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3 Dividend Stocks That Should Pay You For the Rest of Your Life

By Will Healy – May 1, 2020 at 12:28PM

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Continuous demand will sustain these companies for decades to come.

Many investors prefer to invest in stocks they can hold on to forever. These companies tend to offer products and services with an appeal that transcends economic cycles or fads.

Another key offering that these companies bring to their shareholders is dividends. As such, they have often provided reliable, steadily increasing payouts over the years. Sometimes these are the Dividend Aristocrats that hike payouts annually. Other dividend stocks thrive by providing more gradual increases over time.

Regardless of their approach, they tend to establish a track record of providing both growth and income over several decades. Though numerous stocks fit this description, Altria Group (MO 2.73%), Caterpillar (CAT 4.91%), and Sysco (SYY 4.04%) appear particularly well-positioned as the market struggles to recover from the COVID-19 crisis.


Altria has delivered impressive gains to its dividend investors over time. Those who have held this stock since at least 2003 and reinvested the dividends now earn back their initial investment every year on the dividend alone.

However, despite this dividend growth, one might be forgiven for missing this opportunity. Altria sells an addictive product long known for shortening the lives of its users. When considering the billions of lawsuit liabilities from tobacco, and the decline in tobacco use over the decades, only the most courageous of investors have likely held on under such conditions.

Roll of dollars, a calculator, and a sticky note showing the word "dividends."

Image source: Getty Images.

Nonetheless, despite these challenges, Altria continued to find a way to boost profits and payouts. Its $3.36 per share annual dividend currently yields about 8.5%. Also, because it has not paid a special dividend since 2008, the company has now seen 11 straight years of payout hikes. Furthermore, a relatively high payout ratio of approximately 77.7% has not curtailed this streak. 

Altria also has potential new revenue sources if tobacco use becomes further marginalized. While the profit potential of vaping remains in question, the company may benefit from a budding new industry: marijuana.

In 2018, Altria spent $1.8 billion on a 45% stake in Canadian cannabis company Cronos Group. Despite falling in value in recent months, Cronos stock appears poised to deliver massive returns over time. As jurisdictions continue to legalize marijuana for both medical and recreational purposes, this industry can nurture future growth, even as consumers continue to turn away from tobacco.


As the world's largest producer of construction and mining equipment, Caterpillar's machines play an essential role in the economy. Their heavy equipment facilitates the construction of buildings and infrastructure. Also, Caterpillar faces relatively little direct competition. Companies like Terex or Komatsu may compete with Caterpillar. However, most other heavy equipment producers such as Deere & Company are indirect peers at best.

Moreover, during the coronavirus crisis, officials have deemed construction essential in many regions of the U.S. This means the industry has not suffered to the degree some might assume. Furthermore, as Asia continues to industrialize, these markets appear positioned to bring an increased level of business for decades to come. Asia has already become the company's second-largest region in terms of revenue.

Despite the importance of this company, its valuation has remained relatively muted. Moreover, at a current multiple of 12.3, its business prospects might make the company worth buying.

While not a dividend aristocrat, Caterpillar maintains a 10-year streak of payout hikes. The company kept its payout steady in 2009, and stock splits brought about dividend cuts on a per share basis over the years. Still, its history of dividend growth is not in question. Investors who have held this stock since at least 1994 earn their original investment back in dividends every year, assuming they reinvested the payouts.

Caterpillar's current annual dividend now stands at $4.12 per share, a yield of approximately 3.7%. However, with a payout ratio of about 71.5%, the company will need an eventual profit recovery to sustain the dividend.

Nonetheless, as construction continues through the COVID-19 crisis, and as countries in Asia pursue a decades-long push to industrialize, Caterpillar should continue to provide investors with generous, growing dividends for years to come.

Sysco Corporation

Sysco is a stock that may not receive much attention on an individual level. Consumers do not buy its products directly, and those who hear about it may confuse it with a technology company that has a similar-sounding name.

However, those who purchase food products on behalf of restaurants, educational facilities, and other business-level entities know this name well. After decades of serving these large-scale customers, it has amassed a streak of annual dividend increases now spanning 49 years.

However, the COVID-19 crisis has forced the closure of many of the entities that would not typically shut down amid an economic downturn. Consequently, Sysco stock fell as much as 70% from its December high at one point. Even after a partial recovery, Sysco stock trades at a discount of about 37% from its 52-week high.

Still, investors should not assume that they are too late. After this comeback, the $1.80 per share dividend yields about 3.3%. Also, at a current P/E ratio of approximately 16.1, investors can still buy Sysco at a reasonable price.

Moreover, Sysco remains in better shape than some might fear. Profit estimates for 2020 have fallen from $3.82 per share to $2.85 per share. While that takes the dividend payout ratio to approximately 60.2%, the downturn does little to jeopardize the company's ability to continue paying or increasing the dividend.

Additionally, people need to remember that this crisis will not last forever. Even if the economic recovery takes some time, Sysco will again provide food to the restaurants, hotels, school cafeterias, and other entities that remain temporarily closed.

Sysco may not excite investors or receive significant individual attention. However, for income-oriented investors wanting a reliable stream of cash, it will take more than a pandemic to jeopardize the dividend paid by Sysco Corporation.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Caterpillar Inc. Stock Quote
Caterpillar Inc.
$179.63 (4.91%) $8.40
Altria Group, Inc. Stock Quote
Altria Group, Inc.
$42.50 (2.73%) $1.13
Sysco Corporation Stock Quote
Sysco Corporation
$75.00 (4.04%) $2.91
Deere & Company Stock Quote
Deere & Company
$360.29 (4.72%) $16.24
Terex Corporation Stock Quote
Terex Corporation
$33.09 (6.78%) $2.10
Komatsu Ltd. Stock Quote
Komatsu Ltd.
$19.47 (2.80%) $0.53
Cronos Group Stock Quote
Cronos Group
$3.01 (2.73%) $0.08

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

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