Investing in companies that have paid dividends for decades is the best starting point to look for safe passive income. These are companies that have been tested against multiple economic cycles but have continued to deliver returns to shareholders.
Here are two dividend stocks that could pay you extra cash for the rest of your life.
1. Coca-Cola
Coca-Cola (NYSE: KO) is one of the safest stocks to buy if you’re looking for a balance of high yield and growth. The company benefits from a recognizable brand, high margins, and a worldwide-distribution network. This has enabled the business to grow its dividend every year for 62 years.
It’s a simple business. The company maintains high annual-sales volumes by marketing across a large portfolio of beverages. In addition to trademark Coca-Cola, it owns brands across water, energy, coffees, teas, and juices. The breadth of selection allows the company to meet demand for almost any type of non-alcoholic beverage. Over the last year, the company generated $10 billion in profit on $46 billion in revenue.
Management continues to squeeze every last drop of profit out of operations. It has already gained nearly $3 billion in proceeds from making adjustments to its bottling network and equity investments. The company is testing the use of artificial intelligence (AI) to provide suggestions to retailers to improve sales volumes and revenue. Management believes they are just scratching the surface with this technology, which could lead to improving financial results over time.
Coca-Cola has remained very resilient through the macroeconomic headwinds over the last few years. The company is currently paying out two-thirds of annual earnings per share (EPS), bringing its forward-dividend yield to 2.73% — well above the S&P 500 average of 1.30%.
The stock offers solid value that should pay shareholders passive income for a lifetime.
2. Home Depot
Home Depot (NYSE: HD) is another relatively safe dividend stock that has delivered solid returns for years. It is the world’s largest home-improvement retailer, which paved the way for 37 years of consistent-dividend payments, and the growth opportunities still ahead in a fragmented industry should lead to many years of dividend growth.
The business is wrestling against higher interest rates that pressured demand for home projects. Comparable-store sales, which measure the sales performance of stores open at least one year, fell last quarter, and the company expects full-year comp sales to be down 3% to 4% year over year. However, the stock is close to hitting new highs as investors price in the impact of lower interest rates, which will make financing projects more affordable. Meanwhile, Home Depot still has a substantial-growth runway ahead.
There is more than $35 trillion worth of homeowners’ equity in the U.S., and Home Depot estimates its addressable market at $1 trillion. After four decades of growth, the business commands a small share of this opportunity, with $152 billion of trailing revenue.
While the company’s revenue is not immune to weakness in the housing market, Home Depot is an attractive investment because it has relatively low-market share in a market that should continue to grow over the long term.
Plus, the stock offers a great yield. Home Depot currently pays out 60% of expected full-year earnings, bringing the forward-dividend yield to 2.20%.
Home Depot has a resilient business that has proven it can withstand ups and downs in the real estate market. The stock should pay dividends for decades to come.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.
Want Safe Dividend Income in 2025 and Beyond? Here Are 2 Stocks to Buy. was originally published by The Motley Fool
