3 Consumer Staples Stocks Built to Create Long-Term Wealth

Key Points

• Costco Wholesale may seem pricey on the surface, but as the “growth story” stays intact, shares remain positioned for further gains.

• Altria Group’s high dividend stock status has been the secret behind the Marlboro maker’s continued strong market performance.

• Walmart’s AI and e-commerce pivots leave the retail giant poised to stay an outperformer.

• 10 stocks we like better than Costco Wholesale ›

Consumer staples stocks have many strengths. Typically considered defensive stocks, they tend to stay resilient during bear markets, while still performing well during bull markets. With long track records of profitability, they typically have consistent dividend growth.

For new and experienced investors, familiarity with these companies and their respective brands can make them easier to understand and, therefore, more confidently invest in.

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Among consumer staple stocks, many of which are also blue chip stocks, three stand out as strong buys in today’s market: Costco Wholesale (NASDAQ: COST), Altria Group (NYSE: MO), and Walmart (NASDAQ: WMT).

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Despite a rich valuation, Costco Wholesale remains primed for steady growth

Over time, Costco Wholesale has performed quite well. For instance, over the past five years, Costco shares have generated total returns of around 220%, versus 82% for the S&P 500 index. Over the past decade, Costco shares have generated total returns of 679%, while the S&P 500’s total return has been just over 291%.

Nevertheless, following Costco’s long stream of outperformance, at first glance, this stock may appear overvalued. Currently, Costco trades for 49.5 times forward earnings. This forward multiple exceeds those of other retailers, including Amazon and Walmart. Add in emerging headwinds, like the brewing legal battle between the company and its customers over tariff refunds, and shares may appear to be on the verge of a correction.

However, Costco is likely able to sustain this high forward multiple as long as Costco’s growth story persists. Based on the company’s latest financials, this arguably remains true. For the preceding quarter, revenue of $69.6 billion and earnings of $4.55 per share came in ahead of estimates. On a year-over-year basis, sales and earnings increased by 8.1% and 10.9%, respectively.

Although further valuation expansion may prove tricky, if Costco’s earnings keep growing at a high single-digit to low double-digit pace, shares could continue climbing in tandem with earnings. Over time, Costco’s 0.5% dividend could become a greater contribution to total returns in the coming years, given how management continues to raise payouts by 12% to 13% annually.

Don’t discount Altria Group’s wealth-building potential

Altria Group has historically been a wealth-generating machine among consumer staples stocks. However, even with the long-term decline in cigarette usage among Americans, shares in the Philip Morris USA parent have once again started to outperform the S&P 500.

A key reason behind this has been Altria’s status as one of the high-yield dividend stocks. Investors who reinvested Altria’s large quarterly cash payouts into additional shares have experienced strong capital compounding — in the last year, Altria shares are up 15%, but when including dividend reinvestment, the total return is 23%.

That said, with products like nicotine pouches convincing smokers to switch rather than quit, concerns run high that Altria’s wealth-building days are behind it. That’s mostly because its competitors like Philip Morris International have more successfully capitalized on this “smokefree” trend.

Yet while Altria’s “smokefree success” pales in comparison to that of its former corporate sibling, I wouldn’t write it off completely. Thanks to cigarette price increases and the company’s own modest success in the smoke-free arena (Altria Stock: Company Goes Smoke-Free, Supercharges Its Yield | Investor’s Business Daily), the company has managed to sustain positive, albeit modest, earnings growth.

On its own, Altria’s 6.2% dividend yield appears secure. So, too, does the company’s ability to continue raising payouts by at least single digits in the years ahead. Through acquisitions and/or new product launches, Altria could also further strengthen its position in smokeless and tobacco-free nicotine products. If this occurs, shares could receive an additional long-term boost, as investors rerate the stock to a valuation on par with its pricier competitor.

Walmart’s digital transformation is still building significant wealth

Over the past decade, in terms of total returns, Walmart shares have outperformed the S&P 500 by a wide margin. A big reason for this has been the big box retailer’s shift from being solely a brick-and-mortar retailer to a formidable force in e-commerce.

This has led to steady, consistent earnings growth, and in turn, a richer valuation than that of Target. However, following this big run-up, analysts and investors alike have started to question whether Walmart is worth its current valuation. Right now, its shares trade for 42 times forward earnings. Despite concerns about a possible bubble in this stock, consider several catalysts that could sustain the long-term bull case.

There’s the prospect of further e-commerce growth, for one. During 2025, Walmart’s global e-commerce net sales grew 24%, making up 23% of global sales . The company is also accelerating its integration of artificial intelligence, both in its stores and online. This AI pivot could help to further boost revenue and earnings, and this could lead to further strong gains for shares. Last year, Walmart increased its dividend by 9.2%, a rate much higher than in prior years.

Walmart’s dividend is relatively small, giving the stock a forward yield of 0.8%. However, in the years ahead, if high dividend growth continues, these payouts could make up a greater percentage of total returns.

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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Target, and Walmart. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.