Key insights
- The article highlights three stocks, Coca-Cola and NextEra Energy, as long-term income investments, emphasizing durable businesses with a history of dividend growth. Coca-Cola's strong brand portfolio, consistent revenue growth, and 64-year dividend increase streak, alongside Berkshire Hathaway's endorsement, position it as a stable income play. NextEra Energy, as a leading utility, also offers reliable income potential. These selections suggest a focus on defensive, dividend-paying companies, which can be attractive in uncertain economic environments, potentially drawing capital towards these sectors.
Income investing goes far beyond merely finding stocks with high dividend yields. An attractive yield today could turn into no yield sooner than you might think with some stocks. Instead, smart income investors know that the most important step is to identify companies with businesses built to last and a long-term commitment to paying and growing their dividends.
With these kinds of companies, you don't have to fret about what will happen to the dividends when inflation surges, recession fears rise, and geopolitical uncertainty increases. They keep the income flowing (and usually growing) through it all.
Do you want income for life? Here are three stocks to buy and never sell.
The Coca-Cola Company (KO +3.66%) is a textbook example of a durable business. It was founded in 1892, nearly six years after the first Coca-Cola fountain drink was served. More than 134 years later, the company is still going strong.
Coca-Cola now owns 32 brands that generate at least $1 billion in annual revenue. The company has achieved a 7% organic revenue growth rate over the last decade, compared to 4% for consumer packaged goods peers. And it still has strong growth prospects ahead, especially in developing and emerging markets.
The stock is a perennial favorite among income investors, for good reason. Its forward dividend yield is roughly 2.7% now, but your effective future yield will almost certainly be even higher. Coca-Cola is a member of the Dividend Kings, an elite group of stocks that have increased their dividends for at least 50 consecutive years. The company's streak of dividend increases stands at 64 years.
Coca-Cola is the longest-held position in Berkshire Hathaway's (BRKA +2.11%) (BRKB +2.06%) portfolio. In his 2023 letter to Berkshire shareholders, legendary investor Warren Buffett wrote about the company: "When you find a truly wonderful business, stick with it."
NextEra Energy (NEE +0.92%) ranks as the largest utility company by market cap. It owns Florida Power & Light, the largest electric utility in the U.S., which provides electricity to around 12 million people in Florida. The company also operates the largest energy infrastructure developer in the U.S.
As a top utility, NextEra Energy arguably has one of the safest businesses around. The company provides services that consumers and businesses absolutely must have. It's also a regulated monopoly with no direct competition.
NextEra pays a dividend that yields 2.9%. The company increased its dividend by 10% in 2026 and expects around 6% growth over the next two years. NextEra's dividend payout ratio of 59% gives it the financial flexibility to achieve this goal.
One knock against utility stocks is that they usually don't deliver exceptional growth. However, NextEra Energy thinks it will grow robustly over the next decade, with rising demand for artificial intelligence (AI) one of its key growth drivers. The company also plans to acquire Dominion Energy (D +0.60%) in a deal that would make it the No. 1 utility in nearly every category.
Realty Income (O +1.82%) is the world's sixth-largest global real estate investment trust (REIT). It owns 15,571 properties leased to 1,786 clients. The company's tenants represent 92 industries, with grocery stores, convenience stores, home improvement stores, and dollar stores making up roughly one-third of its total annualized base rent.
The REIT has generated positive operation returns (year-over-year adjusted funds from operations per share growth plus dividend yield) for 31 consecutive years. Its occupancy rates have consistently topped the industry medians for decades and have never fallen below 96.6% in any year.
Realty Income offers an especially juicy dividend yield of 5.4%. The company has increased its dividend for over 31 consecutive years. Even better for income investors, the REIT pays a monthly dividend for 670 consecutive months.
What about growth potential? Realty Income checks off this box, too. Europe is an especially attractive opportunity, with an estimated total addressable market of $8.5 trillion and fragmented competition.