Investing

3 Dividend Kings to Buy and Hold Forever

Omor Ibne Ehsan

Published: January 15, 2025 9:43 am

Dividend Kings are stocks that have increased their dividend payouts for over 50 consecutive years. These are great investments to anchor together your portfolio — as they are generally quite stable — and also get some passive income, even if the market is not doing as well. If these companies have been raising their dividends for over 50 years, there’s a strong incentive for them not to put their Dividend King status at risk by reducing dividends.

24/7 Wall St. Key Points:

• Dividend Kings will continue compounding your investment no matter the underlying economic trends.
• These Dividend King stocks are among the best stocks to do just that.
• All three stocks here have little downside potential and their yields are on the higher end.
• Here’s a free report you should grab if you want to read about two more “Dividend Legends.”

It’s a time-tested way to safely make your way into retirement.

Here are three to look into:

Consolidated Edison (ED)

Consolidated Edison (NYSE: ED) hasn’t been the most exciting name. Minus dividends, it is down 2.3% in the past five years. However, stability matters. The company has a rock-solid hold on the Manhattan power grid and has a 3.77% forward dividend yield with 51 consecutive years of increase.

They posted $4.09 billion in revenue, up 5.7% year-over-year and analysts expect their revenue to continue growing at an average of 4.8% over the next three years. Profits matter when it comes to dividend stability, and they reported around $588 million in Q3 2024 net income, up 12% YOY.

This is a very stable business that you can “hold forever” and reinvest the dividends. Treasury yields are higher right now, but if they come down more in the coming Trump era, I think ED will look a lot more attractive. In my opinion, we could see it revisit $100 or more if U.S. Treasury securities start yielding below 3%.

PepsiCo (PEP)

PepsiCo (NASDAQ: PEP) has taken some bruises recently, but I still think it has the backbone to flourish again. The heftiest moat of this company is the snacks aisle and is far from just soda these days.

PEP stock has been on a long-term consistent path since the early 2000s and recessions and notable downturns in the broader economy have been the only times it has veered off that trajectory. We’re probably not in a recession at the moment, but consumers have been price-sensitive. This sensitivity has translated into demand headwinds for PepsiCo since it has been leaning on price hikes to drive revenue growth in recent quarters. The macro indicators are “solid” on paper. Thus, it’s perplexing to see PEP stock struggle.

Nonetheless, PepsiCo managed to recover each time it declined in the past, and I have no doubt that it will recover from the current slump as well. Analysts continue to see positive revenue growth in the years ahead and expect EPS growth to remain at around 5-7%.

I personally think the recent decline is more likely due to a reversal of the “de-risking” we’ve seen earlier. PepsiCo’s growth has slowed down but hasn’t turned negative and shouldn’t cause such a correction. Investors seem to be far more bullish on the economy and the stock market post-election and are less interested in defensive stocks like PEP. I expect things to normalize as PEP is quite cheap now.

It has a dividend yield of 3.8% with 53 years of consecutive dividend payout hikes.

Kimberly-Clark (KMB)

Kimberly-Clark (NYSE: KMB) makes products like Huggies diapers and Kleenex tissues. These products are “boring,” but they have very sticky demand and you can see both of these characteristics being reflected in the company’s stock price.

The stock has traded around $130 (±$30) since 2015. The sentiment looks lukewarm: on one hand, people love seeing that bottom-line growth. On the other, they’re nervous about cost pressures creeping back and the 3.5% sales decline in Q3.

I caught a note from TD Cowen who downgraded the stock. In their words, “We maintain conviction in the company’s path to gross margin expansion over the medium term but expect less expansion in 2025 as the favorable tailwinds from commodity cost deflation in pulp & paper are beginning to reverse.”

However, I still think this is one of the best Dividend King stocks you can buy. KMB has one of the highest dividend yields among Dividend Kings at 3.92% and has 53 consecutive years of dividend increases. You can’t deny that it’s a “forever stock.”