3 Blue Chip Dividend Stocks That Out-Yield the 2027 COLA
The 2027 Social Security COLA lands at 3.6%, but three blue chip stocks are already doing better on yield, dividend growth, or both. The question is which one actually fits a retiree's need for durable income rather than just a…
If you’re a retiree weighing next year’s Social Security raise against what your portfolio pays, a durable payout matters more than the biggest yield. The Social Security cost-of-living adjustment for 2027 is 3.6%. The two figures measure different things. A COLA is a percentage raise on a benefit you already collect. A dividend yield is the annual cash a stock pays, shown as a percentage of its share price.
Yield tells you how much income your money earns today. The dividend raise is the real equivalent to a COLA, because it measures how fast that income grows. Verizon and PepsiCo yield more than the COLA percentage. Chevron yields less, but its latest dividend raise was bigger than the COLA. All three are large companies with long operating records and strong market positions behind their payouts.
Verizon Communications: A 6.44% Yield Paid From Growing Cash Flow
Verizon Communications (NYSE:VZ | VZ Price Prediction) is one of the biggest U.S. wireless carriers. It serves nearly all of the Fortune 500 and has about 147 million wireless retail connections. With a market value of about $185.4B and shares near $44.05, it yields 6.44%, the highest of the three. The quarterly dividend is $0.7075 per share, or $2.83 a year.
Dividend safety: Free cash flow is what pays dividends, and Verizon’s is rising. Third-quarter free cash flow was $7.801B, up 13.9% from a year ago. The company forecasts full-year free cash flow growth approaching 12%. That cash covers the dividend and also funds buybacks of up to $4.5B this year, with $4.0B already completed through September. On earnings, guidance for adjusted EPS of $5.04-$5.06 compares with the $2.83 annual dividend. The stock trades at about 11 times trailing earnings and 8 times forward earnings.
Track record: Verizon’s quarterly payments run without a break from 1999 to today. The quarterly rate has gone up every year, from $0.55 in 2015 to $0.7075 now.
Bull case: The business is getting stronger. Verizon added 406K postpaid phone subscribers in the quarter, compared with 44K a year earlier. Adjusted EBITDA margin rose from 37.8% to 40.2%, and a $2B+ agreement with Amazon Web Services adds a new source of AI revenue. In the earnings release, CEO Dan Schulman said "we are winning loyal, high-value customers while expanding margins, reducing churn, and generating strong sustained cash flow." For income investors, wider margins mean more room to keep raising the dividend.
Risk: Debt. Verizon has about $166.2B in debt outstanding, and interest expense rose 17.2% from a year ago. Every dollar spent on interest is a dollar that can’t go to raises.
Chevron: Below the COLA on Yield, Ahead of It on Raises
Chevron (NYSE:CVX) is one of the world’s largest integrated energy companies. It produced about 3.98 million barrels of oil equivalent per day in the third quarter and runs U.S. refineries handling about 1.09 million barrels per day. Chevron is worth about $459.5B, and shares trade near $232.48. Its yield is 2.77%, which falls short of the 3.6% COLA. Chevron earns its place here on dividend growth. The quarterly payout is $1.78, or $7.12 a year.
Track record: Its latest increase was 4%, which it called its 39th consecutive annual increase. The dividend history supports that claim: the quarterly rate went up every year, from $1.08 in 2017 to $1.78 today. A dividend raise is the closest match to a COLA, and Chevron’s latest one was larger.
Dividend safety: Chevron has the strongest balance sheet of the three. Its free cash flow yield of 3.61% is higher than its 2.77% dividend yield, so cash flow covers the payout with room to spare. Third-quarter free cash flow was $12.003B, from $16.014B of operating cash flow minus $4.011B of capital spending. The gearing ratio is 0.219, net debt to EBITDA is 0.936, and interest coverage is 13.7x. In the quarter, Chevron cut total debt by $3.5 billion and net debt by $7.8 billion.
Bull case: Chevron hit its $3B structural cost savings target six months early and is now aiming for up to $4B. The Hess acquisition delivered $1.5B in run-rate synergies. CEO Mike Wirth said "We’re reinvesting to bring more energy to a supply-constrained market." Lower costs help protect the dividend when oil prices fall.
Risk: Oil prices drive this payout’s coverage. Brent averaged $97/bbl in the third quarter, which helped results. In the first quarter, free cash flow was negative $1.549 billion after commodity timing effects. Coverage can shift sharply from one quarter to the next.
PepsiCo: A 4.08% Yield With Little Cash to Spare
Brands found in almost every grocery aisle, including Pepsi, Lay’s, Doritos and Gatorade, are among what PepsiCo (NASDAQ:PEP) sells across more than 200 countries and territories. The company is worth about $187.2B and yields 4.08%, which puts it in high-yield range. The quarterly dividend is $1.48, or $5.92 a year.
Track record: PepsiCo’s quarterly payments go back to at least 1999. The rate has gone up every year in recent history: $1.0225 in 2020, $1.15 in 2022, $1.355 in mid-2024, $1.4225 in mid-2025 and $1.48 now.
Dividend safety: This is the tightest payout on the list. PepsiCo’s free cash flow yield of 4.10% is only slightly above its 4.08% dividend yield, so the dividend uses almost all of the free cash flow. Management plans $7.9B in dividends this year plus $1.0B in buybacks, and it is targeting free cash flow conversion of at least 80%. Leverage is higher than at the other two companies: the gearing ratio is 2.45 and net debt to EBITDA is 2.60. Interest coverage of 10.26x and cash of $10.675B give it a buffer. Trailing EPS of 7.95 still covers the $5.92 annual dividend.
Bull case: The international business is doing well. EMEA revenue grew 8%, Latin America Foods 14% and Asia Pacific Foods 10%. Third-quarter revenue rose 5.6% to $25.27B, and operating income grew 19.4%. A gross margin of 54.1% shows strong pricing power. People keep buying snacks and drinks in a recession, so this income stream tends to hold up when the economy weakens.
Risk: North America is struggling. Core operating profit at the North American snacks unit fell 12%, and with input costs rising, management lowered its core EPS growth outlook to +2.5% to +3.5%. Slower earnings growth means smaller raises, and coverage is already tight.
Which Retirees These Three Dividend Stocks Suit
These three names fit a retiree who wants quarterly income from large, established businesses and wants that income to grow alongside Social Security. Verizon offers the largest yield, supported by rising free cash flow. Chevron offers the strongest balance sheet and a dividend raise bigger than the COLA. PepsiCo has a steady record of annual increases, but coverage is thin. Taken together, they offer more current income than the COLA percentage, plus raises that can keep pace with it.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
