Do Not Build a Retirement Portfolio in 2026 Without at Least One of These 3 Dividend Kings

Dividend King stocks are turning into a necessity for all portfolios, even growth-focused ones. Stocks like PepsiCo (NASDAQ:PEP | PEP Price Prediction), Federal Realty Investment Trust (NYSE:FRT), and Kimberly-Clark (NASDAQ:KMB) are now a must-have, especially for retirement portfolios.

Why?

It is because most retirement investors have gone too deep into covered-call ETFs that track tech stocks and do not have enough ballast. Even if you aren’t invested significantly in tech, your portfolio can do a lot better if you have stocks quietly compounding in the background without significant cyclicality.

To add to that, these stocks are mostly sitting at discounts after record interest rate hikes made Dividend King stocks look risky compared to Treasuries. Now that Treasuries have moderated, the market is getting hungry for capital appreciation and a hedge against resurging inflation. The Dividend Kings below give you both of that.

PepsiCo (PEP)

PepsiCo has long been a disappointment for Dividend King investors, but I don’t expect it to underperform for much longer. GLP-1 fears are being proven to be an overreaction as the stock is finally showing signs of a recovery. Weight loss drugs did cause a slowdown in momentum, but revenues are still growing.

PepsiCo posted $67.2 billion in revenue in 2019 with $13.1 billion of EBITDA and $7.3 billion of net income. In 2025, it posted $93.9 billion in revenue and $8.24 billion in net income, along with $15.54 billion in EBITDA. The stock price today is not marginally higher than where it was in 2019 due to all the GLP-1 fears.

The business has simply normalized after the post-COVID boom in 2021, during which analysts priced in too much growth. The selloffs since then have made PEP stock undervalued, and you’re paying just 18 times forward earnings for a well-established Dividend King stock.

I’d buy since you rarely get a 3.7%-yielding household name trading so cheaply. PEP has increased its dividends 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 affluent, supply-constrained suburban corridors.

It has the longest streak of dividend increases in the entire REIT industry at 58 consecutive years. FRT has been a steady but unspectacular performer relative to the broader market, and this is exactly what you want in the current environment. FRT stock now trades at a discount due to interest rate hikes in the past few years, weakening real estate companies. They have the strength to perform much better in the latter half of this decade as interest rates eventually come down.

CEO Don Wood said we are in a “relatively stable interest rate environment that could result in lower rates as the year progresses. We will see.”

I don’t expect FRT stock to climb back to $150 anytime soon, but it could reach $120 or $130 this year if rate cuts come in the latter half of 2026. If not, you can still sit on that 4.2% dividend yield and watch it quietly compound.

Kimberly-Clark (KMB)

Kimberly-Clark spent a decade trading sideways before plunging back down. The decline is due to Kimberly-Clark’s announcement of a major acquisition deal for Kenvue (NYSE:KVUE). The acquisition itself is valued at around $48.7 billion in a mix of cash and stock, which would dilute existing KMB shareholders for only about 54% of the combined company afterward. It’s also a very high price to pay for a business with a $33 billion market cap as of this writing.

Regardless, Kimberly-Clark’s management is not acquiring a business blindfolded. CEO Mike Hsu sees the acquisition as something that could shift KMB to higher-growth, higher-margin categories in health and wellness, since it would bring brands like Tylenol, Band-Aid, Listerine, Aveeno, and Neutrogena, plus Kimberly-Clark’s own brands, under one roof.

Are these brands worth $48.7 billion?

Well, if you combine Kimberly-Clark and Kenvue, you’re looking at $32 billion in annual revenue and $7 billion in adjusted EBITDA before synergies. I expect the enterprise value (market cap + net debt) to stand around $90 billion at most after the merger. So, you’re paying 13 times EV to EBITDA even before those synergies kick in, which is not that expensive. In fact, KMB stock already trades at 12 times EV-to-EBITDA today.

For a Dividend King yielding 5.2% today, I expect the market to take this stock a lot higher in the coming years, regardless of how the Kenvue acquisition unfolds.