Timing the market is difficult even for professionals. Even investing legend Warren Buffett often admits that he has no idea what the market will do this week or next year. And unexpected volatility can make or break a short-term trader. Timing the market sounds great until you miss a few of the best days and watch your returns get cut in half.
There's a less stressful path. Buy dividend stocks you trust, hold them tight, and let compounding do the work over many years. The three companies discussed here have rewarded patient shareholders for ages. They're hiding in plain sight, too.
NYSE: AMT
Key Data Points
American Tower is everywhere (if you look up)
Let's start with a company you probably use every day without knowing it, with business assets scattered all around your neighborhood. American Tower (AMT 0.35%) owns the enormous metal structures (and easy-to-miss small cells) your phone relies on for call, text, and internet connections.
The company has about 150,000 sites across 22 countries, and wireless carriers pay rent to use them. As a real estate investment trust (REIT), American Tower hands over most of its income to shareholders through buybacks and dividends. You're looking at roughly 4% dividend yield with more than a decade of annual dividend increases.
Image source: Getty Images.
The bull case for American Tower writes itself. People aren't using their phones less over time.
One note for tax planning: REIT dividends are typically taxed as ordinary income rather than at the qualified dividend rate. You can get around that issue by holding your American Tower shares in a tax-saving retirement account, as I do in a traditional IRA.
NYSE: AXP
Key Data Points
American Express isn't your grandparents' credit card company
Let's get back to Warren Buffett. My next recommendation has been a Buffett favorite for decades.
American Express (AXP 1.34%) doesn't just process payments; it issues the cards and runs the underlying payment network. This approach gives the company more control over details such as fees and customer data than competitors Visa (V 1.27%) and Mastercard (MA 0.96%).
The centennial giant also stands out by focusing on premium services for high-quality customers. This luxury-flavored strategy provides some recession resistance on the spending side.
Looking ahead, American Express is remarkably innovative with blockchain-based travel data apps and heavy use of artificial intelligence (AI) tools. The company may be old, but it's staying flexible.
The yield is only around 1.1%, but the payout is up by 59% in three years. The yield only stays low because American Express's stock price keeps climbing. That payout is earning Berkshire Hathaway (BRKA 1.08%) (BRKB 1.14%) billions of dollars in dividend payouts every year.
NYSE: KO
Key Data Points
Coca-Cola is more than just soda these days
My third idea is another Buffett favorite. Coca-Cola (KO 0.91%) has raised its dividend every year since 1962. To put that in perspective, the company started this streak before the Beatles released their first album.
Coke's yield hovers near 2.8%, and Berkshire has famously held its shares since 1988 without selling any. The company has evolved from a pure-play bet on sugary sodas. Nowadays, it also offers a broad portfolio of water, tea, juice, coffee, and sports drinks. Growth isn't explosive, but the brand travels everywhere and people keep paying a little more for it every year. That's a durable competitive advantage.
