2 Magnificent S&P 500 Dividend Stocks Down as Much as 25% to Buy and Hold Forever

The stock market makes it possible for anyone to build wealth, but the occasional dip is simply the price we pay for long-term returns. That's where dividend stocks can help. Even in a brutal bear market, rock-solid companies can keep sending cash to your account, making it a lot easier to stay the course.

For income-focused investors, here are two S&P 500 blue chips with long dividend-growth records -- and yields that look attractive today.

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1. Home Depot

Home Depot (NYSE: HD) is the world's largest home improvement retailer, serving a $1 trillion addressable market. Yet the stock is currently down 25% from its prior peak as the housing market has cooled.

A dividend stock's yield can offer a quick read on value. Home Depot has paid a quarterly dividend for more than 35 years. It recently raised its quarterly dividend by 1.3%, bringing the annual payout to $9.32 per share. That puts the forward yield at an attractive 2.85% -- more than double the S&P 500 average.

Sales growth has been sluggish. Comparable sales in the fourth quarter rose just 0.4% year over year. Inflation and higher interest rates have pressured demand, but these headwinds tend to come and go in cycles.

Management is still playing the long game. It's opening more stores and leveraging a large footprint of valuable real estate -- a key advantage as more customers order online and pick up in-store. Digital sales climbed 11% year over year last quarter.

The dividend has grown about 9% annually over the past five years. With $164 billion in trailing revenue and a trillion-dollar opportunity ahead, Home Depot has room to keep growing -- and to keep paying investors a rising stream of passive income.

2. PepsiCo

Shares of PepsiCo (NASDAQ: PEP) are down about 22% from their previous peak. Yet the company is still putting up steady results, with adjusted sales up 2% in 2025. It recently raised its quarterly dividend by 4%, bringing the annual payout to $5.92 per share, effective in June. That's the 54th consecutive annual dividend increase.

PepsiCo's lineup goes far beyond its namesake soda. Alongside beverage brands like Sprite and Mountain Dew, it owns snack giants like Cheetos, Doritos, and Lay's.

Just as importantly, PepsiCo runs a delivery network that connects directly with retail stores. Those relationships help secure shelf space and strong product visibility, supporting consistent demand. That reliability is what allows PepsiCo to generate the sales and earnings needed to fund a growing dividend for years.

With a forward dividend yield of 3.87% -- more than twice the S&P 500 average -- investors are getting a solid income stock. PepsiCo has grown its dividend at nearly a 7% compound annual rate over the past five years, and it should keep rising with earnings, which analysts expect to grow about 6% annually in the years ahead.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.