2 of the safest dividend stocks to buy and hold forever

There is no risk-free investment and any claim to the contrary is likely a scam. But some businesses look solid enough to still be going strong in five, 10 or even 20 years. Companies in this category are not ready and worth the effort to find them.

For those who need inspiration, let’s consider two excellent candidates: Microsoft (MSFT 0.84%) and Coca cola (K.O 0.94%). These long-time market leaders, both of which are also top dividend stocks, are worth holding for good. Read on to learn more.

1. Microsoft

A list of companies whose products are used by millions of people every day will feature Microsoft prominently. The company is by far the leader in computer operating systems (OS) and one of the biggest players in gaming. Its competitive edge in both areas should help it remain a leader for a long time.

Its operating system involves high switching costs. Many of its software programs are invaluable to students, teachers and businesses in their day-to-day activities – think Excel, Teams, Word and more. Jumping ship to one of its competitors is not easy. Microsoft also benefits from the network effect in gaming: the more games its devices and consoles have, the more it attracts gamers.

That said, the biggest growth factor isn’t the games or its operating system. That title goes to the company’s cloud computing group, which has gained even more momentum thanks to the recent rise in artificial intelligence (AI) with various AI tools on its Azure cloud platform. In the most recent period (the fourth quarter of fiscal 2024, ended June 30), Microsoft’s revenue rose 15% year over year to $64.7 billion. Azure revenue grew nearly twice as fast — to 29%. CEO Satya Nadella said of Azure: “Our stock earnings have accelerated this year because of AI.”

Indeed, the company has approached the leader in cloud computing, Amazon (NASDAQ: AMZN)for some time. Cloud computing represents an important long-term opportunity for Microsoft.

With an incredibly strong core business — Microsoft has an AAA rating, the highest possible, from Standard & Poor’s — and a competitive edge, the company looks set to remain successful for many years to come. It should also continue to reward investors with payout increases. The stock’s forward yield of 0.72% might not be impressive, but its dividend has grown 142% over the past decade. And no doubt there is more to come.

2. Coca-Cola

Coca-Cola might not seem like an interesting investment in the age of AI and other cutting-edge technologies. But a “boring” company that sells a vast portfolio of beverages in many different categories around the world could be just what the doctor ordered, at least for risk-averse long-term income seekers.

The company’s brands include some of the most well-known in the field, beyond the drink of the same name. With Minute Maid juices, Dasani water, Powerade sports drinks, Gold Peak iced tea — even alcohol and coffee — its highly diverse lineup has something for just about everyone. The worldwide popularity of the brand is a strong competitive advantage: it is difficult to find a country where at least some of Coca-Cola’s products are not sold.

The result is consistent and predictable financial results (the pandemic was an understandable exception). Some of its products have lost popularity due to health concerns, but management is addressing this problem by diversifying into more beverage categories and healthier, lower-sugar versions. It’s the kind of adaptability we should expect from a company that’s been in business for more than 100 years, and is likely to stay that way for many years to come.

What about the dividend? He has one of the most incredible streaks in the market, increasing his payout annually for 62 consecutive years; its forward yield of 2.71% is above S&P 500his average of 1.32%. It’s hard to see this dividend streak ending anytime soon, which means investors can safely keep Coca-Cola stock in their portfolios.