3 Magnificent Dividend Stocks to Buy Today and Hold for 20 Years

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Individuals seeking reliable dividend-paying stocks to augment their passive income might discover appealing prospects in 2025. The recent period marked by elevated inflation and interest rates has exerted strain on the financial performance and stock values of leading consumer brands. Consequently, this situation has caused the dividend yields of several top companies to rise to enticing levels.

To provide some suggestions, three writers from Fool.com think that investing in Target (TGT), Starbucks (SBUX), and Philip Morris (PM) is a wise decision at the moment. Here’s why these companies are expected to keep increasing their dividends to shareholders for many years.

Low price, top dividend

Jennifer Saibil (Recommendation): Although Target’s sales have been dropping recently, there are compelling arguments suggesting it could make a comeback. Given its low cost and high-yielding dividend, the current moment might present an excellent opportunity to invest in this stock.

Over the recent years, Target has faced numerous challenges, causing its stock to plummet by 62%, far from its peak. In the immediate future, it’s likely that things won’t change significantly; customers are hesitant to make non-essential purchases due to inflation, and the home improvement sector is struggling because of a sluggish real estate market. During the first quarter of their 2025 fiscal year (ending May 3), sales dropped by 2.8% compared to last year, with comparable sales falling even more sharply at 3.8%.

Despite experiencing advancements in critical sectors such as cost reduction and a 19% increase in operating income year on year, it continues to shine as a top performer in omnichannel services. Furthermore, digital sales growth was 4.7% higher than last year during the first quarter, and same-day delivery sales through the membership program saw a significant rise of 35%.

The company has established a new department, the Enterprise Speed-up Hub, with a primary focus on enhancing the organization’s adaptability and connectivity by utilizing technology and data more effectively. Their objectives include boosting efficiency and swiftness, which aligns well with their existing digital capabilities.

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In 2017, Target found itself in a comparable scenario prior to the pandemic. At a time when most weren’t focusing on digital channels, Target made strategic investments in them. This move proved advantageous during the pandemic, as it allowed Target to thrive early on. Today, it continues to follow a similar strategy.

As a dedicated investor, I can’t help but marvel at the resilience of Target, a true Dividend King, boasting an impressive 54-year streak of raising its dividends. This consistency speaks volumes about its reliability and growth potential. Currently, the dividend stands at a generous 4.4%, making it an attractive proposition for income-focused investors like myself.

If you haven’t already purchased this stock, now might be a good opportunity as it is currently undervalued with a low price-to-earnings (P/E) ratio of just 11. Over a period of 20 years, if you were to invest and hold onto this stock, you could potentially see significant returns from both the stock’s growth and its dividends.

Starbucks offers an appetizing yield of 2.6%

John Ballard (Starbucks): Over the past few years, Starbucks shares haven’t done as well compared to market indices. Interestingly, the share price remains nearly unchanged from 2019. However, the company has consistently increased its dividend payments, which currently yields an appealing 2.61%.

It appears that Starbucks’ financial performance has been underperforming recently. Despite a decline in overall sales during the last year, their same-store sales have shown some signs of stabilization, with a minimal decrease of 1% compared to the previous year in the quarter ending March.

It seems that the new CEO, Brian Niccol, who joined from Chipotle last year, could be the ideal figure to revitalize Starbucks. Niccol is concentrating on creating a customer-focused brand and transforming Starbucks’ coffeehouses into destinations where customers feel compelled to return. This approach is based on a successful strategy that prioritizes putting customers first, which tends to ensure that all other aspects fall into place smoothly.

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Starbucks can be likened to the coffee industry’s version of McDonald’s, given its ubiquity. Whether this is seen as positive or negative depends on one’s perspective. For a dividend investor, however, it’s undeniably advantageous. Starbucks’ omnipresence on a global scale provides a substantial market reach and operational consistency that translates into reliable financial performances and regular dividend distributions.

For the past five fiscal years, Starbucks’ dividend has increased significantly – from $1.44 in 2019 (which ended in September) to an anticipated $2.28 in 2024. Given the current quarterly payout of $0.61, it is expected that Starbucks will distribute approximately $2.44 for the fiscal year 2025. This projection comes despite projected weak sales causing adjusted earnings to decrease to $2.47 this year. However, with Starbucks anticipated to rebound and return to growth in the coming years, the dividend should still be comfortably covered by these earnings.

Starbucks, with its well-known brand, seems poised for recovery, particularly under the leadership of a skilled CEO. At present, the company’s stock presents a strong opportunity, one that could yield increasing dividends over an extended period.

A great combination of growth and dividends

One dividend-paying stock that appears poised to bring returns for investors in the next two decades is none other than Philip Morris International, according to Jeremy Bowman.

Philip Morris International came into existence following a split between Altria and Philip Morris in 2007. In this separation, Altria retained control over its domestic operations, while Philip Morris International took charge of selling the same products globally. It turns out that the international sector has been more profitable, given that smoking rates are higher and have not decreased as rapidly outside countries like Europe, Latin America, and Asia, in comparison to the U.S.

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Currently, Philip Morris International (PMI) is leading the way with modern, smoke-free alternatives such as Iqos, heat-not-burn devices, which work similarly to vapes but employ actual tobacco instead of e-liquid. Additionally, they have achieved significant success with Zyn oral nicotine pouches, a product they acquired through their purchase of Swedish Match in 2022. The thriving market for these cutting-edge products could be the main motivation for investing in Philip Morris shares today, as they now account for over 40% of its total revenue.

Instead of following the anticipated downward trend in the tobacco industry, Philip Morris is experiencing significant progress, which sets it apart from its larger counterparts.

In the initial three months of operation, the company’s core earnings, adjusted for foreign currency fluctuations, mergers, and asset sales, increased by 10.2% to reach $9.3 billion. This growth included a significant 20.4% increase in the non-smoking segment, amounting to $3.9 billion. Interestingly, cigarette sales also saw an uptick, with a 1.1% rise in volume sales during this period, totaling $144.8 billion for the quarter.

The business additionally demonstrated robust profit growth, as adjusted earnings per share increased by 17%, reaching $1.76. As a dividend-paying entity, it currently provides a yield of 3%. Notably, this company has a rich history of increasing its dividends, which can be traced back to its association with Altria.

For many years ahead, Philip Morris’s consistent dividend stock status is likely to continue, given its robust new product lineup and the durability of its cigarette business.

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2025-07-20 04:37