2 Overlooked and Unloved Dividend Stocks to Buy and Hold Forever

For income investors, sometimes the best combination is finding stocks that are oversold and also pay dividends. Not only are dividends a fantastic way to grow wealth over the long term, but reliable income can help investors while they wait for stocks to rebound. Here are two actions that mostly passed after S&P 500 over the past three years, but which offer stable long-term businesses and respectable dividend yields.

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McCormick (MKC -1.40%) is a global leader in flavors, spices and seasonings, in two segments that generate more than $6.5 billion in annual sales in 150 countries and territories. It has a long list of name brands that boast leading positions in many markets.

Just this week, McCormick declared a quarterly dividend of $0.42 per share, marking the spice company’s 100th year of consecutive dividend payments. The dividend yield currently stands at a respectable 2%.

One driver of business growth came from management’s Comprehensive Continuous Improvement (CCI) savings program, which contributed to a 60 basis point improvement in gross margins in the second quarter compared to the prior year. Management expects the trend to continue with higher gross margins in the second half of 2024 compared to the first half of the year.

Management is also focusing innovation on specific higher-growth product opportunities, which should help reverse the overall sales volume slowdown. It is also true that McCormick’s divestment of a small canning business is currently weighing on sales results.

As management focuses on larger growth opportunities while improving gross margins with its CCI program, the company has demonstrated that it will continue to return value to shareholders as they wait for the stock price to gain ground going forward.

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While investors may not recognize or follow Stanley Black & Decker (SWK -1.81%) stock, chances are it’s still a familiar name to you. The company is a global leader in outdoor tools and products and operates manufacturing facilities globally. Stanley Black & Decker owns an impressive list of other brands that include DeWalt and Craftsman, among others.

Stanley Black & Decker is in a similar position to McCormick as it works diligently to reduce its cost structure and expand margins. The good news is that significant progress has been made, with Q2 gross margins up 28.4% or 600 basis points year over year.

As Stanley Black & Decker uses these cost-cutting savings to continue growing its strong brands, it is also reducing debt. The company’s cost cutting and strong cash generation in Q2 supported the $1.2 billion reduction in debt. Investors should not forget the respectable dividend yield of 3%.

As the company continues to cut costs and reinvest in high-opportunity products and brands, it remains a solid long-term hold for income investors. Look at how consistently Stanley Black & Decker has distributed dividends over time.

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Both companies have trailed the S&P 500 for the past three years, but are working diligently to improve operational efficiency and reduce costs. Both companies have a roster of stellar brands that can and will fuel growth again through innovation and reinvestment. It will take time for their shares to regain traction in the market, but they are positioned to bounce back in the coming years — and provide respectable dividend yields while investors wait.