While it is tempting to buy and sell stocks, if you are investing in dividend-paying stocks, holding the shares in these companies for a long time is the best option to build an income that you can use to invest, save, or spend. The trick is to pick the right stocks to buy and hold, however.
Granted, finding great dividend stocks that you can safely hold for decades isn’t easy. Here are two large, stable companies that fit the bill, partly because they have not only paid dividends for decades but have raised the amount paid each year. Each is in a good position to continue doing so.
1. PepsiCo
PepsiCo (NASDAQ:PEP) sells its well-known soda, snacks, and food brands around the world. Most notably, this includes Pepsi drinks, but it also offers many other products such as Gatorade, Sabra, Frito-Lay, Cheetos, and Quaker Foods.
Last year, its adjusted revenue grew by better than 4%, and earnings per share were 2% higher. Revenue and earnings growth accelerated in the fourth quarter, and for 2021 management expects a mid-single-digit percentage increase in revenue and high single-digit percentage growth for earnings. These are in line with its long-term objectives.
Last year, the company generated $6.4 billion of free cash flow (FCF), which was plenty to pay its $5.5 billion of dividends. Management certainly feels good about PepsiCo’s future, recently announcing that it was increasing the quarterly dividend by 5% from $1.02 per share to $1.08 starting in June. This makes 48 straight years with a raise, qualifying it as a Dividend Aristocrat — an S&P 500 company that has raised its dividend payout yearly for at least 25 straight years — and edging very close to becoming a Dividend King.
2. Target
Target (NYSE:TGT), whose forerunner was started nearly 120 years ago, seeks to stand out from other retailers through partnerships that allow it to offer merchandising exclusively at its stores and on its website.
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