Investing in dividend stocks can provide stable income and long-term growth. While no investment is completely risk-free, some dividend stocks have proven to be ultra-safe bets for buy-and-hold investors seeking passive income streams.
Here are 5 ultra-safe dividend stocks to consider buying and holding for the next 20 years:
1. Johnson & Johnson
Johnson & Johnson (JNJ) is a diversified healthcare company that operates in the pharmaceutical, medical device and consumer packaged goods markets. J&J is a Dividend King, meaning it has increased its dividend for over 50 consecutive years.
J&J currently yields 2.5% and has a safe payout ratio of only 46%. Its well-diversified business and substantial free cash flows provide the ability to continue paying and growing its dividend.
J&J aims to grow EPS by 6-7% annually over the long term, supporting future dividend increases. With a AAA credit rating and over 130 years of operating history, JNJ is about as safe a dividend stock as they come.
2. Procter & Gamble
Procter & Gamble (PG) is a consumer staples giant and Dividend King with 65 consecutive years of dividend growth under its belt. P&G owns iconic brands like Tide, Bounty, Gillette and Pampers that provide stable cash flows.
PG currently yields 2.6% and has a very safe payout ratio of 68%. Its portfolio of leading brands, global scale, and focus on product innovation provide predictability and support consistent dividend growth.
P&G targets annual dividend increases in line with earnings growth. For long-term investors, PG offers an ultra-safe dividend stream.
3. Coca Cola
Coca Cola (KO) is the world’s largest beverage company and one of the most recognizable consumer brands. It has increased its dividend for 59 consecutive years.
Coke currently yields 2.9% and has a sustainable payout ratio of 75%. Its diversified portfolio of sparkling and still beverages generates stable earnings and cash flows to support the dividend.
Coca Cola aims to grow its dividend in line with mid single digit EPS growth annually. With a strong brand and unparalleled distribution network, Coke makes for an excellent long-term dividend holding.
4. 3M Company
3M Company (MMM) is a diversified global manufacturer operating in the fields of industry, worker safety, US health care, and consumer goods. 3M has paid dividends without interruption for over 100 years and has increased its payout annually for 63 straight years.
MMM yields 3.3% today and has a comfortable payout ratio of 67%. Its well-diversified business model provides earnings stability through economic cycles. 3M targets 7-9% annual EPS growth, which supports steady dividend increases for shareholders. For risk-averse dividend investors, 3M is an ideal “set it and forget it” type of stock.
5. PepsiCo
PepsiCo (PEP) is a global food and beverage leader with iconic brands like Pepsi, Gatorade, Frito-Lay and Quaker. It has paid steady or increasing dividends for 49 consecutive years.
PepsiCo currently offers a yield of 2.6% and a secure payout ratio of 68%. Its diversified portfolio of defensive businesses generates predictable cash flows to fund the dividend.
Management targets mid single digit annual EPS growth and approximately in-line dividend growth. With its track record of success and stability, PepsiCo is built to be an ultra-safe dividend payer for decades to come.
Key Takeaways
- Johnson & Johnson, Procter & Gamble, Coca Cola, 3M and PepsiCo have all established long histories of dividend growth and financial strength.
- These ultra-safe dividend stocks offer yields ranging from 2.5% to 3.3%, providing both income and growth potential.
- Their defensive business models, strong brands, global scale and manageable payout ratios make them ideal buy-and-hold forever dividend stocks.
- For risk-averse investors seeking passive income streams, these 5 stocks can anchor a portfolio and provide safe dividends for the next 20 years and beyond.
Conclusion
Finding ultra-safe dividend stocks to buy and hold is key for income investors with long time horizons.
Johnson & Johnson, Procter & Gamble, Coca Cola, 3M and PepsiCo have strong underlying businesses, durable competitive advantages and commitment to growing their dividends steadily.
Buying shares of these high-quality dividend payers can provide portfolio stability and rising income for decades to come.