According to the definition of long-term capital gains, investors must hold a stock for at least 12 months in order to avoid the higher tax obligations associated with day trading. But many on Wall Street believe true long-term investing is measured in many years, not months. This is obvious in the amazing performance of high-growth stocks like Tesla (ticker: TSLA), which has surged more than 1,300% over the last five years, with plenty of short-term volatility along the way. However, “buy and hold” investing is also a powerful source of profits in mature dividend stocks as well as disruptors such as Tesla. These sleepy megacap stocks often offer reliable long-term returns, thanks to stable businesses and generous dividends. If you’re the kind of investor who is in the stock market for the long haul, consider one of these seven dividend stocks that are so entrenched and stable that your holding period can be as long as you like, perhaps even forever.
Let’s face it: AT&T is the top wireless provider in the U.S., with more than 40% market share of wireless subscriptions, and it’s not going anywhere. Sure, its peer Verizon (VZ) is pretty close behind. But even if the No. 1 and No. 2 providers ever do swap positions, neither is going away anytime soon. In a digital age, the demand for data is constant, and that makes AT&T’s revenue stream incredibly reliable. Its dividend isn’t going anywhere, either, as the payouts of $2.08 are comfortable under the $3.15 in projected earnings per share this year and just 66% of total profits. In an industry where customers are very “sticky” and the barriers to competition from new entrants are incredibly high, long-term investors can depend on AT&T for many years to come.
Current yield: 6.9%
Market capitalization: $210 billion
Coca-Cola Co. (KO)
Way back in the late 1980s, Warren Buffett and his Berkshire Hathaway (BRK.A, BRK.B) investment firm bought into Coke stock with a $1 billion investment. And since then, Berkshire’s stake has grown to about 9% of KO shares outstanding. The fact that Berkshire and Buffett have been riding high on KO stock for so long is a testament to the fact this is a stock to buy and hold forever. But in case you needed further proof, consider that Coca-Cola just executed its 59th consecutive annual dividend increase in February. Furthermore, those regular increases haven’t been skimpy ones; KO currently pays 41 cents per quarter, up from 17 cents at the beginning of 2007 just before the financial crisis hit and almost double the 22 cents from a decade ago at the beginning of 2011. Considering KO increased its dividends during the current pandemic, the Great Recession and everything in between, there is a strong vote of confidence in this iconic consumer corporation.
Current yield: 3.2%
Market capitalization: $230 billion
Home Depot (HD)
Home Depot is the leading home improvement retailer in the U.S., with $140 billion in annual sales across nearly 2,300 stores. While HD is admittedly a cyclical stock that may see some short-term ups and downs based on the housing market or spending trends, it has proven itself to be a tremendous source of profits in the long term, thanks to both dividends and share price appreciation. Consider that since 2011, HD stock has exploded 760% higher compared with about 200% for the S&P 500 in the same period. And at the same time, dividends went from 25 cents per quarter in 2011 to $1.65 per quarter at present. Say what you want about short-term volatility, with returns like that, this is a stock you want to buy and hang on to forever.
Current yield: 2.1%
Market capitalization: $345 billion
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