Long-term investors can take full advantage of dividend stocks by harnessing the power of compounding interest. The best way to do that is to sign up for a dividend reinvestment plan (DRIP) and direct stock purchase plan (DSPP), should the company offer it. This allows you to automatically reinvest your dividends. You can also purchase shares, fractional or whole, without the need of having to use a broker. Buy-and-hold investing might not impress your friends, but it can be lucrative.
General Mills is a classic “buy-and-hold” stock. The company provides an annual dividend of 3.05%, or $1.92 per share. For income-starved investors, General Mills has paid an annual dividend for the last 117 years and increased its annual dividend yield for 14 consecutive years
Costco’s dividend yield may not be the highest at 1.2% ($1.80 per share), but the company is a slow and steady workhorse, providing investors with capital appreciation and consistently raising its annual dividend yield. You can’t get much more dependable than this, which is why I added Costco to my “buy and hold” list.
