5 Dividend Stocks to Hold for the Next 5 Years

If you're feeling a little nervous about the market -- and you're probably not alone -- you might want to consider increasing your exposure to dividend stocks. The presence of regular payouts doesn't take away from the inherent risks, but it's a predictably steady form of income during uncertain times.

Patience pays, in more ways than one. Owning shares of Target (NYSE: TGT), Coca-Cola (NYSE: KO), Sirius XM Holdings (NASDAQ: SIRI), Verizon Communications (NYSE: VZ), and Starbucks (NASDAQ: SBUX) over the course of five years means collecting at least 20 dividend checks. All three stocks are yielding at least 3%, so the distributions will add up. However, I think all five names can also deliver outsize capital appreciation.

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1. Target

The higher the yield, the heavier the baggage. The cheap chic retailer's current 5% yield is exciting, but it also got to this point following a series of miscues that sent the shares sharply lower. A retailer won't always connect with its core shoppers, but Target has struggled on this side of the pandemic.

Target shares have surrendered more than 40% of their value over the past year. The three- and five-year charts are even worse. Target was one of the more notable companies to announce layoffs two weeks ago, but it somehow found a way to make a bad situation even worse. Technical hiccups took place during the chain's layoff video call, losing audio in the process.

Target is still a good play here, particularly in light of its multiyear pullback. You can pick up shares of the mass market retailer for a mere 11 times the midpoint of its full-year guidance. It's earning more than enough to keep its quarterly distributions coming -- and growing.

Target is a Dividend King. It has boosted its distributions in each of the past 55 years. It doesn't have a problem cutting the checks, judging by Target's conservative payout ratio. There are still some issues that Target needs to clear, but analysts see a return to growth on both ends of the income statement next year.

2. Coca-Cola

Another company with a long history of annually rising disbursements is Coca-Cola. The beverage stock giant with a globally diversified product portfolio beyond its namesake soft drinks has come through with 63 consecutive annual raises. It shouldn't have a problem stretching that run to 68 years come 2030.

Coca-Cola's yield of 3% is the lowest on this list, but that's a testament to the generational returns it has delivered through capital appreciation over those decades of hikes. Coca-Cola has earned its stripes as a recession-resistant investment, boosting its revenue and case shipment volume even through the Great Recession. It's a low-beta stock that should weather the next bear market better than the market averages.

3. Sirius XM

Most investors outside of Warren Buffett haven't given satellite radio a fair shake in recent years. On the surface, that's fair. Sirius XM's revenue is declining for the third year in a row, even though last week's quarterly update showing a mere 0.6% year-over-year decline is a sign of stability. With a base of 33 million subscribers, Sirius XM is still a force in premium radio entertainment.

Last week's update was a "beat-and-raise" performance, as Sirius XM exceeded Wall Street profit targets and boosted guidance across all three metrics that it reports. Patient investors are getting a 5% yield, and those payouts have moved higher every year since a dividend policy was introduced nine years ago. The stock is trading for less than 8 times trailing earnings, and with low gas prices, a return to in-office work, and the average age of cars on the road at a historic high, the tailwinds are coming for an industry that is boosted when driving and new car sales are on the rise.

4. Verizon

At the high end of the yield menu, Verizon leads the way with its 7% dividend. Serving 146.1 million consumer and business accounts, the wireless carrier is a slow but steady producer. Investing in Verizon means bracing for single-digit revenue growth. It hasn't topped 6% in top-line annual growth since 2009, but it's a money machine.

Verizon has been generating a double-digit normalized net income margin for more than a decade. Consumers are willing to cut the cord and other luxuries in their daily lives, cutting the cordless is a last resort. The smartphone has become an indispensable handheld computer that is essential in today's society. Like Sirius XM, Verizon is trading at a single-digit earnings multiple. There are fates far worse than being cheap and slow in today's richly priced market.

5. Starbucks

Let's close with an iconic brand that has fallen on hard times. The baron of barista's 4% in sales growth for its latest quarter may not seem like a caffeinated showing, but it's the strongest top-line move for Starbucks since the end of 2023. Last week's quarterly report was also its first time posting positive global comps after seven negative quarters.

Its 3.1% yield is a decent payout as investors await the "Back to Starbucks" turnaround being orchestrated by rock star quick-service CEO Brian Niccol to play out. He is bracing investors to expect this to be a multiyear revival process, but when you have more than 40,000 locations across the planet that's more than fair. With growth expected to accelerate in these next two fiscal years, it may be time to return to the siren.

Rick Munarriz has positions in Sirius XM, Target, and Verizon Communications. The Motley Fool has positions in and recommends Starbucks and Target. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.