10 Dividend Stocks for the Next Decade and Beyond

Following the worst stock market year since the Great Depression, it's natural for investors to seek more stable and less stressful stock strategies. Dividend-paying stocks provide you with an opportunity to achieve both.

Among other things, dividend-paying stocks:

  • Are less volatile as a group than their non-dividend-paying counterparts.
  • Provide you with a real return right away; with non-dividend-paying stocks, returns aren't realized until you sell.
  • Allow you to choose what to do with the cash payouts -- reinvest in the stock, put it into savings, or buy groceries ... it's up to you.
  • Offer you an inflation hedge when companies increase their payouts.

Fortunately for us, the S&P 500 currently yields about 3% -- its highest average yield since the early 1990s -- making today the best market to buy dividend-paying stocks in almost two decades.

With this in mind, I've set out to find 10 of the most promising dividend-paying stocks for the next decade and beyond. Five of them will be focused on dividend growth, with the other five focused on stocks with higher yields (above 5%). You want to have a helping of both types in your portfolio to promote both payout growth and payout stability.

Dividend growth
High dividend yields are always nice right away, but smart long-term income investors will also plant the seeds for future dividend growth. These stocks may not have the juiciest yields on the market, but they generate more than enough free cash flow to boost their payouts and reinvest in the business for years to come.


Dividend Yield

5-Year Trailing Dividend Growth Rate

Levered Free Cash Flow Payout Ratio

Procter & Gamble (NYSE: PG  )




Microsoft (Nasdaq: MSFT  )




Johnson & Johnson (NYSE: JNJ  )




Lockheed Martin (NYSE: LMT  )




Chevron (NYSE: CVX  )




Source: Capital IQ, a division of Standard and Poor's.

High yield
Super-high dividend yields can be very tempting -- all a stock yielding 10% has to do is not lose value and you've made 10% in one year! In more cases than not, however, a stratospheric yield is a bad sign for the stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means a depressed stock price based on market concerns about the underlying business. Remember: Dividends are not guaranteed, so you need to make sure the business is generating enough cash to pay the dividend, or else your investment loses its luster.

The yields on the following five stocks are more than 50% higher than the S&P average of 3%. They may not grow as fast as the previous five stocks, but they have enough free cash to fully fund their high yields.


Dividend Yield

Levered Free Cash Flow Payout Ratio

Pfizer (NYSE: PFE  )






Altria (NYSE: MO  )



Avery Dennison






Source: Capital IQ, a division of Standard and Poor's.

Reach for the sky, but diversify
With stock prices down and dividend yields up, now is the perfect time to double down on dividends and build a lower-cost, lower-stress stock portfolio worthy of holding for the next decade and beyond. There are plenty of great businesses with rich dividend histories trading with yields we haven't seen in years, but in addition to owning a few "dividend growth" and "high-yield" stocks, please remember to diversify your picks across various sectors. As we learned with the implosion of the financial sector last year, no matter how nice the dividends are, you never want to put all your eggs in one basket.

If you're looking for more dividend stock ideas, our Motley Fool Income Investor service can help. Advisor James Early and the Income Investor team recommend both stocks with high yields and those focused more on dividend growth. At present, their picks yield 7% on average and have outperformed the S&P by 5 percentage points on average since inception in 2003.

A 30-day trial to Income Investor is free. If you'd like to learn more about the service, just click here.

Todd Wenning thinks Blades of Steel hockey on the NES was way ahead of its time. He owns shares of Procter & Gamble and Pfizer. Pfizer, Paychex, and Johnson & Johnson are Motley Fool Income Investor selections. Pfizer, Paychex, and Microsoft are Motley Fool Inside Value selections. The Fool owns shares of Pfizer and Procter & Gamble and has a disclosure policy.

Read/Post Comments (39) | Recommend This Article (537)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 23, 2009, at 2:00 PM, TerryHogan wrote:

    How about GE? I know they don't exactly have a ton of free cash flow, but they've paid a dividend for the past 100 years or so, increasing it most of the time. They'll probably benefit from "greening" initiatives, whether it's solar, nuclear, wind, natural gas, or moving more transport by train. Also, a 10% yield is pretty juicy, and management has committed to maintaining it. If it were to revert to a 5% yield, that would mean a price of over $24. Or $40 for a S&P average yield of 3%. You get 10% just to wait around for a price recovery (even if it takes 10 years), I'd say that's okay.

  • Report this Comment On January 24, 2009, at 4:15 PM, beertrain wrote:

    Warren Buffet purchased an estimated $5.0 billion in preffered stock which is to pay 10%.

    Considerations: Preffered stock holders get paid before the common stock holders. Even though the management team has promised to pay the dividend in 2009, remember it is nothing more than a promise. Most recently several companies have slashed their earnings (ie,. STX from 10% to 3%) or suspended them altogether (ie. DCX and many others).

    GE has traded in the range of $11.88 to $38.52 with a current price of $12.05. GE has high debt, expecting lower earnings moving forward, probably on expected reduced revenue. The recent stock price can indicate you are buying good value at a steep discount, or it can indicate there are real issues for this company moving forward.

    In the famous words of one of my friends last fall, when buying Dana Corp at $0.05 a share, how low can it must be a screaming good deal!. He was half right, it was screaming, but it screamed all the way to zero, as in Chapter 11.

  • Report this Comment On January 24, 2009, at 7:12 PM, Zinj wrote:

    I too, think Blades of Steel may have been the crowning achievement of 8-bit gaming.

  • Report this Comment On January 28, 2009, at 3:28 PM, obarurnq wrote:

    I love dividend stocks. Recently picked up an electrical utility and a railroad. That's two boring, low growth sectors that always have respectable dividends (that are a bit higher than normal now). But, very safe places to ride out the storm and get at least some profit.

  • Report this Comment On January 28, 2009, at 11:40 PM, eileen1023 wrote:

    that sounds good too me, We decided to take our dividends of fkinx . Now Q where to invest it. Retired are we and want to diversify some more. Have annuities we hope are safe. Anyone have some good info on what they might have done and feel satisfied that you have done the best of what there is

  • Report this Comment On January 28, 2009, at 11:44 PM, eileen1023 wrote:

    i am interested in the posting of obarurng who found an electrical utility and a railroad. ? being retired would these companies be good to purchase now?

  • Report this Comment On January 29, 2009, at 1:06 AM, Seano67 wrote:


    Utilities in particular are considered very low-risk investments, suitable for older people and retirees. Railroads would also be ok, I guess- although you have to realize that the railroad business by nature is a cyclical one.

    Utilities are generally safe and stable though with low volatility (because people are always going to need heat, light, and water), and usually they pay a nice dividend yield too. Here's a link to a list of utilities:

    However, if you are investing on your retirement income, you obviously need to be more careful than younger investors- so just make sure to take great care, do your due diligence, and ask lots of questions.

    Good luck!

  • Report this Comment On January 29, 2009, at 6:57 AM, HeftyDude wrote:

    I am seeing more and more Fool articles where they leave out the ticker symbol of some stocks? Why? There also must be a rule in journalism that once a stock is mentioned as a subject in the body of the article, then you no longer have to make it bold and add the ticker symbol. Well, as a consumer of these here newsletters and articles, I submit to you that it would be much better for me as the consumer to have those ticker symbols/links everywhere the company name is mentioned rather than scrolling up and down looking for that link. I am still puzzled as to why three stocks in the second table have no ticker link at all. It can't be laziness given the author had to look up those dividends yeilds. What gives?

  • Report this Comment On January 30, 2009, at 10:59 AM, trenton1ryan wrote:

    Pipelines (many of which are MLPs) are a great place to be for divvies. North of 8% and though they are linked to the price of oil, they are solid, boring co's that don't have to pay the same amount of taxes (the MLPs), so it goes to the shareholders (called unitholders actually).

    Check out PAA, KMP, OKS, and EPD for starters.


  • Report this Comment On January 30, 2009, at 11:00 AM, trenton1ryan wrote:

    Disclosure: I own all but KMP.

  • Report this Comment On January 30, 2009, at 12:37 PM, toycanon999 wrote:

    Better to buy an ETF like LVL...

    The yield is terrific and you have the protection and diversification of a basket of stocks...

    If stocks stop paying, they will fall out of the basket and be replaced and you will incur no transaction fees, taxes or effort.

  • Report this Comment On January 30, 2009, at 12:46 PM, DougH11 wrote:

    Pfizer. Pfizer dividend. Pfizer R&D. Pfizer management. Fools.


  • Report this Comment On January 30, 2009, at 1:11 PM, grigorythegreat wrote:

    And what about CEL, which has 15% dividend yield and has a 4-stars CAPS rating?

  • Report this Comment On January 30, 2009, at 1:20 PM, scambo99 wrote:

    what gets me about The Motley Fools is this.

    They have one fund that is up 1.38% and 5 that are down between 10% and 40% and they are bragging how they are out performing the S%P. Give me a break.

  • Report this Comment On January 30, 2009, at 1:27 PM, Krazy4CocoPuffs wrote:

    Hey, Hands down JRT is the rockin'est stock to own. Jerome Investors Trust. They make Ponzi schemes look like childs play. Buy 10K today and have another 10K in the next two dividend payments give or take. Hold onto it for another year and maybe they'll add the 'special bonus fifth dividend' with the December check.

    Correct me if I'm mistaken. NYSE:JRT ... the checks are in the mail today..

  • Report this Comment On January 30, 2009, at 2:12 PM, mudman90039 wrote:

    I have a lot of utilities for that dividend, some in gas, some in electricity. I look for companies that are working into green technologies as part of their sources. Doesn't mean they havent gone down, but not as much as the finance stocks I have. UGH! I have two RR stocks, they've been going down too with the reduced market and shipping, but I"m sure they will rebound just like JNJ.

    I just buy more positions when it dips. tho I'm holding back right now.

  • Report this Comment On January 30, 2009, at 2:54 PM, petehanse wrote:

    The Motley Fools are not called FOOLS for nothing ....they do manage to fool plenty of people ! All there picks are written up to have u believe they are the best things since fresh bread.

    Unfortunately many fall way below their hype!

  • Report this Comment On January 30, 2009, at 3:15 PM, Loyd51Ford wrote:

    The market is very up and down. These dividend stocks allow you to have one more screener. Do I want this stock? Does it pay a dividend?

    That's how I use it. No question that you get more for your money focused on dividends - as long as you take into consideration the other factors that go into a "good stock."

    Thank you.

    Loyd Ford

  • Report this Comment On January 30, 2009, at 4:53 PM, weownthenight wrote:

    Many moons ago while a broker with MLPF&S, I too thought dividend stocks were the way to go. No sooner had the ink dried on the tickets than did those securities do an about face and plunge for three years. Yields were at historic highs and you couldn't give away high dividend yielding stocks Currently Textron is yielding 10% which means the stock is about to be slammed and the dividend is probably not secure. Be very careful. Secular bear markets last 12-15 years and we are only starting year 9. When the P/E's and yields get to 7 and the percentage of cash to equity ratio is 10 or better,I will be mortgaging and borrowing everything I can to buy stocks. It should correspond just about to the exact time that every financial publication will proclaim the stock market is dead. I know, I was there in 1978 and in August of 1982 the cash to equity ratio was 15.

  • Report this Comment On January 30, 2009, at 5:31 PM, FOXXY01 wrote:

    I can't figure out why you never list AT&T (T) as a good dividend paying stock. The last time that I checked it was paying 6.5%+ and is currently on one of your recommended list.

  • Report this Comment On January 30, 2009, at 5:36 PM, Kayaker46 wrote:

    Take a look at Windstream Communications, Inc. (WIN), a rural phone and broadband company selling in the range of $8.50 to $9.50. Steady dividend of $1.00 per year yields about 11-12%.

  • Report this Comment On January 30, 2009, at 5:53 PM, hbcjoe wrote:

    When buying preferred stocks, be sure to buy the cumulative preferred issues. That means that if they do cut your dividend, they must come back and pay you for any previously missed dividends before they can give a dividend to anyone else.

  • Report this Comment On January 30, 2009, at 5:56 PM, OlNewbie wrote:


  • Report this Comment On January 30, 2009, at 6:14 PM, OlNewbie wrote:

    I buy them in 50/50 pairs or thirds 33/33/33 by sector for the most part. That way if one goes flat due to bad management..., I have a little more cushion. If the sector goes flat, well that's another story. PFE is a good example. I sold it, cut my losses and put the money elswhere when they cut their dividend, which broke one of my rules, but kept BVF & BMY. I may add OKS, PAA or EPD as ryan listed above. I am also going to add ED and one other utility - to be determined.

  • Report this Comment On January 30, 2009, at 8:30 PM, petheri wrote:

    BPT for dividends. Been laughing all the way to the bank for the last 10 years......

  • Report this Comment On January 31, 2009, at 12:27 AM, simonkathrein wrote:

    Now this... this is about the ONLY long term buy and hold strategy that I actually agree with. Buy and hold only stocks that 'PAY YOU TO OWN THEM'.

    I won't be doing this now however, as i feel the worst isn't over yet. The point is... even if Pfizer is paying an 8% yield, if the stock drops another 8% in the next year i've broke even. If it drop's another 30% in the next leg of the downturn... i've lost a whole lot more. I'll be considering this strategy probably in 2013 or so, and for now sticking to guarenteed investments with the bulk of my retirement money. Here's why:

    Click the link, scroll down to the bottom and watch Harry Dent's 2 youtube videos. Then read the article.

    If you want an 8% yield, try and get your hands on some high quality preferred shares or high quality corporate bonds in strong cashflowing large cap companies that 'guarentee' your principal.

  • Report this Comment On January 31, 2009, at 1:01 AM, haydeneb wrote:

    You might want to check out these ETFs: EAD, PHK, PHF, DSU. They are all cheap now and paying great divs. In the 20% range and should be able to maintain them.

  • Report this Comment On January 31, 2009, at 11:04 AM, Scones wrote:

    Problem is with weakened earnings, many of these companies have been slashing dividends. Many companies are just struggling to survive and need the cash to keep the ship afloat. Investors definitely need to exercise extreme caution when expecting a dividend, especially those at or near retirement. Just my opinion though...

  • Report this Comment On January 31, 2009, at 2:48 PM, teejk wrote:'s not just weakened earnings...I think more companies will be re-setting their dividends... in the past they maintained certain dividend levels to attract shareholders and thereby stabilize a certain share this market, that share price is not meeting expectations (I'm guessing due to hedge-fund liquidation selling...about time those guys left the table and I hope they all go broke) and the yields are going through the roof. A dividend cut used to be fatal to a stock, signalling a business in trouble but in this environment, I think it's going to be management's call on how much more can their healthy company's stock go?

  • Report this Comment On February 04, 2009, at 3:18 PM, TxAlaskan wrote:

    Todd, what is your feeling of how safe the dividends are from Diana Shipping (DSX) and Magellan Midstream Partners (MMP)?

  • Report this Comment On March 13, 2009, at 10:24 PM, megesquire wrote:

    What is the potential liability of the named companies for underfunded pension funds?

  • Report this Comment On April 15, 2009, at 12:36 PM, sean9960 wrote:

    I know just enough about the stock market to get me in trouble but I bought some GE stock, will ride it for a few years and sell it. After Uncle Sam and the state and my online investor gets his commission I should have enough for a bag of tater tots and some cheap hamburger meat, GOD BLESS AMERICA

  • Report this Comment On April 25, 2009, at 12:40 PM, RiverRover wrote:

    To Hefty Dude,

    To find a ticker symbol, just click on the "search" line and enter the full name of the company. Then click on "search caps" and you'll find the ticker symbol. Click on the ticker symbol and you're there!

  • Report this Comment On April 25, 2009, at 12:41 PM, RiverRover wrote:

    That's "Search site" not search caps. Sorry!

  • Report this Comment On May 09, 2009, at 12:45 PM, CautiousInv wrote:

    I think GE has seen their better days. I am very cautious of them because I believe the chickens have come home to roost for them.

  • Report this Comment On May 09, 2009, at 1:02 PM, CautiousInv wrote:

    GE has seen it's better days.

  • Report this Comment On May 09, 2009, at 1:14 PM, CautiousInv wrote:

    I believe eventually these companies that are suppose to benefit from Obama's spending and policies will be will be investigated and punished for corruption for the damage they've done and are trying to do to this country. Good things can not come from companies that deal with dictators who want harm to come to us and our economy. Stick with faithful, honest, strong, and reliable companies that aren't expecting others to bail them out or use corruption to get there. If it is taxpayer funded it is not strong, honest, faithful, or reliable. They will take it and run.

  • Report this Comment On May 19, 2009, at 5:28 PM, ErnieEK wrote:

    After reading the comments, I would suggest to those who are holding stocks to put in a close trailing stop in order not to lose your shirt. I bought GE and put in a trailing stop - ended up making a slim profit but managed to miss losing my shirt. It pays to use a trailing stop on all your stocks - same with options.

  • Report this Comment On May 21, 2009, at 4:57 PM, Demoncrat wrote:

    The comments are generally on point, but one variable few are taking into account is the age of the investor. For investors under the age of 30 who are looking for growth and can accept risk, looking for the highest yields is beneficial.

    Close-end Real Estate Investment Trusts, Oil Investment Trusts, etc. are trading at all-time lows because the value of the underlying assets are questionable due to the current economic climate. Oftentimes, these are trading at far below the actual value of the securities and assets they hold.

    As a younger investor, diversifying in these securities is a high risk, high reward proposition. If you can lock in a share at $5 that pays a quarterly dividend of $.25-$.50 cents per, you have a great investment opportunity, if you can afford to wait out the storm.

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