own.
Argus has a Buy rating with a $120 target price.
PepsiCo
This top consumer staples company reported solid third-quarter earnings and will continue to supply all the goods for Super Bowl parties. Trading at 18 times forward earnings with massive cash flow and a 3.81% dividend, PepsiCo Inc. (NYSE: PEP) is a solid idea now.
Last year, activist investor Elliott Investment Management took a $4 billion stake in the worldwide food and beverage company, revealing a strategy to unlock value within the company’s iconic brand by focusing on core strengths, such as innovation and brand marketing, rather than its capital-intensive bottling operations. This move caused PepsiCo’s stock to surge, with Elliott believing the company could see over 50% upside if its proposed strategic changes were implemented. However, these changes would involve a very long-term transformation.
Its Frito-Lay North America segment offers:
- Lays and Ruffles potato chips
- Doritos, Tostitos, and Santitas tortilla chips
- Cheetos cheese-flavored snacks, branded dips
- Fritos corn chips
The company’s Quaker Foods North America segment provides:
- Quaker Oatmeal
- Grits
- Rice cakes
- Natural granola and oat squares
- Pearl Milling mixes and syrups
- Quaker Chewy granola bars
- Cap’n Crunch cereal
- Life cereal
- Rice-A-Roni side dishes
PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:
- Pepsi
- Gatorade
- Mountain Dew
- Diet Pepsi
- Aquafina
- Diet Mountain Dew
- Tropicana Pure Premium
- Sierra Mist
- Mug brands
UBS has a Buy rating with a $170 target price.
Procter & Gamble
Procter & Gamble Co. (NYSE: PG) was founded more than 185 years ago as a soap-and-candle company. It has paid dividends to shareholders since 1891 and has raised them for 70 straight years, with the current yield at 2.82%. Procter & Gamble focuses on providing branded consumer packaged goods worldwide.
The company’s segments include:
- Beauty
- Grooming
- Health Care
- Fabric & Home Care
- Baby
- Feminine & Family Care
The company’s products are sold in approximately 180 countries and territories primarily through mass merchandisers, e-commerce, including social commerce channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores, including airport duty-free stores, high-frequency stores, pharmacies, electronics stores, and professional channels.
It also sells directly to individual consumers. It has operations in approximately 70 countries.
Procter & Gamble offers products under these brands and others, such as:
- Head & Shoulders
- Herbal Essences
- Pantene
- Rejoice
- Olay
- Old Spice
- Safeguard
- Secret
- SK-II
- Braun
- Gillette
- Venus
- Crest
- Oral-B
- Ariel
- Downy
- Gain
- Tide
- Always
- Always Discreet
- Tampax
- Bounty
UBS has a Buy rating with a $161 target price.
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