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3 Dividend Stocks That Can Stay in Your Retirement Portfolio for Decades

When you add stocks to your retirement portfolio, you ideally want companies with long-term growth prospects that also pay a dividend. Generally -- at least for much of your holdings -- you also want market leaders that have shown they will be around for the long haul (barring some unforeseeable disaster).

Nothing, of course, is forever. Sears would have been a very good investment for a long time had you purchased it before or even during the many decades in which the company was a dominant retail force. That chain's fall shows that there's no such thing as a stock that's a sure bet forever, but there are companies you can buy and check in on occasionally simply to make sure nothing terrible has happened (Eddie Lampert buying a big stake would be a potential red flag).

These three companies might not endure forever, but they're built to thrive for decades to come. All three pay a dividend, and all three have shown the ability to steadily grow their business.

Starbucks has shown that it has a resilient business model. Image source: Starbucks.

Starbucks

Starbucks (NASDAQ: SBUX) has become ubiquitous in the United States and has a strong presence in countless other countries. The company has found a business model that works, and its sheer size has helped it marginalize competitors in what was previously a fractured space.

The coffee chain has refined its operations, which allows it to expand rapidly but without fear of failure. Yes, it has local competitors -- even big ones like Luckin Coffee in China -- but the company's size and the customer relationships it controls through its loyalty program make competing an incredibly expensive proposition.

Starbucks still has significant global growth ahead. It's opening roughly a store a day in China and has figured out how to operate its existing locations more effectively. It has also increased its quarterly dividend from $0.16 in 2015 to $0.41 in the most recent quarter.

Microsoft

Microsoft (NASDAQ: MSFT) has turned its business from one based on sales to one that makes its revenue from subscriptions and ongoing services. That's a model for sustained success, since the company no longer has to make one big sale. It can instead offer affordable subscriptions and services that scale with the size of its customers' businesses.

The technology giant has also steadily increased its dividend recently, raising it from $0.46 to $0.51 per share each quarter. That's in line with its annual increases since it first offered a $0.16 dividend in 2011.

McDonald's

Fast-food giant McDonald's (NYSE: MCD) has shown that it can adapt to a changing dining landscape. The company has overcome fears that its product would become less popular as fast-casual chains offering higher-quality but more expensive food grew in popularity.

Fast casual has threatened fast food, but McDonald's has shown that a market exists for cheap, familiar fare served up efficiently. The chain has learned the value of technology and focusing on ease of use for customers. It has also embraced delivery, app-based ordering and payment, and even using artificial intelligence to increase order sizes.

McDonald's has also insulated itself from the ups and downs of the restaurant business by having the majority of its locations operated by franchisees. That pushes more risk and expense onto those owner/operators and away from the company, giving it more revenue certainty, which should protect its dividend. And the dividend just increased by 8% to $1.25. The company has "raised its dividend for 43 consecutive years since paying its first dividend in 1976," according to a press release.

You should love the company

With any stock bought to hold for extended periods of time -- maybe decades for these three -- you want to be a fan of the brands. If you are a coffee drinker and love Starbucks, you'll be more in tune to whether something fundamentally changes with the product over a long while.

The reverse is true if you're a vegan who never eats at McDonald's and actively has an issue with the company -- that probably makes it a brand you don't want sitting in your retirement portfolio.

These are set-it-and-(mostly)-forget-it investments. Be a diligent investor and look in on the companies a few times a year, but don't worry about the short-term stock price. The value of the stock should go up over time, and you're being paid via dividend to ride out any bumps or stumbles along the way.

10 stocks we like better than Starbucks
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline owns shares of Microsoft. The Motley Fool owns shares of and recommends Microsoft and Starbucks. The Motley Fool owns shares of Luckin Coffee Inc. and recommends the following options: long January 2021 $85 calls on Microsoft. The Motley Fool has a disclosure policy.


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