The Reliable Dividend Stocks Retirees Count On Year After Year

Most retired dividend investors want to find reliable dividend stocks. That's actually not as hard as it sounds, though you may have to give up a little yield to get the best of the best into your portfolio.

What are the best of the best?

Coca-Cola (NYSE: KO) and Walmart (NYSE: WMT) fit the bill. Here's how you know which ones to buy and when.

Mixing two dividend pools

The list of Dividend Kings is a favorite among dividend investors because each of the companies on the list has increased its dividend annually for at least five decades. It requires a strong business model that gets executed well in both good times and bad to achieve a record like that. And the record is clear proof that a company places a high importance on returning value to investors via a progressive dividend payment.

But there are a lot of different Dividend Kings. You can focus even more on reliable dividend stocks if you stick to companies that operate reliable businesses. One of the most reliable sectors out there is the consumer staples sector. These companies sell modestly priced items that are bought in both good economic times and bad ones. They are often selling necessities, like food and toiletries.

It shouldn't be surprising that there are a bunch of consumer staples stocks that are also Dividend Kings. But you don't want to buy willy nilly, you'll want to ensure you are getting a good price.

Coca-Cola versus Walmart

Coca-Cola is a reliable dividend stock that appears desirable today. It is one of the largest consumer staples companies on the planet, has an industry-leading position in beverages, and looks reasonably priced right now.

The value side of the equation is highlighted by Coca-Cola's price-to-sales and price-to-earnings ratios being near or slightly below their five-year averages. To be fair, the stock isn't a deep value play, but a fair price for a great company is still quite attractive.

Oh, and the dividend yield is 2.9%, which is more than double the market's 1.2% yield.

Walmart is another giant consumer staples company, with the giant retailer selling all of the basic necessities of life. It works with companies like Coca-Cola, helping get consumer staples products to the consumers that use them.

Walmart has been a very well-run business for a very long time; after all, it is a Dividend King. But there's a small problem on the valuation front. Walmart's P/S and P/E ratios are both well north of their five-year averages. And the stock's 0.9% dividend yield is not only miserly, but it is even lower than the yield of the broader market.

If you are looking for reliable dividend stocks, either Coca-Cola or Walmart will do. But if you are looking for some yield, too, Coca-Cola will clearly be the better option. And when you add in valuation, Coca-Cola just looks like a better deal.

Don't stop at the first step

Building an income portfolio for your retirement isn't just about finding reliable dividend stocks. That's just the first step. The big goal is to find reliable dividend stocks that are worth buying. Paying too much for a great company can turn it into a bad investment.

Sticking to consumer staples Dividend Kings like Coca-Cola and Walmart will get you off to a good start, but then you need to dig in and make some deeper comparisons. When you do that, you'll quickly see why some stocks will be better options than others. That said, great dividend stocks don't go on sale very often, so you'll want to look regularly and act quickly when opportunities to buy do arise.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.