The Best 3 Consumer Staples Stocks to Buy and Hold for Decades
In an environment of heightened geopolitical tensions, investors tend to get nervous. Such events can have varying effects on the economy, which tends to hurt growth-oriented stocks. Such times may call for rotating increasingly into consumer staples stocks, as those offer dividend returns and sell products that are necessary in any economy. Knowing that, investors…
In an environment of heightened geopolitical tensions, investors tend to get nervous. Such events can have varying effects on the economy, which tends to hurt growth-oriented stocks.
Such times may call for rotating increasingly into consumer staples stocks, as those offer dividend returns and sell products that are necessary in any economy. Knowing that, investors may have a particularly compelling opportunity in these three consumer staples stocks.
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Admittedly, Target (NYSE: TGT) may seem a bit risky in today’s environment. Over the last few years, challenges like high inventories, poor product selection, messy stores, and unpopular political stances have alienated customers. To that end, sales fell by 2% in fiscal 2025 (ended Jan. 31).
Nonetheless, longtime Target executive Michael Fiddelke took over as CEO on Feb. 1. He outlined a plan to spend $5 billion over the next few years to upgrade stores, hire more in-store personnel, improve its AI capabilities, and improve marketing.
Furthermore, the outlook appears positive with analysts forecasting 3% net sales growth in fiscal 2026. Also, even with its troubles, Target can maintain the dividend it has increased for 54 consecutive years. At $4.56 per share annually, it yields almost 4%, well above the S&P 500‘s 1.2% average.
Despite its challenges, Target can probably maintain its payout. It cost the company $2.05 billion in fiscal 2025, but its $2.84 billion in free cash flow should cover that cost.
Finally, investors should consider its 14 P/E ratio, far below the 45 earnings multiple for Walmart. Even though Walmart has maintained positive growth, Target’s massive discount and sustainable dividend could help the stock soar in 2026.
As a gasoline retailer, Chevron (NYSE: CVX) remains in a strong position to prosper. This stretches beyond immediate concerns such as conflict in the Middle East.
For all of the focus on renewables, gasoline-powered cars are still over 90% of cars on the road, according to the Institute for Energy Research. Also, petroleum and natural gas account for 70% of all energy used in the U.S., according to the U.S. Energy Information Administration (EIA). These indicate Chevron’s products will remain essential for decades to come.
Additionally, Chevron’s dividend, which has risen for 39 straight years, pays investors $7.12 per share annually, a cash return of 3.3%. The dividend cost the company $12.8 billion in 2025. Still, since it generated $16.6 billion in the same time frame, the annual payout hikes can likely continue.
Overall, the stock has more than doubled in value over the last five years, and the stock may seem slightly pricey at 31 times earnings. Nonetheless, as Chevron continues to be a major gasoline provider in the U.S., it is well positioned to be an excellent growth and income stock for its shareholders.
The name PepsiCo (NASDAQ: PEP) may lead investors to key in on its flagship beverage. However, the company is a beverage and food conglomerate, including products such as Gatorade, Aquafina water, Quaker Oats, and Doritos snack foods.
Admittedly, with consumers turning more toward healthier foods and beverages, PepsiCo may not have been as recession-resistant as some investors might assume. Fortunately, the company has worked to revitalize brands. It is also cutting costs by utilizing AI and closing less productive plants.
Moreover, its dividend, which has risen for 54 straight years, is $5.69 per share annually and yields a 3.8% return. Investors need to watch its $8.1 billion in free cash flow, which has become uncomfortably close to the $7.6 billion in dividend costs. Here, investors have to remember that an end to the dividend increases would probably damage the stock’s reputation, making a dividend cut unlikely.
It also faces a challenge with its P/E ratio of 25, especially since archrival Coca-Cola trades at roughly the same valuation. Still, Coca-Cola’s 2.75% dividend yield is much lower. Additionally, PepsiCo’s $93 billion in revenue grew 2%, indicating its efforts to reinvigorate growth have begun to bear fruit. That should ultimately benefit shareholders, who will earn dividend income while they wait for a stock rebound.
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Will Healy has positions in Target. The Motley Fool has positions in and recommends Chevron, Target, and Walmart. The Motley Fool has a disclosure policy.
The Best 3 Consumer Staples Stocks to Buy and Hold for Decades was originally published by The Motley Fool
