3 Ultra-Reliable Dividend King Stocks That Should Increase Their Payouts to All-Time Highs in 2025, Even if There's a Stock Market Sell-Off

When the S&P 500 is roaring higher, it's easy to overlook the benefits of investing in hihg-quality, dividend-paying companies. After all, a 2%, 3%, or even 4% dividend yield doesn't look impressive relative to a 23.3% gain -- which we saw from the S&P 500 in 2024.

However, passive income from dividend stocks can go a long way when the broader market has a mediocre year, especially a down year. Dividend Kings are an elite group of companies that have paid and raised their dividends for at least 50 consecutive years.

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Here's why Walmart (NYSE: WMT), Colgate-Palmolive (NYSE: CL), and Kimberly-Clark (NYSE: KMB) stand out as three recession-resistant Dividend Kings poised to raise their dividends in 2025 no matter what comes.

Image source: Getty Images.

Walmart's business is doing great, but the stock has gotten expensive

Walmart stock gained less than 10% between 2021 and 2023. But last year, Walmart surged 71.9% -- an impeccable performance for a company known for being a stodgy dividend-paying value stock.

A big part of the run-up was likely catch-up for years of underperformance. But Walmart's results are impressive in their own right. Walmart is generating record revenue and has seen a noticeable improvement in its operating margin after inflation took a sledgehammer to its profitability.

WMT Revenue (TTM) data by YCharts

On Feb. 20, 2024, Walmart announced a 9% dividend increase, the highest in over a decade. Walmart will report its fourth-quarter fiscal 2025 results on Feb. 20. Around that time, I expect the company to announce another massive dividend raise given how well the business is doing and Walmart's reasonable payout ratio of 33.2%.

Analyst consensus estimates for fiscal 2026 call for $2.76 in earnings per share, an 11.3% increase from fiscal 2025 estimates. So Walmart's projected earnings growth is solid. However, the run-up in the stock price has made Walmart much more expensive. Its forward price-to-earnings (P/E) ratio is 36.6, which is borderline nose-bleed level for a company like Walmart.

Still, Walmart is an incredibly recession-resistant business with a considerable edge over the competition. Walmart has been able to grow while so many other discount retailers have struggled mightily. The stock could still be worth buying if you are looking to invest in a company that can do well even in a shaky economy.

Colgate-Palmolive's strength is its diversification

Aside from the flagship Colgate and Palmolive names, the company owns noteworthy brands such as Speed Stick, Softsoap, Ajax, Tom's of Maine, Hill's, and more.

Unlike peer Procter & Gamble, which is experiencing flat sales volume growth, Colgate-Palmolive's business is doing very well. In the company's most recent quarter, organic volume rose 3.7% and organic sales rose 6.8%.

Colgate-Palmolive is very geographically diversified, especially compared to many of its peers. North America made up just 20% of third-quarter sales, with 23% coming from Latin America, 15% from Europe, 14% from Asia Pacific, and 6% from Africa/Eurasia. The company reports sales from Hill's as a separate line item, which made up a whopping 22% of revenue in the quarter.

Hill's Science Diet and Prescription Diet are highly valuable pet food brands specializing in treating pets with specific dietary restrictions. The strength of the Hill's brand is a core reason to invest in Colgate-Palmolive.

As for the dividend, Colgate-Palmolive has paid uninterrupted dividends since 1895 and has increased its dividend for 61 consecutive years. The stock yields 2.2%, which isn't ultra-high-yield territory, but it is better than the S&P 500 yield of 1.2%. Colgate-Palmolive sports a forward P/E of 23.4, which is reasonable given the quality of its brands and the impeccable track record for increasing the dividend.

Colgate-Palmolive is a great choice for risk-averse investors looking to limit volatility and collect passive income.

Kimberly-Clark is deep in the bargain bin

Kimberly-Clark is another consumer staples giant with dozens of brands spanning baby and child care, feminine care, family care, and professional products like paper towel dispensers. Like Walmart and Colgate-Palmolive, the company can produce consistent results no matter the economic cycle, making it a stock that should hold up well even during a broader market sell-off.

But while Walmart and Colgate-Palmolive are growing sales and operating income, Kimberly-Clark is seeing notable pricing and volume pressure. In the first three quarters of 2024, consolidated volumes grew just 1%, net prices increased 2%, but total consolidated growth was negative 2% due to currency headwinds.

Kimberly-Clark stock is down 4.4% over the last five years while sales are up just 6.8% and operating income is up just 5.8% during that period. The company's lack of growth, paired with consistent dividend raises, has pushed its yield up to 3.8%. Kimberly-Clark is a dirt cheap Dividend King, too, with a forward P/E of just 17.

Kimberly-Clark's growth is nonexistent for now, but it's a solid source of passive income at a great value, making it a good choice for investors who care more about generating dividend income than potential capital gains.

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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Colgate-Palmolive and Walmart. The Motley Fool has a disclosure policy.