There's nothing like holding a stake in a company that pays you to own it. Some of the best-performing businesses in the world reside on American stock exchanges, and more than a few are happy to share their wealth quarter after quarter, year after year, by regularly paying dividends.
Since the universe of U.S. equities is vast and deep, there's a dividend stock for every taste and occasion. Out of this nearly bottomless well, here are two stocks in particular that have not only paid dividends, but raised them habitually while growing their underlying businesses -- thereby boosting their share prices too. Take a bow, Microsoft (MSFT 0.54%) and Coca-Cola (KO 0.11%).
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1. Microsoft
Once a company heavily dependent on its dominance of PC operating systems, Microsoft has done an admirable job augmenting its business in the 21st century.
These days, the Titan of Redmond has branched out cleverly and successfully into other business. It's a powerhouse in the cloud computing space, an activity that brings in nearly $27 billion every quarter these days, and earns coin from sources as diverse as advertising on its Bing search engine, as well as sales of hardware (most notably its sturdy Xbox line of video game consoles).
Meanwhile, it still has a firm grip on the PC operating system and productivity segments, anchoring the company in its traditional pursuits. At the same time it's looking forward, with hefty investments in artificial intelligence (AI) leader OpenAI, developer of ChatGPT.
Collectively, the company's core pursuits are profitable and cash-generating. This constantly provides plenty of space for the company to pay out a regular dividend. After years of resisting the idea, Microsoft has been dispensing it without fail since 2003.
The latest edition, declared in mid-June, is a quarterly disbursement of $0.83 per share. While that yield is a relatively modest 0.7% it's a good bet the next one will be higher. That's because Microsoft habitually enacts dividend raises at the start of each of its fiscal years, and we've just exited its fiscal 2025.
The company still has plenty of avenues for growth, and analysts are fully expecting continued improvement. Their consensus for both earnings per share (EPS) and revenue growth in fiscal 2025 compared to its predecessor is around 14% for both.
So with Microsoft, we have a monster business helmed by a management team that knows how to stay relevant and grow at impressive rates in an always-tough industry. And all the while, it's happy to pay its shareholders for coming along for the ride. This is a star example of a set-it-and-forget-it stock.
2. Coca-Cola
If there's one large company that requires little or no introduction to American consumers, it's Coca-Cola. Its signature drink is ubiquitous, almost impossible to avoid, eternally popular, and a great foundation for a business that has stood the test of time.
Coca-Cola is an enduring success because its core product has always been straightforward and high-margin -- Coke the drink consists overwhelmingly of just sugar and water. These days, the company doesn't deviate from doing what it does best, i.e., selling popular drinks to the mass market. It has an ever-expanding portfolio occupied by many types of beverages.
For many investors, Coca-Cola is the very model of an income stock. The company's fundamentals rarely grow impressively, but at its present size, they don't really need to. For the entirety of 2024, revenue crawled only 2% higher compared to the previous year (to $46.8 billion), while net income was actually down slightly at $10.6 billion.
But oh, those net margins. In 2024's case, that figure was a typically high 23%. It isn't easy to net such a profit when a business is so massive and reaches nearly every corner of this planet.
With that kind of sustained, and sustainable, profitability, Coca-Cola has little problem generating more than enough free cash flow (FCF) to fund its ever-rising quarterly dividend. In fact, the company is a Dividend King, and most recently hiked its payout as it approached the end of 2024. Right now, it dispenses a quarterly disbursement of $0.51 per share, yielding a relatively generous 2.9%.
While no one should expect a sudden explosion on either the top or bottom lines for the company at any point, the company's ability to maintain that wonderfully high-margin business is a very safe bet. Coca-Cola is a stock anyone at any age can buy and hold for the rest of their days -- and get paid handsomely on the regular while they do so.
