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Over the last decade, these five companies have distributed more than $500 billion to shareholders, consistently increasing their dividends each year.
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The yields vary widely, from Costco’s humble 0.57% to Pfizer’s impressive 7.2%, catering to both those looking for immediate income and those with a focus on growth.
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Each of these companies maintains a strong competitive advantage, making chaos unlikely, whether it’s through American Express’s affluent clientele or S&P Global’s monopolistic ratings.
This is a perspective shift regarding investments: companies that regularly offer dividends have outperformed the S&P 500 by 2.5 percentage points each year since 1972. It’s definitely not about flashy trends or cryptocurrencies.
These stable dividend generators consistently provide quarterly checks, while others are distracted by the latest fads. The math is striking: a $10,000 investment in dividend stocks back in 1972 is now worth over $4 million, compared to just $1.6 million in the S&P 500.
These five major firms represent a winning strategy, merging current income with steady growth in payments, effectively turning patience into wealth.
Abbvie (NYSE: ABBV) has increased its dividends for the twelfth year running, despite facing challenges with its major product, Humira. The reported payment ratio appears alarming at 303%, but that is largely due to accounting from acquisitions. The underlying cash flow is solid enough to support dividend distributions.
The subsidiaries stepping in to replace Humira are seeing rapid growth, and management anticipates slow but steady growth through 2029, aiming for high single-digit annual dividend increases in the coming years.
Costco (NASDAQ: Cost) offers a lower yield of 0.57%, but boasts an extraordinary 13.2% annual growth rate in dividends over the last five years, with a conservative payout ratio of 27%. Their membership fees alone can cover the entire dividend cost.
Costco operates around 12 times a year, with each warehouse generating roughly $260 million in sales annually. This scale offers substantial advantages against competitors. Plus, they often issue special dividends—like $15 per share in 2024 and $10 in 2020.
American Express (NYSE: AXP) provides a yield of 0.92% yet has achieved a 12% increase in dividends annually over the last five years, with only 21.3% of its revenue going toward payouts. Unlike its competitors, AMEX manages both card issuance and payment processing, providing a 30% return on its stock.
Their affluent customers spend 2.5 times more than average, giving the company substantial pricing power, even through the pandemic. Berkshire Hathaway holds a significant stake in AMEX, which is telling.
S&P Global (NYSE: SPGI) offers a 0.79% yield that has risen by 8% annually during the last five years, allocating 28.7% of its revenue for dividend payments. Their credit ratings create a powerful barrier to entry, as all debt issuers depend on their evaluations.
In addition to ratings, S&P provides essential financial insights through IHS Markit and earns fees through index licensing linked to trillions in passive funds. With investment-grade debt issuance projected to grow by 5% to 7% annually, S&P Global appears positioned for ongoing dividend increases.
Pfizer (NYSE: PFE) boasts a high yield of 7.2%, attractive to income-focused investors, even after a significant increase in payment rates. While the Covid windfall has subsided, the core business remains strong enough to cover dividend payouts.
Their pipeline includes over 100 potential blockbuster drugs aimed at various conditions like obesity, cancer, and rare diseases. For investors seeking yield, Pfizer’s dividends are backed by genuine profit potential and a diverse portfolio of medications.
These five stocks exemplify the rewarding nature of dividend investments, including the immediate 7% yield from Pfizer to Costco’s remarkable growth at 0.57%. The strategy lies in balancing high-yield stocks like Pfizer and Abbvie for income, while integrating growth-oriented ones like Costco and American Express for future wealth. S&P Global serves as a balanced option with both growth potential and yield.
For many years, these dividend giants have the power to turn a modest initial investment into considerable wealth through the wonders of compound interest. It’s best to invest evenly, reinvest all dividends, and simply let time do its work. The real error might be delaying entry for a potentially better price point that may never materialize.
Consider these points carefully before investing in Abbvie.
The analysts at Motley Fool Stock Advisor have spotlighted what they consider to be the 10 Best Stocks for investors to buy at this time… and Abbvie isn’t among them. The ten stocks selected could see substantial returns in the upcoming years.
When should you consider this? Netflix — I made that list on December 17, 2004… if you had invested $1,000 then, it would be worth $652,872 now! *Or look at Nvidia — created on April 15, 2005… a $1,000 investment would be worth $1,092,280! *
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*Stock Advisor reflects returns as of September 22, 2025
American Express partners with Motley Fool Money. Positions are held in Abbvie, Berkshire Hathaway, Costco Wholesale, Pfizer, and Visa. The Motley Fool has recommended Abbvie, Berkshire Hathaway, Costco Wholesale, Mastercard, Moody’s, Pfizer, S&P Global, and Visa. For the Motley Fool Disclosure Policy.
Buy 5 dividend power and avoid selling Originally published by The Motley Fool
