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3 Dividend Stocks You Can Safely Hold for Decades

By Jennifer Saibil - Jan 29, 2021 at 7:55AM

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Looking for income? These companies offer dependable -- and growing -- dividends, plus potential for stock gains.

Why should you care about dividends? Well, you shouldn't necessarily. There are many different investment styles, and dividends aren't on everyone's list. But many investors look to dividends for income, and the higher the yield, the better. This is especially true for retirement accounts, as dividends can add up and provide a real source of income for people who aren't working.

There's more than one approach in dividend investing as well, such as higher yields or stock gains. Kimberly Clark (KMB 1.80%), PepsiCo (PEP 1.24%), and Starbucks (SBUX 3.87%) are all companies that offer a steady and growing dividend that yields more than the S&P 500 average.

More than just toilet paper

If you were one of the many people who stocked up on toilet paper at the beginning of the pandemic, you may have purchased Scott or Cottonelle, owned by Kimberly Clark. The company owns many brands in what it calls the tissue segment, such as these toilet paper brands, Kleenex tissues, and Viva paper towels in the U.S., as well as in baby care, feminine care, and adult care, and operates in 175 countries.

Woman wiping child's nose

Image source: Getty Images.

As ubiquitous as its products are, the company is still growing sales. The pandemic was certainly a boon for Kimberly Clark's home-focused brands, and sales grew 6% in the 2020 fourth quarter ended Dec. 31. This was after initial bulk-buying frenzy, but the tissue segment still increased 14%. It was a solid quarter with management making greater investments in brands, achieving more market share, and $575 million in cost savings. 

Kimberly Clark shares pays the highest dividend on this list at 3.37%, and it's raised the dividend every year since 1972, including a dividend raise already in January 2021. That's 49 years in a row, meaning it will join the uber-exclusive list of Dividend Kings when it raises its dividend in 2022.

More than just cola

PepsiCo's sales decreased along with almost all other beverage companies as takeaway suffered through lockdowns. But at a 3% decline, the top line was way lower than rival Coca-Cola's 28% drop in the second quarter, and it was back in growth territory with a 5% increase in the third quarter ended Sep. 5.

Girl drinking a can of cola.

Image source: Getty Images.

What turned the tide in PepsiCo's favor was its more varied product assortment, including snacks and breakfast foods, which were both big sellers while people stayed home. During the second quarter, when the away-from-home business plunged, Quaker breakfast foods increased 23% and Frito-Lay snacks rose 7%.

These brands remained strong in the third quarter. PepsiCo's sales were rising before the pandemic, and its broad range of brands is what will bring it into the future as well. CEO Ramon Laguarta emphasized that the company will focus efforts on increasing market share for its core brands, as well as developing new growth brands.

PepsiCo has raised its dividend annually for the past 48 years, so it's heading for elite Dividend King status as well, and currently yields 2.94%, making it a high-yielding and trustworthy dividend.

More than just coffee

Starbucks' dividend has the lowest yields on this list, at 1.83%, but it has also raised it annually since 2010. That raise continued through the pandemic despite strong sales decreases and losses, demonstrating the coffee king's commitment to its dividend.

Starbucks barista wearing a mask and serving a customer.

Image source: Starbucks.

Starbucks is still in growth mode, and it opened 278 new stores in the 2021 first quarter ended Dec. 27, for a total of nearly 33,000. Former CFO Pat Grismer previously said that the company is on track to have 55,000 stores in 2030, a huge increase, giving it tremendous growth power.

The pandemic put a huge strain on growth as people weren't getting their morning coffees on the way to work. First-quarter comps declined 5%, a steady improvement from the 9% decline in the fourth quarter. Stores are still not fully functional, with most offering limited seating due to social distancing efforts, but the company shifted focus and opened more suburban locations as well as launching more pandemic-friendly features like curbside pickup. It also opened more stores with drive-thrus, which accounted for half of total sales and delivered a 10% comps increase in the first quarter. 

Starbucks upgraded its membership program in 2020 and added more mobile pay options, and mobile accounted for 30% of total sales in China in the first quarter. The company considers itself digital-first, poising it for further growth as digital adoptions expand, and making it a great dividend stock to hold long-term.


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Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
$78.11 (3.87%) $2.91
Pepsico, Inc. Stock Quote
Pepsico, Inc.
$166.13 (1.24%) $2.03
Kimberly-Clark Corporation Stock Quote
Kimberly-Clark Corporation
$134.46 (1.80%) $2.38
The Coca-Cola Company Stock Quote
The Coca-Cola Company
$63.04 (1.88%) $1.16

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

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