It’s not the size of the dividend yield that matters most; it’s the quality of the dividend and the growth potential in company cash flows. This is especially true for long-term investors looking to stay aboard for more than a decade. Not only will the promised yield need to be delivered upon (opt for well-covered dividends that were built to survive even the harshest of corrections), but it would be nice to have that dividend grow significantly over some period of time. Indeed, inflation is still an issue, and ensuring frequent (dividend) raises is a must to stay ahead.
In this piece, we’ll check out three dividend stocks with secure payouts that are worth holding for a lifetime.
Goldman Sachs: 1.7% yield
First up, we have the dividend payer with the lowest yield but the most impressive growth prospects. Goldman Sachs (NYSE:GS) is an investment banking behemoth that’s really blasted off in recent years. After melting up from the Liberation Day lows, GS stock is now up over 115% in just two short years.
Despite more than doubling in less than 24 months, the stock still looks as cheap as ever at 16.1 times forward price-to-earnings (P/E), especially considering the fundamental improvements across the board. With Goldman recently announcing the testing of its AI software engineer from a firm named Cognition, perhaps it’s Goldman (as well as the big banks), and not an AI developer itself, that stands to benefit most from the productivity gains to be had from applied AI and agents.
Indeed, the financial landscape is experiencing a technological shift, and Goldman is leading the charge. Either way, GS shares are cheap with plenty of momentum riding behind them and perhaps enough of an AI tailwind to keep gaining in the second half. As the growth marches higher, so too will the dividend.
Crown Castle: 4.2% yield
Crown Castle (NYSE:CCI) is a cell tower company that’s in recovery mode after shedding 60% of its value between 2021 and the very end of 2024. With a 4.2% yield, a much lower valuation, a more defensive cash flow stream, and some recent upgrades from Wall Street, perhaps it’s time to give the former market darling a second look.
Earlier this year, the firm inked a deal to sell its fiber business for $8.5 billion. Indeed, that cash will go a long way as the firm looks to ride out the rest of the industry storm.
Though I don’t foresee a swift bounce-back overnight, I do see great financial flexibility, margin expansion potential, and perhaps some generous dividend hikes as the firm’s fortunes look to improve down the stretch. If you’re a fan of the dividend and the 0.90 beta, perhaps now represents a good time to place a bet as the firm pulls the curtain on earnings later this month.
PepsiCo: 4.3% yield
PepsiCo (NASDAQ:PEP) stock is hated on Wall Street right now, down over 30% from its 2023 peak. Indeed, the drink and snack food firm is facing a lot of headwinds from multiple angles. But if you believe in the power of a great consumer-packaged goods brand, I think you have to stick with a stock amid its trying moment.
The stock has a generous 4.3% yield, a low 0.47 beta, and trades at a very reasonable 17.1 times forward P/E. If value and yield are what you seek, the blue chip delivers on both fronts. As much as “healthier” offerings are intriguing and all, I believe it’s the value proposition that will beckon consumers back.
Personally, I think any cost savings from its efforts (think automation) should be given back to consumers in the form of larger portion sizes after all the “shrinkflation” they’ve been through since the pandemic reopening.
Finally, with more than 50 years of annual dividend hikes, Pepsi is a dividend growth juggernaut to stick with, even if it lacks the catalysts to make a run for those prior highs.
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