3 Magnificent Dividend Stocks to Buy Today and Hold for 20 Years

Key Points

• This Dividend King has a high yield and trades at a bargain price.

• This leading restaurant brand offers a high yield as its new CEO implements a promising strategy to return the business to growth.

• This top dividend stock is also delivering double-digit growth on the bottom line.

• 10 stocks we like better than Target ›

Investors looking for solid income stocks to boost their passive income can find some attractive opportunities in 2025. The past few years have seen high inflation and interest rates put pressure on the financial results and share prices of top consumer brands. This has driven the dividend yield up to attractive levels for several top companies.

To give you some ideas, three Fool.com contributors believe Target (NYSE: TGT), Starbucks (NASDAQ: SBUX), and Philip Morris (NYSE: PM) are solid buys today. Here's why these companies should pay growing dividends to shareholders for years to come.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Low price, top dividend

Jennifer Saibil (Target): It might seem surprising to hear that Target is an excellent stock to buy now, considering its declining sales. But there are good reasons to believe it can bounce back, and with its cheap price and top dividend, now could be a great time to take a position.

Target has dealt with a slew of problems over the past few years, and its stock is 62% off its highs. Things may not improve much in the short term; its most pressing problems today are that customers are still holding back on discretionary purchases due to inflation, and home improvement is still suffering from a low real estate market. In the 2025 fiscal first quarter (ended May 3), sales were down 2.8% from last year, and comparable sales (comps) were down 3.8%.

However, it's making progress in certain key areas, like keeping costs down, and operating income increased 19% year over year. It's also still a star in omnichannel options. Digital comps increased 4.7% over last year in the first quarter, and same-day delivery sales in the membership program were up 35%.

Management initiated a new enterprise acceleration office to focus on how the company can leverage technology and data to improve its connectedness and agility. Its goals are improving functionality and speed, and that complements its digital strength.

Target was in a similar situation in 2017 before the pandemic, and at that time, it invested in digital channels before it was what everyone was doing. That put it in a great position to excel early in the pandemic, and today it's following a similar playbook.

Shareholders may be lamenting the price drop, but they're still enjoying the top dividend. Target is a Dividend King, having raised its dividend 54 years straight. That indicates reliability and growth. At the current price, the dividend yields 4.4%.

If you don't own the stock, you can buy today while it's trading at a bargain price-to-earnings (P/E) ratio of only 11. If you can buy and hold for 20 years, you're likely to be well rewarded, from both the stock and the dividend.

Image source: Starbucks.

Starbucks offers an appetizing yield of 2.6%

John Ballard (Starbucks): Starbucks stock has underperformed the market indices the past few years. In fact, it's still trading at about the same share price in 2019. But the company has continued to grow its dividend, bringing the yield up to an attractive 2.61%.

Starbucks' business is not performing well. Sales have fallen over the past year, but its comparable-store sales are starting to flatten, down just 1% year over year in the company's March-ending fiscal Q2.

New CEO Brian Niccol, who came over from Chipotle last year, appears to be the right leader to turn Starbucks around. Niccol is focusing on building a customer-centric brand and turning Starbucks' coffeehouses into places where customers want to hang out again. This follows a proven strategy that if you take care of customers first, everything else falls into place.

Starbucks is the McDonald's of coffee. That is a good or bad thing, depending on your perspective. From a dividend investor's view, it's a good thing. With a Starbucks on every corner, it has tremendous global presence and scale that produces overall consistent financial results and dividend payments.

Over the last five years, the dividend grew from $1.44 in fiscal 2019 (ended in September) to $2.28 in fiscal 2024. At the current quarterly payment of $0.61, Starbucks should pay $2.44 for fiscal 2025. This is even as weak sales are expected to send adjusted earnings down to $2.47 this year, which is enough to cover the dividend, especially as Starbucks returns to earnings growth over the next few years.

Starbucks has the brand to get back on track, especially with a talented CEO at the helm. The stock offers solid value right now that can potentially pay growing dividends for a lifetime.

Image source: Getty Images.

A great combination of growth and dividends

Jeremy Bowman (Philip Morris International): One dividend stock that looks well-positioned to deliver for investors over the next two decades is Philip Morris International.

Philip Morris International was formed in the divorce between Altria and Philip Morris in 2007. Altria kept the domestic business, while PMI sold the same products in international market. That's proven to be the more favorable side of the business, as smoking rates remain higher in places like Europe, Latin America, and Asia, and have not declined as fast as in the U.S.

Meanwhile, PMI has also innovated with next-gen, smoke-free products like Iqos, heat-not-burn devices, which function like vapes but use real tobacco instead of liquid, and it has found success with Zyn oral nicotine pouches, which it gained in its acquisition of Swedish Match in 2022. In fact, the success of its next-gen products may be the best reason to buy Philip Morris stock today, as they now make up more than 40% of its revenue.

Unlike its big tobacco peers, Philip Morris is delivering impressive growth, bucking the expectations of declines in the industry.

In the first quarter, organic revenue, which strips out the effect of currency exchange, acquisitions, and divestitures, rose 10.2% to $9.3 billion. That included 20.4% organic growth in the smoke-free business to $3.9 billion. Even cigarette sales are still growing as well, with volume sales up 1.1% in the period to $144.8 billion in the quarter.

The company also delivered strong growth on the bottom line, with adjusted earnings per share up 17% to $1.76. As a dividend payer, the company offers a yield of 3% today, and it has a long track record of raising its payout, dating back to its days when it was tied to Altria.

With the strength of its new products and the resilience of its cigarette business, Philip Morris should remain a rewarding dividend stock for years to come.

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Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has positions in Chipotle Mexican Grill, Starbucks, and Target. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Starbucks, and Target. The Motley Fool recommends Philip Morris International and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.