4 Dividend Stocks to Hold for the Next 10 Years

Many people like to collect periodic income from their investments. After all, it's a good way to make your money work for you.

Dividends can be an important component of a stock's total return. If you plan on holding shares for at least a decade, the payments can add up.

These four dividend stocks, with market-beating yields, make excellent selections for dividend-seeking investors who plan on holding them for at least a decade. They have raised payouts for many years and have both the willingness and wherewithal to continue raising them.

1. Coca-Cola

Earlier this year, Coca-Cola (NYSE: KO) raised its quarterly dividend by 3.9%, from $0.51 to $0.53. The dividend raise should come as no surprise, given that the company has done it for 64 straight years. That makes Coca-Cola a Dividend King, one of an illustrious group of companies that have increased dividends annually for at least 50 straight years.

Fortunately, the beverage company has evolved its business to stay competitive. It's expanded beyond soda, with a product lineup that includes water, juice, value-added dairy, and plant-based beverages.

At the current dividend rate, the shares have a 2.6% dividend yield, much higher than the S&P 500 index's 1.1%. Coca-Cola's payout ratio of 65% shows that its earnings easily cover the payments. The ratio is calculated by dividing dividends by earnings.

2. PepsiCo

PepsiCo (NASDAQ: PEP) is another Dividend King. Earlier this month, the company announced a 4% dividend increase to a quarterly rate of $1.48. It has paid dividends for more than 60 years and boosted them for 54 consecutive years. The company sells beverages and food, including chips, oatmeal, pasta, and rice.

At the new $5.92 annualized dividend rate, PepsiCo's shares have a 4% dividend yield. That's nearly four times the S&P 500 yield. PepsiCo has a payout ratio of 89%.

3. Procter & Gamble

Procter & Gamble (NYSE: PG) has paid a dividend since 1890. And it's raised them for 70 straight years. You don't build that track record without being committed to rewarding shareholders with dividends.

And its stable of everyday products that command high market shares gives investors confidence that the streak will continue. It sells items like detergent, razors, toothpaste, and diapers under brands like Tide, Gillette, Crest, and Pampers.

The board of directors raised May's quarterly payout by 3% to $1.0885 a share. Procter & Gamble's stock has a 3.1% dividend yield.

The business generates plenty of free cash flow (FCF), or operating cash flow minus capital expenditures. For the first nine months of the fiscal year, ended on March 31, the company generated over $11 billion in FCF. That easily covered the $7.6 billion in dividends.

4. Realty Income

Realty Income (NYSE: O) is a real estate investment trust (REIT). These structures appeal to dividend-seeking investors since they are required to pay out at least 90% of their taxable income as dividends.

Realty Income, which primarily owns retail properties, pays dividends monthly. The company typically raises dividends quarterly.

It hasn't reached 50 years of increases, but that's only because Realty Income became a public company in 1994. Since then, the company has increased the payout 134 times, including 114 straight quarters.

It last raised the payout in April, increasing the monthly amount from $0.27 to $0.2705 per share. That works out to a dividend yield of 5.2%. In April, the FTSE Nareit All Equity REITs Index had a 3.7% yield.

When looking at REITs, adjusted funds from operations (AFFO) is a useful metric because it shows you the company's cash available for distribution. Management forecasts AFFO per share of $4.41 to $4.44. That's plenty to cover the current $3.25-per-share annualized dividend.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.