3 Dividend Stocks to Buy and Hold for the Next 5 Years
When you are buying a dividend stock to hold for five years, the flashy growth names matter less than a simple question: Will this company still be selling its products and paying its dividend no matter what the economy does? Consumer goods companies are built for exactly that kind of durability, because people keep buying groceries…
When you are buying a dividend stock to hold for five years, the flashy growth names matter less than a simple question: Will this company still be selling its products and paying its dividend no matter what the economy does?
Consumer goods companies are built for exactly that kind of durability, because people keep buying groceries and pantry staples in booms and recessions alike.
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The three names below are not the most talked-about stocks on the internet, and that is part of the appeal. Each pairs a long dividend history with a real plan for the years ahead.
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1. Hormel Foods: A Dividend King in the middle of a comeback
Hormel Foods (NYSE: HRL) is one of the most reliable dividend payers in the entire market. It has paid an uninterrupted quarterly dividend since going public in 1928 and raised that payout for decades, earning it Dividend King status. (A Dividend King is any company that has raised its annual dividend for 50 or more consecutive years.) The yield today sits comfortably above the market average, which is unusual for a company this steady.
There is also a structural reason to trust the dividend: The Hormel Foundation owns nearly half the company and depends on those payments to fund its charitable work, so cutting the dividend is close to unthinkable.
The business itself is in the middle of a turnaround it calls Transform and Modernize, a mix of cost cuts and investment in manufacturing and technology aimed at lifting profits. It is working. Hormel has posted several straight quarters of organic sales growth; its Planters nut business is back on track; and it keeps leaning into the protein and snacking trends with brands like Spam, Skippy, and Applegate. The risk to watch is that its payout ratio has crept high after a rough stretch, so the turnaround needs to keep delivering for the dividend to keep growing at a healthy pace.
2. McCormick: The quiet toll taker on flavor
McCormick (NYSE: MKC) may be the most boring great business in your grocery store, and I mean that as a compliment. It sells the spices, seasonings, and condiments that go into food everywhere, from the McCormick bottles in your cabinet to Frank’s RedHot, French’s, and Cholula, plus the flavorings it supplies behind the scenes to restaurants and packaged-food makers. That gives it a toll-taker quality: No matter which food trend wins, the flavor usually runs through McCormick.
For dividend investors, the track record speaks for itself. McCormick has raised its dividend for 40 straight years, and it recently pushed the payout up again. Its pricing power, built on trusted brands and tiny-ticket purchases people rarely trade down on, helps protect profits when costs rise. The catch is that this is a slow grower, so you are buying steadiness and rising income rather than rapid gains. Over a five-year hold, that trade can be well worth making.
3. J.M. Smucker: Coffee, pet treats, and a breakout sandwich
J.M. Smucker (NYSE: SJM) rounds out the group with a portfolio that spans at-home coffee like Folgers and Dunkin, pet snacks like Milk-Bone and Meow Mix, and its spreads business anchored by Jif and Smucker’s. The standout, though, is Uncrustables, the frozen, crustless sandwich that has grown into one of the company’s most important brands and still has room to run as it expands into more stores and channels.
Smucker’s pays an above-average yield backed by a long dividend history, which suits a patient investor looking for income. The honest risk is the balance sheet, as the company took on debt for acquisitions and has had to write down the value of some brands. Management is focused on paying that debt down and leaning into its winners, so the next five years are partly a story of getting the financial house in order while Uncrustables and coffee do the heavy lifting.
The takeaway for investors
None of these three will double overnight, and that is the point. For a five-year hold, Hormel Foods, McCormick, and J.M. Smucker offer the combination that actually compounds wealth quietly: durable demand, long dividend track records, and real plans to keep improving. Reinvest those growing dividends, stay patient, and let these unglamorous businesses do what they do best.
Should you buy stock in Hormel Foods right now?
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends J.M. Smucker. The Motley Fool recommends McCormick. The Motley Fool has a disclosure policy.
3 Dividend Stocks to Buy and Hold for the Next 5 Years was originally published by The Motley Fool
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