10 Dividend Stocks to Buy and Hold for the Next 50 Years

Stocks next 50 yearsAccording to the 2011 Retirement Confidence Survey, 76% of Americans have saved less than $100,000 for retirement. More than half have saved less than $25,000.

Even finding a decent return on the savings you do have is tough. Savings accounts struggle to yield 1%. Higher-yielding CDs don't offer much more.

What to do? Socking away more is an option, but it's not a very realistic one for many whose paychecks are already stretched thin and in a tough job market with stagnating wages.

It's clear we have to do more with the little savings we have. And the way to do that is by tapping into the stock market -- the most effective vehicle for long-term wealth creation ever designed.

Stocks? Really?

Some will react viscerally to the idea of putting their nest eggs anywhere within spitting distance of the stock market after the meltdowns in 2001 and 2008. Each crisis destroyed hundreds of billions of dollars in paper wealth, hurting untold numbers of Americans.

And yet it didn't have to be this way. Had you invested in the S&P 500 SPDR (SPY) -- an exchange-traded fund that roughly mirrors the return of the S&P 500 -- in January 2000 and reinvested dividends all the way through the next 12 years, you'd still have earned about 1.5% annually on your investment -- better than most bank accounts offer nowadays.

Surprised? For money that you won't need for at least five years, investing in an index fund is good strategy. Investing in well-paying dividend stocks and then reinvesting the proceeds is even better. You might even call it a relatively safe, stable way to boost retirement savings during periods of market madness.

Actually, it's better than that. Because reinvesting is optional, retired investors can choose to start taking their dividend payouts as cash at any time, turning what had been a good vehicle for producing market-beating returns into a healthy source of income.

Of Course, There Is a Caveat

Stocks are not the same as bank accounts, and an even a good dividend payer can suffer financial trouble and elect to stop writing checks to shareholders. Or worse, companies can go out of business entirely.

Yet, there are ways to reduce risks. The best strategy is to only invest in stocks money that you will not need to access for the next five, 10, 20 years or more. And if you're really a nervous nelly, then only money you can afford to lose should be earmarked for stocks.

Another strategy is to use long-term history as your guide to ferret out stocks that are most likely to pay you back over the long term.

Gallery: 10 Stocks to Buy, Hold and Prosper

10 Stocks for the Next 50 Years
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10 Dividend Stocks to Buy and Hold for the Next 50 Years

10 Stocks to Buy, Hold and Prosper

Betting on companies that are not only profitable but also have a long history of increasing their dividend payments to shareholders is as good a strategy as you'll find for increasing wealth without exposing yourself to outsize risk.

Each of these 10 businesses has been issuing ever-higher checks to their investors for at least half a century, according to the dividend-tracking site The Dynamic Dividend.

1. Diebold (DBD). This maker of safes and other security equipment yields 3% and pays out 50% of its profits as dividends. Management has increased the average payout by 5.4% annually over the past five years.

2. American States Water (AWR). This company pays a 3.1% yield as of this writing, with 45% of profits committed to dividends. This California water utility was founded in 1929 and has increased its average payout by 3.9% annually over the past five years.

3. Dover (DOV). Shares of this industrial machinery supplier yield 2.1% as of this writing, paying out 26% of profits as dividends. Management has increased the average payment to shareholders by 11% annually over the past five years.

4. Northwest Natural Gas (NWN). It pays a 3.9% yield as of this writing, with 73% of profits earmarked for dividends. This Pacific Northwest gas utility celebrated its centennial two years ago and has increased its average payout by 4.7% annually over the past five years.

5. Emerson Electric (EMR). Another member of the 100-plus club, this supplier of industrial electronics yields 3.2% as of this writing. Roughly 46% of earnings are committed to dividends. Management has raised the payout 9.1% annually over the past five years.

6. Genuine Parts Company (GPC). Yielding 3.1% as of this writing, this auto parts wholesaler pays 50% of profits back to shareholders as dividends. Management has increased the payout by 6% annually over the past five years.

7. Procter & Gamble (PG).You already know P&G -- it's one of the world's most popular consumer products companies, maker of such items as Tide detergent and Pampers diapers. What you might have missed is the company's 3.3% yield, paid from 60% of annual earnings. Management has increased its spending on dividends by 11.2% annually over the past five years.

8. 3M (MMM). Originally known as Minnesota Mining and Manufacturing when founded in 1902, 3M -- the creator of Post-It Notes -- yields 2.7% as of this writing. Management pays out 37% of profits as dividends, and 3M has increased the per-share cut by 3.6% annually over the past five years.

9. Vectren (VVC). Founded in 1912, this central U.S. utility funds a 4.9% yield by paying 80% of earnings back to shareholders as dividends. Management has increased the payout by 2.4% annually over the past five years.

10. Cincinnati Financial (CINF). The riskiest bet in the lot, this property casualty insurer pays out more than 150% of its annual profits as dividends. So while the history and current yield -- 4.6% as of this writing -- are no doubt enticing, management may be forced to curtail payments to shareholders in the coming years.

Should you invest in any of these stocks? That depends on whether you have an interest in learning more about the underlying businesses. And again, don't invest with money you'll need in the next five years. Stocks are wonderful at creating long-term wealth, but they're as dangerous as dynamite over the short term.


Still want more? For nine dividend stocks hand-picked by Motley Fool analysts, see this free report -- Secure Your Future with 9 Rock-Solid Dividend Stocks. And chime in below to share other strategies you use to boost retirement savings.

Motley Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. The Motley Fool has sold shares of SPDR S&P 500 short. Motley Fool newsletter services have recommended buying shares of Procter & Gamble, Emerson Electric, and 3M. Motley Fool newsletter services have recommended creating a diagonal call position in 3M.
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