Investing in quality dividend stocks can put you on a path to financial freedom. Focusing on durable brands that generate consistent profits can deliver a passive and growing income stream for life. Here’s why Coca-Cola (KO +0.28%) and Constellation Brands (STZ +1.09%) might be two of the best dividend stocks to buy and hold forever.
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Coca-Cola
Coca-Cola’s brand and global distribution provide it with a wide competitive moat. It has been in business since 1886 and today operates in over 200 countries. Across the dozens of brands it owns, including Dasani and Sprite, people consume 2.2 billion servings of its products every day.
That everyday consumption makes Coke stock an ideal dividend investment. Steady sales and profits have allowed it to increase its dividend for 64 consecutive years. Based on its currently quarterly dividend of $0.53 per share, or $2.12 annualized, the stock offers an attractive forward yield of 2.5%.
Today’s Change
(0.28%) $0.23
Current Price
$82.20
Key Data Points
Market Cap
Day’s Range
$81.95 – $82.92
52wk Range
$65.35 – $85.68
Volume
11.7M
Avg Vol
17.4M
Gross Margin
61.82%
Dividend Yield
2.53%
Coca-Cola has historically paid out most of its free cash flow as dividends. Over the past year, it generated $12.5 billion in free cash flow and distributed nearly $11 billion in dividends.
It should become more profitable and efficient over time, supporting dividend increases. It is using artificial intelligence (AI) to drive greater precision in generating higher revenue per transaction. This makes Coca-Cola an excellent dividend growth stock to consider for the long term.
Constellation Brands
Constellation Brands is a top seller of imported Mexican beers in the U.S., including Modelo, Corona, and Pacifico. It also sells a portfolio of wines and spirits, including Kim Crawford, Ruffino, and Casa Noble Tequila.
Today’s Change
(1.09%) $1.42
Current Price
$132.08
Key Data Points
Market Cap
Day’s Range
$131.19 – $132.85
52wk Range
$126.45 – $176.81
Volume
1M
Avg Vol
2.2M
Gross Margin
50.98%
Dividend Yield
3.10%
The stock currently pays a quarterly dividend of $1.03, or $4.12 annualized. This brings its forward yield to about 3.1%, and it’s well covered by free cash flow. Over the past year, the company’s free cash flow totaled $1.8 billion, while it paid out $712 million in dividends.
Constellation doesn’t have the impressive dividend growth streak of Coca-Cola, but it has grown its dividend at an annualized rate of about 12% over the past 10 years.
The stock has underperformed in the past few years due to a weak sales environment. However, beer sales grew 2% year over year in the first quarter, which accounts for the vast majority of the company’s sales, while wine and spirits posted an 8% sales increase excluding divestitures. Importantly, earnings grew 7% year over year in the last quarter, demonstrating effective cost management.
Long term, the demand for beer and wine is not going away. Constellation’s high yield and relatively low payout ratio make it an excellent dividend stock to buy now.
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