Are you worried about your finances, and whether you'll be able to retire? You're not alone: Many Americans are growing concerned about the rising cost of living and what the future will hold.
One way you can improve your financial situation in the years ahead, however, is by putting money into dividend stocks, which can be a source of recurring income for you now and later in life. Three pillars that are excellent investments to buy and hold for decades are Realty Income (O -0.17%), Coca-Cola (KO), and Bank of America (BAC -0.21%).
1. Realty Income
A real estate investment trust (REIT) can make for a great dividend stock. As long as it has strong tenants and a promising outlook, it can potentially be a pillar to build your portfolio around.
What is attractive about Realty Income is its diversification. Its portfolio has more than 1,300 clients spanning 85 industries. Its largest clients include many big retailers such as Dollar General, Walgreens Boots Alliance, and Dollar Tree. But none of those tenants account for even 4% of Realty Income's portfolio.
One of the most attractive features of the stock is its high yield of 6% -- that's more than three times the S&P 500 average of 1.6%.
Another great reason to own the stock is that it pays dividends monthly. Most dividend stocks make payments every quarter, but Realty Income provides a much more consistent stream of payouts. The REIT has an impressive streak of paying dividends for 640 consecutive months -- that's more than 53 years.
With plenty of stability and profit margins often at 20% or wider, Realty Income is one of the safest high-yielding stocks for your portfolio right now.
2. Coca-Cola
Coca-Cola is also known for its long-term stability, making it another excellent investment to build your portfolio around. Its dividend yield of 3.2% is above average, and the company has increased it consistently over the years.
In the past decade, it has raised its quarterly payouts by 64%, from $0.28 to $0.46. That averages out to a compound annual growth rate of just over 5%. It has increased its payout annually for more than 60 consecutive years. Future dividend payments are never a guarantee, but it would be downright shocking for Coca-Cola to interrupt its impressive streak.
The company's resiliency is on full display this year as net sales are up 6% through the first nine months of 2023. While that is largely due to price increases and could slow next year, it's a great example of Coke's pricing power. It can raise prices and pass on rising costs to consumers and still not suffer a huge decline in demand.
With one of the best brands in the world, Coca-Cola can be a great investment to hold for decades and help strengthen your financial position.
3. Bank of America
Bank of America is a top bank stock, yielding 3.4%. It's one of the safer bank stocks, and billionaire investor Warren Buffett has stuck with it. While he has sold off other bank stocks, Bank of America accounts for 8.5% of all holdings in Buffett's Berkshire Hathaway portfolio -- second only to Apple, which makes up 47.5% of Berkshire's holdings. Coca-Cola is a bit lower at 6.6% of the Berkshire portfolio.
Investing in a top bank stock such as Bank of America is a good way to bet on the country, which Buffett always encourages people to do. As long as the economy is doing well, one of the nation's largest banks should, too.
Over the trailing 12 months, Bank of America has reported nearly $29 billion in profit, which is just under 29% of its total revenue during that stretch ($101.2 billion).
There's always the risk that if the economy deteriorates, the bank may reduce its dividend payments, as it did during the Great Recession. But as the economy inevitably improves, the dividend will recover, as it has during the past decade.
Trading below its book value, Bank of America is a good stock to load up on right now. Even though investors might be concerned about the economy in the short term, in the long run, this is still a fantastic business to own a piece of.
