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3 Dividend Plays to Buy And Hold For 5 Years

By David Butler - Updated Jan 23, 2020 at 2:56PM

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It's fun chasing the "next big thing", but it's also prudent investing to have a few strong yielding dividend plays in the portfolio. Here are a few I like.

When it comes to picking long term dividend plays that you want to hold forever, I very much favor financials. These institutions tend to survive far longer than most other forms of business. Of course, that statement operates under the assumption that you're taking good names, and not exposing yourself to highly leveraged endeavors. Here are two banks I deem as worthwhile long term dividend plays, as well as one real estate investment trust that I really like.

BNY Mellon (BK 1.04%)

In Warren Buffett's play on banks, Berkshire Hathaway (BRK.B -0.03%) owns a significant position in the giant investment company. Involved in virtually every facet of financial services, BNY Mellon offers a strong case as a good move on dividends. Despite putting together strong earnings growth over the last few years, the stock has been caught in the mire of the markets, and has given up significant gains over the past year. The combination of a mixed first quarter, combined with the shift in sentiment regarding federal rates has put downward pressure on the stock. To me, it's an opportunity for a long term investment. Yielding 3%, with a dividend growth rate of 15.21% over a three year period, BNY Mellon offers yield increases that exceed the industry average of 10.71%.

PNC Financial (PNC 0.80%)

Yielding 3.63%, PNC Financial has also outpaced the S&P 500 over the last three years. Sticking to prudent management, and successfully driving both interest and non interest income, PNC is an excellent pick for the long haul. With a 3 year dividend growth rate of 19.15%, the bank lags behind some peers, but still showcases strong growth. The yield itself also exceeds the industry average.

With a beautiful balance sheet that includes over $49 billion in total equity, an investment in PNC is an investment in assets. This isn't necessarily a stock that's going to rock your world with massive earnings growth rates. What you're going to get here is a safe, strong play that will keep providing you with good yields for years to come, while holding shares in a well capitalized, low debt bank.

Also down this year, I view names like PNC Financial as good targets in a market that is still overvaluing many equities.

Dividends

Dividends

Medical Properties Trust (MPW -0.33%)

Looking away from banks, Medical Properties Trust is a real estate investment trust that invests in medical properties such as hospitals, clinics, etc. I had really been hoping that a higher rate environment would put some pressure on Medical Properties Trust, as REIT's traditionally perform a little weaker during times of higher rates. As we all know from all the commentary on the Fed this year, that environment is not on the horizon.

Alas, anyone who wants to make an investment in this one will likely have to pay the price. Sporting a 5.63% yield, Medical Properties Trust has been quietly building a portfolio of medical properties in the United States and Europe. Over the last five fiscal years, revenues and operating income has expanded aggressively, creating the potential for some serious value for shareholders. Dividend growth rates have lagged the broader REIT industry, but that's not a problem since the company's yields are well above the average. Looking forward, this one will require a little more studious attention than either PNC Financial or BNY Mellon. That said, if this company continues to allocate its resources into truly valuable medical properties, I think it's a firm that is setting itself up well for the healthcare industry that an aging world population is going to need.

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Stocks Mentioned

The Bank of New York Mellon Corporation Stock Quote
The Bank of New York Mellon Corporation
BK
$43.77 (1.04%) $0.45
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$304.05 (-0.03%) $0.10
The PNC Financial Services Group, Inc. Stock Quote
The PNC Financial Services Group, Inc.
PNC
$155.98 (0.80%) $1.23
Medical Properties Trust, Inc. Stock Quote
Medical Properties Trust, Inc.
MPW
$18.07 (-0.33%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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