Retirement isn’t a dream—it's a deadline. And when that day comes, your portfolio needs to stop pretending it's a growth-hungry teenager and start acting like a responsible adult who pays the bills on time. The question is: what pays those bills if the 9-to-5 is over? That’s where dividend stocks come in, quietly doing the job of a paycheck with none of the micromanaging.
If I retired today, my strategy wouldn’t be complicated. I’m not chasing the riskiest high-yield plays that crumble like cheap furniture during a market correction. I want durable, proven companies that crank out consistent, reliable dividend income—preferably with a history of raising payouts like they’re trying to outdo themselves.
So, grab a coffee (or your favorite retirement-appropriate beverage), because here are the three dividend stocks I’d count on to keep my lights on, my fridge stocked, and my leisure hobbies fully funded if I retired today.
1. PepsiCo (PEP): The Snack-and-Sip ATM
Dividend Yield: ~3.1%
Dividend Growth Streak: 51 years and counting
Sector: Consumer Staples
Let’s start with something as comforting and consistent as your favorite bag of chips. PepsiCo is the golden retriever of dividend stocks: loyal, dependable, and always happy to see you.
Why PepsiCo?
Because even in a recession, people still eat chips and drink soda—sometimes especially in a recession. PepsiCo’s portfolio is a fortress. Yes, it includes its namesake beverage, but also household snack brands like Lay’s, Doritos, Quaker Oats, and Gatorade. You’re not betting on a single trend—you’re buying a lifestyle.
During economic downturns, when tech bros are panicking over earnings misses and biotech is busy burning cash like it’s confetti, PepsiCo just… keeps shipping snacks. People might cut back on vacations or luxury goods, but they rarely cut back on affordable indulgences. That’s the beauty of consumer staples.
The Dividend Case
PepsiCo is a Dividend King, meaning it’s increased its dividend every single year for over half a century. That kind of consistency isn’t luck—it’s baked into the business. With a payout ratio around 70%, PepsiCo walks the line between generosity and sustainability. Plus, its cash flow is rock-solid. You’re not praying it can pay you. You’re just waiting for the direct deposit.
Let’s say you own $100,000 worth of PepsiCo. That’s about $3,100 in annual dividends, or roughly $258 a month. That’s a grocery bill. Or a car payment. Or a guilt-free reason to subscribe to every streaming service imaginable.
2. Realty Income (O): The Monthly Paycheck Machine
Dividend Yield: ~5.8%
Dividend Growth Streak: 31 years
Sector: Real Estate (REIT)
Let’s say you want your dividend income to act like an actual paycheck. As in, it shows up every single month—on time, every time. That’s Realty Income, the so-called “Monthly Dividend Company.” And yes, it actually trademarked that phrase, which is honestly baller.
Why Realty Income?
This REIT is a landlord to some of the most boring but reliable businesses in America—think Walgreens, Dollar General, 7-Eleven, and FedEx. These are essential-service retailers that don’t go belly-up during recessions. And because Realty Income signs long-term, triple-net leases (where tenants cover taxes, insurance, and maintenance), its costs are kept in check.
In other words, they collect rent, forward some of it to shareholders, and rinse and repeat like clockwork.
The Dividend Case
With a juicy yield near 6%, Realty Income is the kind of stock you buy when you want to feel retired. You’re not watching quarterly dividend announcements with bated breath—you’re seeing money hit your account 12 times a year.
Better yet, it’s a dividend grower. Not rapid, but reliable. The company has increased its dividend over 120 times since its 1994 IPO. That’s more raises than most working professionals get in a lifetime.
If you had $100,000 in Realty Income today, you’d be pulling in $5,800 annually—about $483 a month. That’s rent money. Or golf club dues. Or a month’s worth of wine and Amazon impulse buys.
3. Johnson & Johnson (JNJ): The Dividend Safety Net
Dividend Yield: ~3.3%
Dividend Growth Streak: 62 years
Sector: Healthcare
Finally, we need something ultra-defensive. Something that doesn’t flinch during market crashes, pandemics, or global instability. Enter Johnson & Johnson: the granddaddy of healthcare stocks and a Dividend King with a nearly mythic reputation.
Why J&J?
Because when you’re retired, health becomes a top priority—and investing in it makes poetic (and financial) sense. Johnson & Johnson isn’t just Band-Aids and baby shampoo. It has three pillars: pharmaceuticals, medical devices, and consumer health. That trifecta gives it stability across all market conditions.
Even better? The company recently spun off its consumer health segment (Kenvue), streamlining its focus and unlocking more efficiency for investors. The core J&J business is now a pharmaceutical and medical devices juggernaut with pricing power, massive scale, and global reach.
The Dividend Case
This is the bluest of blue chips. J&J has increased its dividend for 62 years straight. It kept raising during the dot-com bust, the Great Financial Crisis, COVID, and the ensuing inflation mess. That’s a shareholder-friendly commitment that most companies can only dream of.
With a 3.3% yield and one of the safest payout ratios in the S&P 500 (~45%), this is a foundation stock. The kind of asset you use to anchor your retirement portfolio while others are chasing fads.
A $100,000 investment here gives you $3,300 a year, or $275 a month. It’s not flashy, but it’s the kind of dependable cash you can build a life around. Or at least fund your pharmacy visits and your Netflix habit.
What This Retirement Paycheck Looks Like
Let’s do the math. If you split $300,000 evenly among these three stocks—$100,000 each—you’d be earning approximately:
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PepsiCo: $3,100/year
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Realty Income: $5,800/year
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Johnson & Johnson: $3,300/year
That’s $12,200 annually, or about $1,017/month in passive income. And that’s before any dividend reinvestment or tax-advantaged compounding.
Is it enough to replace a full salary? No. But we’re not trying to replicate a six-figure W-2 here. This is about supplementing Social Security, pensions, or other retirement savings. It’s a way to keep cash flowing without dipping into principal. And best of all, these companies raise their payouts over time—so your paycheck grows as inflation tries to shrink your purchasing power.
Why These Three?
1. They’re Boring.
Boring is beautiful in retirement. You don’t need drama. You don’t need Tesla-style volatility. You need a portfolio that lets you sleep soundly through rate hikes, earnings misses, and geopolitical chaos.
2. They’re Built for Durability.
Each of these companies has a competitive moat. PepsiCo has brand power. Realty Income has long-term leases and irreplaceable real estate. Johnson & Johnson has patent-protected drugs and healthcare clout. These aren’t fly-by-night operations—they’re institutions.
3. They Love Paying Shareholders.
All three have made dividend payments a core part of their identity. They’re not just paying you out of obligation—they’re doing it as a statement of financial strength. And with long histories of increases, you’re not just getting income—you’re getting raises.
Could You Do Better?
Sure. There are riskier stocks with higher yields—think AT&T, Altria, or mREITs. But those come with baggage: debt loads, regulatory threats, or shrinking businesses. You can chase 8–10% yields, but if the company cuts its dividend in half, you’re suddenly earning less than you would with PepsiCo.
This strategy isn’t about maximizing income at all costs. It’s about striking a balance between yield, safety, and growth. These three give me enough income to cover basic expenses and enough confidence to ride out market turbulence without losing sleep.
What About Taxes?
Ah, yes—the IRS never retires. But there’s good news here. Qualified dividends from PepsiCo and Johnson & Johnson typically receive favorable tax treatment (0% to 20%, depending on your bracket). Realty Income, being a REIT, is taxed as ordinary income—unless you hold it in a tax-advantaged account like an IRA or Roth.
Translation? With a little planning, you can make this paycheck even more efficient.
Final Thoughts: Retirement Isn’t a Cliff—It’s a Transition
If I retired today, I wouldn’t be gambling on crypto or jumping into high-risk startups hoping for one last moonshot. I’d want slow, steady, and proven. And that’s exactly what PepsiCo, Realty Income, and Johnson & Johnson offer.
These are the companies that don’t just pay you—they reward your patience. They raise dividends, compound wealth, and show up when the world gets shaky. They’re not the most exciting dinner party stocks. But you know what’s exciting? Watching $1,000 hit your account each month without lifting a finger.
If you’re building your own retirement paycheck, think like a landlord, a consumer, and a patient. Or just start with these three—and let them work while you relax.
Disclaimer: This blog is not financial advice. Always do your own research and speak with a qualified financial advisor before making investment decisions.