Two Dividend-Paying Stocks Worth Holding Long-Term: A Closer Look

Understanding Sustainable Dividend Income

For income-focused investors, the key to building wealth isn’t just about finding stocks with high payouts—it’s about identifying companies that can reliably deliver those dividends while maintaining competitive advantages. Many businesses boast impressive dividend yields, but only a select few combine financial strength with consistent growth potential.

Two names repeatedly stand out in conversations about reliable dividend stocks: Coca-Cola and Home Depot. Both have demonstrated the ability to reward shareholders year after year while navigating economic cycles.

Coca-Cola: Six Decades of Consistent Payouts

Coca-Cola (NYSE: KO) remains a global beverage powerhouse, with products available in over 200 countries. Beyond its core cola business, the company has diversified into waters, juices, teas, and plant-based beverages to stay relevant as consumer preferences shift.

Revenue Growth and Market Performance

Recently, Coca-Cola’s adjusted revenue climbed 6% in Q3, driven by pricing power and favorable product mix changes. While volume growth has been modest—largely due to consumer caution amid economic uncertainty—the company continues to capture market share. This suggests that when economic conditions normalize, Coca-Cola is well-positioned to accelerate.

Dividend Strength

What truly sets Coca-Cola apart is its dividend track record. The company has increased payouts for 63 consecutive years, a distinction that places it among an elite group of “Dividend Kings.” Its recent 5%+ payout increase in early 2025 reflects management’s confidence in future earnings.

The financial metrics support this optimism. Coca-Cola’s payout ratio sits at a sustainable 67%, leaving room for reinvestment and growth initiatives. At current valuations, the stock offers a 2.9% dividend yield—significantly higher than the S&P 500’s 1.1% average.

Home Depot: Weathering Cyclicality With Strong Free Cash Flow

Home Depot (NYSE: HD) dominates the home improvement retail space and has aggressively expanded its professional contractor business through strategic acquisitions like SRS Distribution and GMS.

Current Headwinds and Long-Term Positioning

The company faces near-term challenges. In its fiscal Q3, same-store sales growth stalled at just 0.2%, held back by declining customer traffic. However, Home Depot’s business is inherently cyclical—when housing markets and consumer confidence improve, demand for home improvement projects will surge, and Home Depot’s scale ensures it captures the bulk of that spending.

Dividend Sustainability

Here’s where Home Depot excels: the company generated $10.4 billion in free cash flow, comfortably covering its $6.9 billion in dividend payments. Management explicitly prioritizes dividends as the first use of cash after business reinvestment, reflecting a shareholder-friendly capital allocation strategy.

Home Depot has raised dividends every single year since 2010—and remarkably, it maintained payouts even throughout the 2007-2009 financial crisis. Currently trading at 2.6% dividend yield, the stock offers compelling income potential for patient investors.

Key Metrics Comparison

Both companies showcase financial discipline. Coca-Cola’s consistent revenue growth and market share gains provide pricing power, while Home Depot’s cash generation capabilities provide a safety cushion for dividend sustainability. Each has carved out a defensible competitive moat in its respective industry.

For investors seeking the best stocks that combine income with durability, these two merit serious consideration as long-term portfolio holdings.