My Top 3 Consumer Staples Dividend Stocks to Buy Now

The S&P 500 has rallied nearly 30% over the past 12 months, even as unpredictable economic policies and geopolitical conflicts rattled the global economy. But high-flying AI stocks drove much of that rally -- and the index now looks historically expensive at 33 times earnings.

Whenever the market gets overheated, I make sure that I own some defensive dividend plays that can weather the imminent pullback. The consumer staples sector -- which houses some of America's most resilient blue chip stocks -- is a great place to look for those investments.

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Let's take a look at three of my favorite dividend-paying consumer staples plays -- Coca-Cola (NYSE: KO), Altria (NYSE: MO), and Procter & Gamble (NYSE: PG) -- and see why they're worth buying as most investors focus on higher-growth AI stocks or news-driven energy plays.

Coca-Cola

Coca-Cola, the world's largest beverage company, pays a forward yield of 2.7%. It's raised its dividends for 64 consecutive years, making it a Dividend King that has raised its payout annually for at least 50 straight years. It maintained that streak through nine official recessions, indicating it's an evergreen company that can easily weather any future downturns.

To counter declining soda consumption, Coca-Cola expanded its portfolio with more bottled water, fruit juices, teas, sports drinks, energy drinks, coffee, and even alcoholic drinks. It also refreshed its flagship sodas with healthier versions, smaller serving sizes, and new flavors. To maintain stable margins, it produced only concentrates and syrups for its drinks -- which it sold to independent bottling partners for them to produce and distribute the finished products.

From 2025 to 2028, analysts expect Coca-Cola's EPS to grow at a steady 6% CAGR. Its stock still looks reasonably valued at 24 times this year's earnings, and it should easily bounce back from the next market downturn.

Altria

Altria, the top tobacco company in America, pays a forward yield of 6.2%. This Dividend King has raised its dividend 60 times over the past 57 years, even as adult smoking rates declined. By raising prices, cutting costs, diversifying its portfolio beyond cigarettes, and repurchasing more stock, it grew EPS even as revenue growth slowed to a crawl.

Altria expects the expansion of its smoke-free business -- which sells e-cigarettes, nicotine pouches, and snus -- to gradually reduce its long-term dependence on cigarettes and cigars. By 2028, it expects to generate at least $5 billion in smoke-free revenue, equivalent to more than a quarter of its projected sales.

Assuming that expansion pays off, analysts expect Altria's EPS to grow at a 13% CAGR from 2025 to 2028. That's a robust growth rate for a stock that trades at 12 times this year's earnings, and it will likely attract more investors as a defensive play if the market crashes.

Procter & Gamble

Procter & Gamble, one of the world's largest consumer staples companies, pays a forward yield of 3%. It's also a Dividend King that has raised its payout annually for 70 consecutive years. It owns dozens of well-known brands -- including Tide, Pampers, Tampax, Charmin, Bounty, Gillette, Oral-B, Head & Shoulders, and SK-II. That scale and diversification have enabled it to generate stable growth through economic downturns.

Over the past decade, P&G streamlined its portfolio by divesting over 100 of its weaker brands, updated its products to target higher-end consumers and widen its moat against cheaper private label brands, and sold more products through e-commerce platforms. It also overhauled its global logistics infrastructure to address volatile tariffs and geopolitical conflicts.

From fiscal 2025 (which ended last June) to fiscal 2028, analysts expect P&G's EPS to grow at a 5% CAGR. At 21 times this year's earnings, it still looks like a safe place to park your cash.

Leo Sun has positions in Altria Group and Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.