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Dividend king stocks are becoming a necessity for all portfolios, even growth-focused portfolios. like stock PepsiCo (Nasdaq:pep | pep price prediction), Federal Realty Investment Trust (NYSE:FRT), And Kimberly-Clark (Nasdaq:KMB) These are now a must, especially for retirement portfolios.
Why?
That’s because most retirement investors have gone too deep into covered-call ETFs that track tech stocks and don’t have enough leverage. Even if you’re not significantly invested in technology, your portfolio may perform much better if you have stocks compounding quietly in the background without significant cyclicality.
Additionally, these stocks are mostly sitting at a discount after interest rates rose to record, making Dividend King stocks look riskier than Treasuries. Now that treasuries have softened, markets are becoming hungry for capital appreciation and a hedge against rising inflation. The Dividend King below gives you both.
PepsiCo (PEP)
PepsiCo has been a disappointment for dividend king investors for a long time, but I don’t think its performance will continue to be bad for long. GLP-1 fears are proving to be an overreaction as the stock is finally showing signs of recovery. Weight loss drugs slowed the pace, but revenues are still growing.
PepsiCo generated revenues of $67.2 billion in 2019 with EBITDA of $13.1 billion and net income of $7.3 billion. In 2025, it had revenues of $93.9 billion and net income of $8.24 billion as well as $15.54 billion EBITDA. The stock price is not a bit higher today than it was in 2019 because of all the GLP-1 fears.
Businesses have returned to normal following a post-Covid surge in 2021, during which analysts had forecast much higher growth. The selloff since then has left PEP stock undervalued, and you’re paying just 18 times forward earnings for a well-established Dividend King stock.
I’d buy because you rarely find a 3.7%-yielding household name trading this cheap. PEP has increased its dividend for 53 consecutive years.
Federal Realty Investment Trust (FRT)
Federal Realty Trust is a real estate investment trust (REIT). It operates shopping centers and mixed-use properties. These are areas where shopping, dining, entertainment, office space and residential living blend together in prosperous, supply-constrained suburban corridors.
This is the longest period of dividend growth in the entire REIT industry in 58 consecutive years. FRT’s performance relative to the broader market has been steady but not spectacular and that’s what you want in the current environment. FRT stock is now trading at a discount due to rising interest rates over the past few years, leaving real estate companies vulnerable. They have the potential to outperform in the latter half of this decade as interest rates will eventually decline.
CEO Don Wood said we are “in a relatively stable interest rate environment which may result in rates moving lower as the year progresses. We’ll see.”
I don’t expect FRT stock to climb back to $150 anytime soon, but if a rate cut occurs in late 2026 it could reach $120 or $130 this year. If not, you can still sit on that 4.2% dividend yield and watch it quietly grow.
Kimberly-Clark (KMB)
Kimberly-Clark traded sideways for a decade before falling back down. The decline is due to the announcement of a major acquisition deal by Kimberly-Clark Kenview (NYSE:KVUE). The acquisition is valued at approximately $48.7 billion in a mix of cash and stock, the latter of which would dilute existing KMB shareholders to just 54% of the combined company. It’s also a very high price to pay for a business with a $33 billion market cap as of this writing.
Despite this, Kimberly-Clark’s management is not blindly acquiring businesses. CEO Mike Hsu sees the acquisition as one that could move KMB into high-growth, high-margin categories in health and wellness, as it will bring brands like Tylenol, Band-Aid, Listerine, Aveeno and Neutrogena, as well as Kimberly-Clark’s own brands, under one roof.
Are these brands worth $48.7 billion?
Well, if you combine Kimberly-Clark and Kenview, you’re looking at $32 billion in annual revenue and $7 billion in adjusted EBITDA before synergy. I expect the post-merger enterprise value (market cap + net debt) to peak around $90 billion. So, you’re paying 13x EV even before EBITDA Collaboration Kick in, which isn’t that expensive. In fact, KMB stock Already trading at 12x EV-to-EBITDA Today.
For a dividend king yielding 5.2% today, I expect the market to take this stock much higher in the coming years, regardless of how the Kenview acquisition plays out.