3 dividend-paying stocks you can keep safe for decades
Investing is a long-term business, and your biggest returns on a stock purchase can accumulate years or even decades after your inception. Income investors have an additional reason to be patient with their holdings since reinvested dividends can amplify their overall returns.
But the trick is to find dividend paying stocks that can thrive through the inevitable industry downturns and recessions that will strike during a 30 or 40 year investment period. In my opinion, Costco (NASDAQ: COT), Hasbro (NASDAQ: HAS), and Lowe’s (NYSE: LOW) are attractive options that meet this criterion.
As the third largest retailer in the world (behind Walmart and Amazon), Costco’s dominant position in the industry gives it a lot of resistance. The warehouse giant’s focus on consumer staples, meanwhile, has allowed it to thrive during recessions, even though it benefits during boom times in sales of products such as consumer electronics and retailers. furnishings. Its overall revenue grew at a double-digit percentage rate in the United States in mid-2021 after huge spikes the year before.
The chain also derives most of its revenue from membership fees rather than merchandise mark-ups, making its profits less sensitive to the fluctuations other retailers experience with changing consumer demand.
And while the 0.7% dividend yield at current stock prices may seem small compared to industry peers like Walmart, which now returns 1.6%, Costco has made a habit of periodically returning the ‘excess cash flow to shareholders through large special dividends. Look for this retail titan to distribute a lot more money over the next several decades.
Parts of Hasbro’s business were hampered earlier during the pandemic, as its television and film segment suspended production for several months. But by mid-2021, its operational trends reflected its enduring presence in the gaming world.
Second-quarter sales jumped 54% year-on-year (and increased 9% from period 2019) thanks to contributions from major Hasbro franchises like My little Pony and Transformers, as well as partner brands such as Disneythe princess and Star wars lines. “The Hasbro team is operating at a high level,” CEO Brian Goldner told investors in late July.
This performance extends to its finances, with strong cash flow supporting additional savings, debt repayment and direct returns to shareholders. Its success suggests that the company will soon resume the strong annual dividend increases it interrupted during its sharp decline in operations in 2020. But with its return of 2.7%, Hasbro is already outperforming significantly. the general market average.
Income investors have good reason to favor dividend aristocrats. After all, a track record of at least 25 consecutive annual compensation increases speaks volumes about a company’s ability to weather recessions.
Lowe’s is one of the few retailers of this exclusive club, having outlived its rival Home deposit by maintaining its series of dividend increases during the Great Recession of 2007-2009. But there are other great reasons to love this stock.
Lowe’s recently closed its performance gap with Home Depot with major upgrades to its omnichannel selling platform and a renewed focus on the professional contractor niche. The home improvement giant is also increasing its profit margins. And this year, management devoted some of the resulting cash to a dramatic 33% increase in dividend payouts.
The magnitude of future increases will likely depend to some extent on housing market conditions. But this company is likely to continue to increase its payments every year in almost any economic environment imaginable.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.