My 3 Favorite Dividend Stocks to Buy Right Now

I'm a big fan of boring businesses that pay reliable dividends. Which is why I own a significant number of consumer staples companies. A recent review of my portfolio, as I made year-end tax moves, has me thinking about Clorox (NYSE: CLX), Hershey (NYSE: HSY), and General Mills (NYSE: GIS).

Why consumer staples makers are so attractive

Consumer staples companies produce goods that are generally low-cost and are typically purchased on a regular basis. Even during a deep recession, consumers will still purchase food, toiletries, and cleaning supplies. They are either necessities or very close to it (you could clean a spill with a rag, but a paper towel will probably be easier and more effective). As such, consumer staples makers tend to be resilient businesses throughout economic cycles.

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There are also material brand loyalty issues involved, as customers often prefer a certain brand. Coke versus Pepsi is one example, but the trend extends across the consumer staples space. Brand management is a crucial factor in the sector, as it helps increase a company's resilience when faced with headwinds.

As a dividend investor, I also like that consumer staples makers tend to have attractive dividend histories. That's not true across all consumer staples companies, but it is easy enough to pick out the reliable dividend stocks. Which is why I own Clorox, Hershey, and General Mills.

3 industry-leading brand managers

Of the trio, Clorox has the best dividend history, boasting 48 consecutive annual dividend increases. That's just two shy of Dividend King status. Hershey and General Mills don't have similarly strong histories of annual dividend increases. However, both of these food makers have dividends that have generally trended higher over time.

Clorox's dividend yield is currently around 4.8%, which is toward the high end of its historical range. Hershey's yield is 3%, also near the high end of its historical range. And General Mills' yield is 5.3%, which is, one more time, near the high end of the historical yield range. In this way, each of these reliable, dividend-paying consumer staples companies looks attractively priced today.

In fairness, all three have headwinds to deal with. Clorox is facing inflationary price pressures, the fallout from a data breach, and the impact of a computer system overhaul. Hershey is facing inflationary pressures, particularly from the skyrocketing price of cocoa. And General Mills is feeling the pressure as consumers shift away from packaged food products and toward healthier alternatives.

The backdrop today is difficult for all three, which is why investors have soured on the stocks. However, given the strong history of each company, it seems highly likely that they will not only survive this period but also thrive over the long term. In fact, they are each strong brand managers who focus heavily on product innovation. They are each leaning into innovation right now, as they look to navigate their way through to better days.

The problem with these companies is that they are out of favor with investors. So you need to have a bit of a contrarian streak to jump aboard. However, if you are worried about the risk of AI stocks collapsing, well, this trio of consumer staples companies are at the opposite side of the pendulum swing. They have already felt the sting of negative investor sentiment.

I'm not selling; you might want to buy

I'm confident that Clorox, Hershey, and General Mills are worth holding onto. In fact, if I didn't already own them, I would probably add them to my portfolio given their current valuations. Using yield as a rough gauge of what price investors are assigning each company, they just look too cheap to ignore. If you don't own these reliable dividend stocks, now might be a good time for you to get to know them.

Reuben Gregg Brewer has positions in Clorox, General Mills, and Hershey. The Motley Fool has positions in and recommends Hershey. The Motley Fool has a disclosure policy.