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Best Long-Term Dividend Paying Stocks You Should Invest In

Updated: Apr 16

Reliable dividend stocks are great investments when the market is volatile.

A chart of SPY with dividends reinvested and without dividends reinvested.
SPY DATA BY YCHARTS

As stock market conditions remain volatile, investors are looking for safer companies to invest in. Companies that pay out a reliable dividend are usually the safest stocks. On the other hand, growth stocks have been taking a beating due to raging inflation and increasing interest rates.


As a result of higher interest rates, debt is more expensive, which is bad for growth companies because they rely on debt to grow their revenue. Dividend growth stocks that pay a reliable dividend are not as affected by inflation and interest rates because these companies are not utilizing debt to generate revenue.


It is always crucial to invest based on your risk tolerance. Growth stocks are feeling the heat in the short term, but they can provide great returns in the long run. Dividend stocks are never a bad choice, but the returns may be lower than growth stocks.


If you are risk-averse, dividend companies are a great investment. However, if you are young and have a long holding period, you can also pick up some riskier growth companies as they sell off.


3 of the Best Dividend Stocks


1- 3M Company

The 3M Company sells over 60,000 products, including adhesives, tapes, building materials, and cleaning supplies. It has been granted over 100,000 patents and acquires thousands of new ones each year.


The company is an excellent choice for investors seeking a safe dividend-paying stock. It trades at a P/E ratio of just 14, lower than the average S&P 500 P/E ratio, proving it’s at a nice discount.


The 3M Company also pays an incredible dividend yield of 4%. It has also repurchased shares of its stock, showing investors it is confident in the future returns of its company. Share buybacks also decrease the number of outstanding shares, thus increasing the share price for its investors.


2- Verizon Communications

Verizon runs the largest mobile network worldwide, with over 120 million subscribers. It is a multinational telecommunications company that serves businesses, consumers, and even governments globally. Its main products include communications and entertainment products.


The company trades at a beautiful P/E ratio of just 9 and generates steady and reliable revenue year over year. Verizon generates, on average, $35b to $40b in operating cash flow per year, allowing them to pay a solid 4.9% dividend yield. Its balance sheet is also excellent, as it has increased its total equity by over 50% in the last few years.


3- Coca-Cola Corporation

Coca-Cola is a classic example of a dividend growth stock. The company has increased its dividend payments for 60 years, proving it is generating reliable revenues regardless of economic conditions. During periods of elevated market volatility, stocks like Coca-Cola tend to outperform.


Coca-Cola is solid on paper, as it trades at a healthy P/E ratio of 29. The company is not increasing its revenue each year, but its operating cash flow has grown consistently. This is crucial for dividend-paying stocks because dividends are paid in cash. The company pays a dividend yield of 2.68%, but this yield is much higher for long-term investors of Coca-Cola.


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