2 Dividend Stocks You Can Safely Hold for Decades

If you’re looking for safe dividend stocks to hold for decades, there are some great companies out there you might not know about yet. The following stocks have been growing their dividend payments for 25 years or longer and pay above-average yields. Here’s why Realty Income (O 0.47%) and Fastenal (FAST 0.74%) are solid choices for retirement savers.

Realty Income: 5.60% dividend yield

Concerns over consumer spending and a possible recession have sent shares of Realty Income down 18% over the past year. But the stock rallied through the end of 2023 as investors began to appreciate the stellar dividend record and quality tenant portfolio of this top real estate investment trust (REIT). Realty Income has a diversified portfolio of over 13,000 tenants that are under long-term net lease agreements with commercial clients, which provides high visibility into future dividend payments.

Realty Income has grown its monthly dividend for 31 consecutive years. As a REIT, it is required to distribute at least 90% of its taxable income in the form of dividends to shareholders. The stock’s current dividend yield is 5.60%, which is higher than the real estate industry average.

Realty Income’s tenants include large retailers like Walmart, FedEx, Walgreens, and other well-known brands, and retail locations make up 82% of its property portfolio. Holding the stock is almost like earning a royalty on the retail sector, but the best part about owning this REIT is that investors don’t have to worry about a rough patch in consumer spending. These companies are not going to shutter locations just because of a bad year.

Management’s strategy is to maintain a healthy mix of strong companies that will stand the test of time. This is why Realty Income has paid a dividend for over 54 years and will likely continue paying one for decades to come.

Fastenal: 2.27% dividend yield

Fastenal is a well-managed business that has a shareholder-friendly dividend payout. It’s a leading distributor of construction supplies, including fasteners and other parts, and it has delivered market-beating returns to investors for decades while paying out a percentage of earnings in dividends.

The company has increased the quarterly dividend for 25 years and currently offers a yield of 2.27%, which is higher than the S&P 500‘s 1.47% yield.

Fastener distribution requires exceptional supply chain management and a sophisticated distribution network, which is a key competitive advantage for the company. Over the last 10 years, its revenue grew 8% per year, while earnings per share increased 10% annually.

The company’s strategy to get closer to customers, with over 3,400 on-site and retail locations, and tight control of operating costs has driven excellent returns for investors. The stock has more than doubled over the last five years and hit another high to start 2024.

Fastenal still has a long runway of growth. It is just starting to gain traction internationally, where sales crossed the $1 billion mark in 2022 compared to $6 billion in the U.S.

If you need dependable growth to go along with the income, look no further. A $10,000 investment in Fastenal stock 10 years ago would already be worth $40,000 with dividends reinvested. With the company starting to expand internationally, investors could see similar returns over the next decade.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx, Realty Income, and Walmart. The Motley Fool has a disclosure policy.

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