3 Dividend Stocks to Buy for Lifelong Cash Flow

Stocks to buy

Dividend stocks allow investors to get paid just by holding onto shares. This investing model can help people cover their living costs without having to sell shares. Some corporations offer high yields with limited upside in their stock prices. Other businesses have low yields but plenty of upside.

Investors should consider whether they prioritize growth or income. You can end up with both, but the scale will always lean toward one side more than the other. Dividend growth stocks can get higher total returns while dividend income stocks offer more cash flow right now.

It’s hard to tell how companies will change over many decades. However, several corporations are likely to deliver dividends for the rest of your life. Let’s delve into some of them.

United Parcel Service (UPS)

Close up of UPS logo printed on a delivery truck.

Source: Sundry Photography / Shutterstock

The United Parcel Service (NYSE:UPS) has been around for more than 115 years. The corporation has endured various economic conditions while delivering dividends to shareholders. Impressively, the corporation has been paying dividends since 1999

In recent years, UPS encountered some financial obstacles which brought the stock price down by 21% over the past year. The decline has resulted in a 19 P/E ratio and a 4.35% dividend yield. Some analysts believe the bottom is in for UPS stock.

Currently, the stock has a moderate buy rating from 20 analysts. The average price target suggests a 7% upside. It’s hard to imagine a scenario where UPS goes out of business. The company plays a critical role in the supply chain and stands to benefit as the e-commerce industry continues to grow. UPS won’t outperform the stock market anytime soon. But it offers a solid dividend and more stability than growth stocks.

Microsoft (MSFT)

ChatGPT logo seen on the smartphone, Microsoft (MSFT) logo seen on the laptop. Microsoft Copilot

Source: Ascannio / Shutterstock.com

Microsoft (NASDAQ:MSFT) is a dividend growth stock that leads in several verticals. The company has a big presence in cloud computing, personal computers, advertising, gaming, artificial intelligence (AI) and other industries. 

Additionally, the stock has handily outperformed the stock market with a 249% gain over the past five years. And analysts believe the stock has additional upside. Microsoft is rated as a strong buy with a projected 13% upside.

Dividend income investors won’t like this stock, but it appeals to dividend growth investors. The yield is only 0.72%, but the company has averaged a 10.86% CAGR for the past 10 years. Microsoft only has a 25% payout ratio, so the company has plenty of room to support further dividend hikes. 

Finally, MSFT has been giving out dividends and growing them for 19 consecutive years. Also, the firm reports consistent revenue and earnings growth each year. Profit margins continue to expand which points to more gains ahead.

Visa (V)

several Visa branded credit cards

Source: Kikinunchi / Shutterstock.com

Visa (NYSE:V) offers enticing profit margins that regularly exceed 50%. Revenue and net income are growing as more people use their credit and debit cards to buy goods and services. Visa makes a small percentage of each transaction. Unsurprisingly, this business model helped the stock gain 74% over the past five years. 

Additionally, Visa increased its revenue by 9% year-over-year (YOY) in the first quarter of fiscal 2024. Also, the company reported a 17% YOY increase in GAAP net income. Visa put $4.4 billion back into stock buybacks and dividend distributions. 

The company’s dividend model is similar to Microsoft’s. The yield is only 0.76%, but the growth rate is impressive. Visa has maintained an 18.08% CAGR for the past 10 years. The company has raised its dividend for 15 consecutive years and only has a 21.50% dividend payout ratio.

Therefore, Visa continues expanding its profit margins while growing its business. That combination suggests that dividend growth should continue for a long time.

On this date of publication, Marc Guberti held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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