3 Dividend Growth Stocks With Unstoppable Businesses to Buy and Hold Forever

Key Points

• These companies have strong businesses with plenty of room to keep growing.

• They all well-known names with highly recognizable, strong brands.

• These are low-risk stocks suitable for long-term investing.

• 10 stocks we like better than Coca-Cola ›

If you want to invest in a safe, dividend growth stock you can feel comfortable owning for the long haul, it's important to consider more than just ratios telling you whether the payout is safe and if there's room for dividend increases. It's also important to consider factors such as the strength of the company's brand and its long-term growth prospects.

It can be incredibly difficult to project how a business might do 10-plus years down the road. But you can reduce the overall risk of investing in a dividend growth stock by selecting one that has an incredible business model, and which has plenty of runway to grow bigger and become more valuable in the future.

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Three dividend growth stocks that fit these criteria and can be excellent income-generating investments for years include Coca-Cola (NYSE: KO), Walmart (NYSE: WMT), and McDonald's (NYSE: MCD).

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1. Coca-Cola

In February, Coca-Cola announced that it would be increasing its dividend for a 63rd consecutive year. The stock is a Dividend King, which is a collection of dividend growth stocks with streaks spanning at least 50 years. Even in that exclusive club, Coca-Cola has set itself apart with one of the longest streaks.

Coca-Cola's iconic brand puts it in a tremendously strong position for the long haul, as consumers often seek out its products. And even as demand has been shifting to healthier options over the years, Coca-Cola has adapted. Its popular Coke Zero products are a great example of that. Plus, Coca-Cola has diversified through acquisitions, with the business now encompassing over 200 brands.

At 2.9%, it already offers a great dividend yield today. With strong profit margins of around 26% of revenue, the business continuing to grow steadily in recent years, and a lot of resources at its disposal to help grow its operations in the future, Coca-Cola is a no-brainer income stock to hang on to for the long haul.

2. Walmart

Retail giant Walmart is another example of an unstoppable dividend stock to own. This year, it raised its dividend by an impressive rate of 13%. And the increase marked the 52nd straight year when it has raised its payout.

Walmart is a growth beast with loads of potential to become larger and more profitable in the future. It has been expanding online, and its acquisition of TV-maker Vizio last year can accelerate its ad business. And what astounds me is that Walmart, as big as it is, operates stores and clubs in just 19 countries. Internationally, there's a ton of growth potential for the business to tap into in the long run.

For a behemoth such as Walmart, which has generated $685 billion in sales over the past four quarters, it looks unstoppable, especially as it expands into new opportunities and possibly more markets. Although its yield is modest at less than 1%, with continued increases, this can prove to be an excellent dividend-generating investment to hang on to for years to come.

3. McDonald's

Another iconic brand that consumers will be familiar with is McDonald's. The company's golden arches are usually cleverly positioned high enough so that travelers can easily spot them from far away. It has a vast global presence, with around 38,000 restaurants spanning well over 100 countries and territories. The fast food chain tweaks its menu to adapt to local cultures, and that flexibility allows the business to succeed and cater to a wide range of customers.

And with many value options, eating at a McDonald's can often be a relatively cheap option for consumers to consider, whether they're traveling or just want a quick meal. The versatility of its operations is what makes it likely that McDonald's will continue to be a top fast food chain for years to come.

The company's 32% profit margins over the past year are impressive and highlight why McDonald's can be an excellent investment to hang on to. Even if it needs to reduce prices to lure in more customers, it can afford to do so while still maintaining a high level of profitability.

At 2.3%, the stock offers investors a decent yield, and McDonald's has been increasing its payout for 48 consecutive years.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.