2 of the Safer Dividend Stocks to Buy and Hold Forever

There is no risk-free investment, and any claim to the contrary is probably a scam. But some businesses look solid enough to still be strong in five, 10, or even 20 years. Companies in this category aren’t run of the mill, and they are worth the effort it takes to find them.

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

1. Microsoft

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

Its operating system carries high switching costs. Many of its software programs are invaluable to students, professors, and businesses in their day-to-day activities — think Excel, Teams, Word, and more. Jumping ship to one of its competitors isn’t 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 driver isn’t gaming or its OS. That title goes to the company’s cloud computing arm, which has gained even more momentum thanks to the recent rise of artificial intelligence (AI), with various AI tools on its Azure cloud platform. In its latest period (the fourth quarter of its fiscal 2024, ended June 30), Microsoft’s revenue grew by 15% year over year to $64.7 billion. Azure revenue grew almost twice as fast — at 29%. CEO Satya Nadella said of Azure: “Our share gains accelerated this year driven by AI.”

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

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

2. Coca-Cola

Coca-Cola might not seem like an exciting investment in the age of AI and other cutting-edge technology. But a “boring” company that sells a vast portfolio of drinks in many different categories worldwide might be precisely what the doctor ordered, at least for those risk-averse, long-term income seekers.

The company’s brands include some of the best known in the business, beyond its namesake drink. With Minute Maid juices, Dasani water, Powerade sports drinks, Gold Peak iced tea — even alcohol and coffee — its highly diversified lineup has something for almost everyone. The worldwide popularity of the brand is a potent competitive advantage: It’s hard to find a country where at least some of Coke’s products aren’t sold.

The result is steady and predictable financial results (the pandemic was an understandable exception). Some of its products have lost popularity due to health-related concerns, but management is getting around that problem through diversification across multiple drink categories and healthier, low-sugar versions. It’s the kind of adaptability we should expect from a company that has been in business for more than 100 years and will likely remain so for many more years.

What about the dividend? It has one of the most incredible streaks on the market, having increased its payout annually for 62 consecutive years; its forward yield of 2.71% is above the S&P 500‘s average of 1.32%. It’s hard to see that dividend streak ending anytime soon, meaning investors can safely hold Coca-Cola’s stock in their portfolios.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.