Want Dividends to Pay Your Medicare Premiums? Here’s How Much You Need

PepsiCo's 4% yield and JNJ's 64-year dividend streak offer retirees two efficient paths to offsetting Medicare's $203 monthly Part B premium.

Dividend growth matters as much as yield since Medicare's Part B premium jumped $18 in 2026, eroding strategies built on static income.

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For anyone on Medicare, the Part B premium is a bill that arrives every month without fail, usually withheld right out of the Social Security check. CMS set the standard monthly Part B premium at $202.90 for 2026, an increase of $17.90 from $185.00 in 2025. The question this article answers is simple: what does it take, in capital, for dividends alone to cover that recurring line item? Three blue-chip Dividend Kings, PepsiCo ( NASDAQ:PEP ), Johnson & Johnson ( NYSE:JNJ ), and Coca-Cola ( NYSE:KO ), offer three different combinations of yield, coverage, and dividend track record to do exactly that.

There are a couple caveats to this roster. First, the annual Part B deductible is $283 in 2026, an increase of $26 from $257 in 2025, so the premium is not the only Part B cash outflow. Second, income-related monthly adjustment amounts affect roughly 8% of people with Medicare Part B, and higher-income filers pay meaningfully more, all the way up to $689.90 per month at the top bracket. The math below is anchored to the standard premium.

PepsiCo trades at $137.63 with a dividend yield of 4.06%, the richest starting yield in this bundle. The current quarterly payout is $1.48 per share, with an annualized forward dividend of $5.92 per share. For an income investor trying to defray Medicare, PEP delivers the most premium coverage per dollar of capital in this group.

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Free cash flow yield of 4.08% essentially matches the dividend yield, and management guides FY2026 total cash returns of about $8.9B, with dividends around $7.9B, funded by free cash flow conversion of at least 80%. Interest coverage sits at 12.03x. The dividend track record is the anchor: PepsiCo announced a 4% annualized dividend increase beginning with the June 2026 payment, representing the 54th consecutive annual increase, comfortably a Dividend King.