When it comes to investing, it’s important to have patience and think long-term. Even holding onto purchased stocks for one to two years is considered speculating if you buy and sell frequently.
Throughout history, it has been shown that the likelihood of earning money is significant when measured by total returns, which considers the reinvestment and compounding of capital gains and dividends. However, this requires patience and resilience to see it through to the end.
Although there is no such thing as a completely risk-free investment, these five dividend stocks are highly favored by investors and are worth holding onto for the long term. These companies are financially strong, consistently growing, and are regularly paying dividends to their shareholders. Investing in these five companies can provide you with peace of mind while growing your passive income.
- Microsoft Corporation (Ticker: MSFT)
Microsoft Corporation is an American multinational technology corporation headquartered in Redmond, Washington. Microsoft has a wide range of products including operating systems, Microsoft Cloud, Xbox games, software, and AI. Microsoft has a wide moat and is a 2.988 trillion company.
With an operating margin of 44.17% and a profit margin of 36.27%, Microsoft is a leader in the tech industry.
*Stock Information
- Price: $402.18
- EPS: $11.06
- PE Ratio: 36.36
- Dividend: $3.00
- Dividend Yield: 0.75%
- Free Cash Flow: 67.44B
Microsoft has been consistently growing its revenue and net income year after year which is certainly good news for the investor.
Microsoft has a history of paying and increasing its dividend for 19 years and its 5-year growth rate is 10.20%.
Microsoft’s robust FCF of $67.44 billion enables it to weather market volatility and overcome any challenges that come it’s way. The strong free cash flow enables Microsoft to consistently pay dividends and spend the FCF on share buybacks.
- VISA (Ticker: V)
Visa Inc. is a San Francisco-based multinational payment card services corporation that enables electronic funds transfers globally. It is best known for its Visa-branded credit, debit, and prepaid cards.
Visa provides financial institutions with Visa-branded payment products, which they use to offer credit, debit, prepaid, and cash access programs to their customers. Visa does not issue cards or extend credit or set rates and fees for consumers.
Visa has impressive operating and profit margins, standing at 67.61% and 53.07% respectively.
*Stock Information
- Price: $276.76
- EPS: $9.92
- PE Ratio: 31.85
- Dividend: $2.08
- Dividend Yield: 0.75%
- Free Cash Flow: 19.12B
Like Microsoft, Visa has been consistently growing its revenue and net income since 2019 and is expected to continue the growth till 2025 estimated by analysts.
Visa has a history of paying and increasing its dividend for 15 years and its 5-year growth rate is 16.09%.
- The Procter & Gamble Company (Ticker: PG)
The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio. It specializes in a wide range of personal health/consumer health, personal care , and hygiene products; these products are organized into several segments including beauty; grooming; health care; fabric and home care; and baby, feminine, and family care.
Procter & Gamble is one of the most popular Consumer Defensive stocks, and their products can be found in households worldwide.
*Stock Information
- Price: $160.4
- EPS: $5.97
- PE Ratio: 26.87
- Dividend: $3.76
- Dividend Yield: 2.35%
- Free Cash Flow: 16B
Porter & Gamble is truly a dividend king who has been paying and increasing the dividend to the shareholders for 68 consecutive years and its 5-year growth rate is 5.58%.
- PepsiCo, Inc(Ticker: PEP)
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York. Since its merger with Frito-Lay in 1965, PepsiCo has grown into a leading consumer goods company worldwide.
The company offers a wide range of products that include well-known brands like Pepsi, Mountain Dew, Lay’s, Doritos, Tropicana, Quaker Oats, and Gatorade, among many others. This diverse portfolio includes carbonated and non-carbonated drinks, savory snacks, breakfast foods, and nutritious options. These products cater to a variety of consumer preferences and dietary needs.
PepsiCo has a smaller profit margin as compared to the first three companies. Its operating and profit margins are 15.27% and 9.92% respectively.
*Stock Information
- Price: $167.87
- EPS: $6.57
- PE Ratio: 25.55
- Dividend: $5.06
- Dividend Yield: 3.00%
- Free Cash Flow: 7.924B
PepsiCo is another dividend king who has a consecutive divided growth of 52 years including the recently announcement of a 7% increase in dividends and planning to repurchase approximately $1 billion of shares. It’s 5-year growth rate is 6.63%.
- Johnson & Johnson (Ticker: JNJ)
Johnson & Johnson (J&J) is an American multinational, pharmaceutical, and medical technologies corporation headquartered in New Brunswick, New Jersey.
Johnson & Johnson’s business segments include Consumer Health, Pharmaceutical, and Medical Devices. In 2023, the company split off its consumer healthcare business sector into a new publicly traded company, Kenvue.
In the pharmaceutical segment, Johnson & Johnson develops and markets innovative medicines for various therapeutic areas, including oncology, immunology, neuroscience, and infectious diseases. Notable products include Remicade, Stelara, Imbruvica, and Invokana.
Johnson & Johnson has an operating margin of 15.57% and a profit margin of 11.71%.
*Stock Information
- Price: $158.62
- EPS: $5.20
- PE Ratio: 30.51
- Dividend: $4.76
- Dividend Yield: 3.00%
- Free Cash Flow: 17.78B
Johnson & Johnson is a dividend king in the Healthcare sector who has been paying and increasing the dividend to the shareholders for 62 consecutive years and its 5-year growth rate is 5.75%.
Conclusion
The stocks mentioned consist of 4 different sectors: consumer defensive, healthcare, financials and technology. Dividend Wheel own shares in every company except for Microsoft which I am looking at the best opportunity to add to my portfolio.
These are my favourite stocks and buying any of these 5 stocks will not go wrong in any case. The revenue and net income are consistently growing. They are continuously paying and increasing their dividends to the shareholders. What more can you ask for?
Do you own any of the mentioned stocks and what other stocks do you recommend for buy and hold for long-term?
*Stock information updated at the time of writing
(Information extracted from Yahoo Finance, Wikipedia and Finviz)