3 Dividend Stocks to Hold for the Next 10 Years

Investing in stocks is a great way to build wealth. It can also be an excellent way to generate income for your portfolio by investing in dividend stocks. These are stocks in companies that pay investors a share of their profits, typically on a quarterly basis. These stocks can be a great source of income, and they also provide stability.

Hartford Funds published a paper titled "The Power of Dividends: Past, Present, and Future," and in it, the researchers noted that dividends have been an important part of the stock market's total returns. Since 1960, approximately 85% of the S&P 500's cumulative return has been generated from reinvested dividends compounded over time.

Companies that consistently raise their dividend are even better investments. According to Hartford Funds, companies that increase their dividend over time have average annual returns of 10.2%. Non-dividend payers only delivered 4.3% returns over that same period.

Image source: Getty Images.

Dividend-paying companies tend to operate sound business models, maintain prudent capital and risk management, and consistently reward shareholders, which makes them attractive for income and stable growth. If that appeals to you, here are three dividend stocks you can scoop up and hold for the next decade and beyond.

This consumer staple has a long history of dividend raises

Coca-Cola (NYSE: KO) is one of the world's largest beverage companies, boasting a strong brand and distinctive flavors that have made it a staple among consumers. Its product range includes its iconic Coca-Cola soft drink as well as other soft drinks, juices, teas, and coffees. The Coca-Cola brand is unrivaled, and customer loyalty allows it to maintain premium prices and pass on any rising costs.

In addition to its recognizable brand, Coca-Cola has a vast distribution network and a considerable shelf presence in grocery stores. It is also adapting to changing customer tastes by introducing new products, such as low-calorie, energy, and sports drinks.

The company also has a relatively asset-light business model, as it primarily focuses on producing and selling syrup concentrate to bottling partners who handle the more capital-intensive parts of the business. As a result, Coca-Cola can keep capital costs lower and generate significant free cash flow, which it uses to reward shareholders with dividends.

Coca-Cola has raised its dividend for 63 consecutive years, an impressive streak that ranks among the best in the industry. This proven track record of payouts demonstrates Coca-Cola's commitment to shareholders, making it an excellent stock for investors seeking income.

A strong business model helped this company raise its payout over five decades

Automatic Data Processing (NASDAQ: ADP) is another dividend payer with a long history of dividend growth. The company provides human capital management services, including payroll and HR compliance. These are essential parts of any business, which help provide it with stable revenue.

The company also operates on a subscription model, which provides it with a recurring revenue stream. Additionally, switching costs for customers can be high, and the company aims to achieve high customer satisfaction, which in turn leads to very high customer retention. For its fiscal year ending June 30, ADP's employer services retention rate was 92%.

ADP has raised its dividend payout for 51 consecutive years and is another reliable dividend stock with a strong track record of delivering for its investors.

This specialty insurer pays a bonus dividend

RLI (NYSE: RLI) operates a specialty insurance business model that generates consistent revenue, which helps fuel its growing dividend. Unlike traditional insurance companies, RLI focuses on unique, hard-to-place risks that fall outside of the standard property and casualty insurance markets.

As a specialty insurer, RLI relies on an extensive history of risk management and covering less-understood risks. These markets tend to have less competition because the risks are unique, which allows RLI to price policies accurately and profitably. The company has done an excellent job of this, as evidenced by its 29-year streak of underwriting profits.

The company's dividend yield is a modest 1%, but it frequently supplements it with a special cash dividend at year-end. This payout structure allows it to maintain a steady dividend while rewarding shareholders with a "bonus" payment when cash flow surges. In 2025, RLI's special dividend is $2 per share, or about a 3% yield based on its recent share price.

RLI is another company with an extensive history of dividend increases, having raised its payout for over 50 consecutive years.

Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.