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3 Buy-And-Hold Stocks That Could Provide Income For Life

By Investing.com (Haris Anwar/Investing.com)Stock MarketsSep 10, 2021 09:23AM ET
www.investing.com/analysis/3-buyandhold-stocks-that-could-provide-income-for-life-200601446
3 Buy-And-Hold Stocks That Could Provide Income For Life
By Investing.com (Haris Anwar/Investing.com)   |  Sep 10, 2021 09:23AM ET
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Which stocks make an ideal investment for your golden years?

If you are a buy-and-hold investor, large-cap dividend stocks are the best choice. These companies tend to have strong business models that allow them to regularly generate cashflows for their shareholders.

In addition to receiving income when you need it the most, large-cap income-producing stocks are also less volatile during economic downturns, like the one we faced during the pandemic.

Their strong balance sheets, essential products and services, and large global footprint help provide investors with considerable annualized returns. Below, we've identified three such stocks:

1. Home Depot

It’s not hard to see the value of the home-improvement giant Home Depot (NYSE:HD) in any retirement portfolio. It’s the kind of stock that is ideal to provide regular cash flows, combined with a strong upside potential.

In addition, the current work-from-home environment and low interest rates has further strengthened the bullish case for HD and its potential for generating steadily increasing dividend income.

Home Depot Weekly Chart.
Home Depot Weekly Chart.

The Atlanta-based retailer, which benefited from pandemic-related changes in consumer behavior and federal stimulus payments last year, said in August that demand for its products has remained strong. In the latest quarter, comparable sales—a measure that adjusts for stores opening and closing—grew 4.5%, after four consecutive quarters of more than 20% growth.

The company is also a reliable dividend payer. Over the past five years, its quarterly dividend, on average, has expanded 22% per year. With an annual dividend yield of 2%, the company pays a $1.65-a-share quarterly payout. And, with a solid payout ratio of 44%, it has much more room to grow. The stock, which closed yesterday at $331.77, has gained 20% this year.

2. American Water Works

Utilities that provide power, gas, water and telecom services to consumers are low-risk investments, making them attractive for long-term buy-and-hold investors. In general, these companies regularly increase payouts. In many cases, they've been boosting their dividends for decades.

Holding these shares over the long term is a great way to ensure a steady income flow with above-average yields, even when other areas of the market go through sharp adjustments. In this domain, you can consider shares of American Water Works (NYSE:AWK), a New Jersey-based utility that provides drinking water in multiple states. The utility provides regulated and market-based drinking water, wastewater and other related services to 15 million people in 46 states.

This massive footprint helped American Water generate consistent returns that outperformed other utilities. Over the past five years, the utility generated 126% total return for its investors. With an annual dividend yield of 1.28%, the utility pays $0.6 a share quarterly dividend. That payout has increased at an average annual rate of 10% over the past five years.

American Water Works Weekly Chart.
American Water Works Weekly Chart.

AWK shares closed Thursday at $187.54, after gaining more than 20% this year.

3. Coca-Cola

The Atlanta-based food and beverage giant Coca-Cola (NYSE:KO) is another suitable candidate to buy and hold. The company has been issuing dividend checks for more than a century, showing the strength of its brands and its ability to survive in the toughest of economic times.

Coca-Cola Weekly Chart.
Coca-Cola Weekly Chart.

Just like many consumer brands, Coca Cola is also taking a hit on its sales due to the COVID-19 pandemic, as sales in amusement parks and theaters dried up after lockdowns. But the company’s balance sheet remains strong, and its management is confident in its liquidity position.

At a time when health-conscious consumers are shifting away from sugary drinks, the company is expanding its healthy offerings. As part of its push to grow beyond its namesake brand and become a “total beverage company,” Coke is acquiring startup beverage companies to resonate better with health-conscious clients and find new areas of growth. Its recent investments include Honest Tea, Fairlife dairy and Suja Life.

Trading at $55.86 at yesterday's close, Coke’s stock is yielding 3.02% annually. That return might not look too exciting, but the company has a long track record of hiking its payout—for 57 consecutive years now. With a 7% annual dividend growth during the past 10 years, KO currently pays a quarterly payout of $0.42 a share.

3 Buy-And-Hold Stocks That Could Provide Income For Life
 

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3 Buy-And-Hold Stocks That Could Provide Income For Life

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Comments (11)
Abdellah Bassoul
Abdellah Bassoul Sep 12, 2021 11:23AM ET
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If you that kind of money you better buy a house and rent it and get a minimum of 6% annual return on capital.. it’s better than any dividend or rate of return out there and it’s garanteed .. Real Estate is a killer
XAVIER PIETRINI
XAVIER PIETRINI Sep 12, 2021 5:32AM ET
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I think this is an excellent article for Value investors ! I know two companies of the three and I agree they should be part of Large Cap Dividend Stocks Portfolio that are interested in keeping them Long Term
Going Green
Going Green Sep 11, 2021 3:44AM ET
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I like the coke pick but favor lowes over home depot….and $bam forever.
Stephen Grout
Stephen Grout Sep 10, 2021 4:04PM ET
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GCAT will be next
qadeer tabassum
qadeer tabassum Sep 10, 2021 1:05PM ET
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how to set share posion ..I trading in forex only .. Now interested in share market ..please guide me to select share and place order for share ..with exemple ppease
Emmanuel Murallo
Emmanuel Murallo Sep 10, 2021 1:04PM ET
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🍀
Andrei Badea
Andrei Badea Sep 10, 2021 1:04PM ET
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amc gme 🚀
Gail Goodman
Gail Goodman Sep 10, 2021 1:03PM ET
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Love those 1.28% dividends.
Andrei Badea
Andrei Badea Sep 10, 2021 1:03PM ET
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amc gme 🚀
la popeye
la popeye Sep 10, 2021 11:30AM ET
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ko is ko
Linn Soee
Linn Soee Sep 10, 2021 2:37AM ET
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fom
Gary Pickett
Gary Pickett Sep 10, 2021 2:37AM ET
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Hello
NJABULO THABISO
NJABULO THABISO Sep 10, 2021 2:37AM ET
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how are you
 
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