3 Dividend Stocks That Should Pay You the Rest of Your Life

Dividends provide a safety net for investors, particularly in uncertain times, and finding a company that pays them and that you can latch onto for a lifetime is rare. Yet these three Motley Fool contributors believe…

Apple (NASDAQ:AAPL)BP(NYSE:BP), and Hershey (NYSE:HSY) are three such stocks you can grow old with.

Apple’s dividend is built to last

Jamal Carnette, CFA (Apple): Due to the slowing smartphone supercycle, Apple investors should no longer expect the company to be the revenue-growth juggernaut it once was. However, dividend investors should put the company on their radar as a dividend growth stock because the company has increased its dividend payout by 10.5% per year over the last three years.

Even if Apple’s top-line growth continues to slow, there’s more than enough cash to pay its dividend for years. As of fiscal Q2 (Q3 will be announced on July 30), Apple’s net cash, as defined by cash and marketable securities minus debt, amounted to $113 billion, more than enough to service the current payout of $14 billion for eight years. And it isn’t as if the company is significantly cutting into earnings to service the dividend: Its payout ratio is less than 25%.

It’s understandable that income investors would overlook Apple — at 1.5%, it currently trails the S&P 500‘s yield by almost 40 basis points — but the company is returning cash back to investors at an unheard-of clip. In the last 7.5 years, Apple has returned $364 billion in capital to its shareholders. In fact, in fiscal 2018, Apple retired 4.8% of their diluted shares outstanding through share repurchases, a de facto dividend. Apple’s manageable payout ratio, partnered with its huge cash pile and aggressive share repurchases, point to a dividend that’s built for the long term.

Far from a dying industry

John Bromels (BP): A lot of people have asked me lately if it’s even worth buying oil stocks. “In 10 years,” said one, “it’ll be all electric cars and solar panels.” So you might be surprised that I’m recommending British oil and gas giant BP as a dividend stock that should pay you for the rest of your life. But it’s true: The data suggests that BP will still be around — and still paying a dividend — for decades to come.

First, the dividend. BP recently surpassed fellow oil major Royal Dutch Shell as the highest-yielding stock among the big oil majors. The company is currently yielding 5.9% compared to Shell’s 5.8%. While that’s not a big difference, it gives BP some bragging rights.

BP can also brag about its excellent recent performance and its longtime commitment to paying a dividend. Even during the recent oil price downturn of 2014-2017 and before that, during the Deepwater Horizons oil spill catastrophe, BP continued to pay a quarterly dividend to its shareholders. That shows how important the dividend is to the company.

Of course, you can’t pay a dividend if you’ve gone belly up. But despite recent gains in renewable energy technology and increases in renewable energy’s market share, the market share of oil and gas has actually grown. Data from the U.S. Energy Information Agency projects that between 2015 and 2040, liquid petroleum usage (including oil) will increase by 18.9% worldwide, and global natural gas usage will jump by 42.7%. This is expected to happen even as renewable energy usage increases, as well.

Far from going out of business, BP should continue to be a reliable dividend stock for the rest of your life…

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