3 Best Dividend Growth Stocks to Buy in March

Oil prices are soaring thanks to the geopolitical conflict unfolding in the Middle East. The S&P 500 index (SNPINDEX: ^GSPC) is moving in dramatic and sometimes erratic ways as investors react to news. And U.S. consumers appear to be increasingly worried about their budgets, with many trading down to low-price stores. That's not a great backdrop for investing.

Now is the time to err on the side of caution with reliable dividend growth stocks. Three solid options are consumer staples giants Coca-Cola (NYSE: KO) and Procter & Gamble (NYSE: PG), and real estate investment trust (REIT) Federal Realty (NYSE: FRT). Here's why you'll find all three of these Dividend Kings attractive today.

Liquids and toiletries never go out of style

Coca-Cola and Procter & Gamble are two of the world's largest consumer staples makers. Coca-Cola produces beverages, while P&G focuses on consumer products such as toilet paper and deodorant. The reason to like these businesses in the face of uncertainty is the necessity of the products they sell. You aren't going to stop drinking or cleaning yourself if there is a recession or a bear market.

Image source: Getty Images.

To be fair, both Coca-Cola and P&G sell premium products. However, they both benefit from material brand loyalty that makes what they sell affordable luxuries. Notably, despite industrywide headwinds, Coca-Cola was able to grow organic sales 5% in its most recent fiscal quarter. P&G isn't doing quite as well, with organic sales coming in flat in its most recent quarter. However, given the industry headwinds, that's not a terrible outcome. The company is projecting organic sales could be as high as 4% for the full fiscal year in 2026.

Procter & Gamble looks more attractive valuation-wise. Its price-to-sales, price-to-earnings, and price-to-book ratios are all below their five-year averages. Add in an attractive 2.8% yield, and value-focused investors might want to take a look. Coca-Cola's P/S ratio is above its five-year average, while its P/E and P/B ratios are slightly below their longer-term averages. All in, growth at a reasonable price (GARP) investors will probably find it attractive. The yield is 2.6%.

Federal Realty is the only Dividend King REIT

What really seals the deal for Coca-Cola and P&G is their status as Dividend Kings, with each having increased its dividend annually for more than 50 years. If you prefer higher-yielding investments, you might find Federal Realty's 4.2% yield attractive. Federal Realty is the only REIT that has achieved Dividend King status.

Federal Realty focuses on quality over quantity, with just 100 or so strip malls and mixed-use properties. The assets it owns tend to have higher populations and higher average incomes around them than do the properties of its peers. Moreover, the REIT has a history of making regular capital investments in its assets to maintain their desirability for both tenants and customers. Essentially, retailers want to be in Federal Realty properties because it gives them access to the most attractive markets and customers. Notably, fitting in with the necessity theme of Coca-Cola and P&G, most of Federal Realty's properties include a grocery component.

Dividend growth is likely to be more modest with Federal Realty, but if you are looking to maximize the income your portfolio generates, it could be a great pick during turbulent times.

Stick with the best and focus on the dividends

The final reason that you should consider buying Coca-Cola, P&G, and Federal Realty is purely emotional. When it is too hard to watch stock prices, well-positioned and reliable dividend growth stocks like these let you focus your attention on something else: the dividend checks that keep coming in quarter after quarter and year after year.

Reuben Gregg Brewer has positions in Federal Realty Investment Trust and Procter & Gamble. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.