3 Dividend Stocks to Hold for the Next 5 Years

Key Points

• The next five years are pivotal ones for Ford and its place within the automobile industry.

• Qualcomm is more of an AI outfit than you might recognize, which is why many investors may be underestimating it now.

• The market may reasonably fear for Verizon's future profitability, but what a yield in the meantime!

• 10 stocks we like better than Ford Motor Company ›

An intended holding period of "forever" is often a great mindset to have when looking for new stocks to buy. It's freeing, in fact, because it automatically eliminates a bunch of names that aren't worthy long-run ideas. Just don't become so regimented in your thinking that you end up ignoring some solid, shorter-term possibilities, including dividend-paying stocks.

With that as the backdrop, here's a closer look at three great dividend stocks to buy and hold for the next five years, at which time you'll want to make a major reassessment of each one. Think of these picks as long-term leases with an option to buy. See, the next five years could bring significant changes for each of these underlying companies and their industries. This change could be for the better, but this change might also start to clearly work against these companies in the meantime.

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Ford

Ford Motor Company (NYSE: F) is, of course, one of the United States' oldest and most iconic carmakers. Investors who know anything about the outfit, however, know that it's not exactly been much of a dividend stock with the most promising future for a while now. Its sales growth has been scant (if not outright negative) since the industry's peak back in the late 1990s and early 2000s.

Although the global automobile business recovered well enough from the fallout of the 2008 subprime mortgage meltdown, most of that growth has taken shape outside of the U.S., where Ford isn't much of a factor. Much of the industry's net growth since then has also been driven by sales of electric vehicles (EVs), which haven't exactly been a bright spot for the company either. EVs accounted for only about 2% of last year's total revenue, and that was down from 2023's figure.

Perhaps the most troubling detail to income-minded investors, however, is that Ford outright suspended its dividend in early 2020 due to the uncertainty of the then-new COVID-19 pandemic. While playing such defense was arguably the right call at the time, it still shows how fragile this stock's dividend payment is.

It's since been (mostly) restored, for the record. The company reinstated slightly smaller regular quarterly dividends in 2022 and has occasionally paid an additional special one-off dividend since then. But investors still aren't exactly as bullish on the company or its stock's dividends as they once were. That's why its forward-looking (regular) dividend yield of 5.3% and forward-looking price-to-earnings (P/E) ratio of just over 8 are well above and below (respectively) the industry's norms ... or most industries' norms, for that matter.

Given the company's likely ability to at least continue funding its current level of dividend payments, though, the market is pricing in more risk than it arguably needs to. You can collect a sizable dividend as a result of this mostly unmerited worry.

Why only five years? The automobile business is changing, but it's not yet clear whether Ford is built to change with it. If it doesn't look any more competitive in 2030 than it does now, there may not be enough long-term growth in store to make it worth holding on to.

Qualcomm

Most investors are familiar enough with Qualcomm (NASDAQ: QCOM), but many don't realize it's a dividend payer as well. It's not a big dividend, mind you. Its forward-looking yield of 2.3% is just average, even if its annual dividend growth is better than average. It also shines in terms of consistency. The company has now upped its annual payout every year for a couple of decades.

That's not necessarily the only or the primary reason you might want to make a point of owning a stake in Qualcomm for the coming five years, however. While its continued cash payments are certainly a nice perk, this ticker will be able to serve double duty as an income and a growth name over this timeframe.

See, Qualcomm makes value-priced performance processors for smartphones, tablets, and even some laptops. Microsoft in particular has touted its Snapdragon-powered Copilot+ PCs as capable of handling heavy-duty artificial intelligence (AI) duties from the computer itself rather than in the cloud (where it's still usually handled).

You'll also find Qualcomm's technology in advanced automobiles, augmented-reality equipment, and video game consoles. It's by no means a leader in most of these markets. But it's well-positioned to serve the consumer technology market, which is increasingly looking for affordable AI-powered solutions that will be made possible by the ever-falling costs of AI platforms themselves.

And that opportunity is certainly brewing. Mordor Intelligence believes the worldwide AI hardware market is poised to grow at an average annual pace of 26% through 2030.

Why only five years? Like Ford, you may decide to stick with Qualcomm well beyond 2030. You'll just want to make a major reassessment at that time because its penetration of the mid-priced segment of the AI hardware market could start to be stymied by other manufacturers then. The company will need to make sure it remains competitive in the meantime.

Verizon

Finally, add Verizon Communications (NYSE: VZ) to your list of dividend stocks to buy and hold with a five-year deep-dive checkup on your calendar. Verizon is, of course, one of the nation's big three smartphone service providers, controlling roughly one-third of the market. That's not all it does, but that's the source of the vast majority of its revenue.

And it's good at what it does, even if it doesn't do things all that differently or look all that different from rivals AT&T or T-Mobile. The stock just doesn't perform all that well, largely because there's little to no real growth opportunity here, other than sheer population growth.

Verizon is really, really good at generating cash flow, though a bunch of which gets passed along to shareholders. The stock's usual lethargy, paired with its dividend payments, translates into a forward-looking dividend yield of 6.3%, which you'd be hard-pressed to find with any other stock of a comparable quality. And that's based on a dividend, by the way, that's now been raised for 18 consecutive years. It's not likely to break that streak now, being so close to becoming dividend royalty.

Why only five years? The only real concern here might be debt. Verizon is sitting on $124 billion of debt (versus a market cap of $183 billion) that's costing it $1.7 billion worth of interest payments every quarter (versus quarterly net income of around $5 billion). Much of this debt load is still locked in at the relatively low interest rates of yesteryear, but a good portion of this is coming due over the next five years.

It can handle it in the meantime, but with rates already as high as they are, investors will want to gauge how much additional interest cost the company will be fielding beyond 2030. For perspective, about two-thirds of its profits are already dished out as dividends. Any more than that, profit margins could become uncomfortably and restrictively thin.

You may also want to check in on Verizon's private 5G networking venture then. It's the company's only real growth engine at this time, but a subtly promising one.

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James Brumley has positions in AT&T. The Motley Fool has positions in and recommends Microsoft and Qualcomm. The Motley Fool recommends T-Mobile US and Verizon Communications and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.