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3 Dividend Stocks to Hold for the Next 5 Years
The Motley Foolยท 2025-08-17 09:35
Core Viewpoint - The article discusses three dividend stocks that are recommended for long-term investment, emphasizing the importance of reassessing these investments after five years due to potential changes in their respective industries and company performance [2]. Group 1: Ford Motor Company - Ford is one of the oldest car manufacturers in the U.S., but it has struggled with sales growth since the late 1990s and early 2000s [4]. - The company suspended its dividend in early 2020 due to the COVID-19 pandemic, highlighting the fragility of its dividend payments [6]. - Although Ford has reinstated a smaller dividend since 2022, investor confidence remains low, reflected in its forward-looking dividend yield of 5.3% and a P/E ratio of just over 8, which are significantly above and below industry norms, respectively [7]. - The automobile industry is evolving, and if Ford does not become more competitive by 2030, it may not be worth holding onto the stock long-term [9]. Group 2: Qualcomm - Qualcomm is recognized as a dividend payer with a forward-looking yield of 2.3%, and it has consistently increased its annual payout for decades [10]. - The company is positioned to benefit from the growing demand for AI-powered solutions, particularly in consumer technology, as the AI hardware market is expected to grow at an average annual rate of 26% through 2030 [14]. - Similar to Ford, Qualcomm's long-term viability will depend on its ability to remain competitive in the AI hardware market beyond 2030 [15]. Group 3: Verizon Communications - Verizon is one of the top three smartphone service providers in the U.S., controlling about one-third of the market, but it faces limited growth opportunities beyond population growth [16]. - The company generates strong cash flow, reflected in a forward-looking dividend yield of 6.3%, and has raised its dividend for 18 consecutive years [18]. - Verizon has a significant debt load of $124 billion, which could impact its financial health as interest rates rise, with $1.7 billion in quarterly interest payments against a net income of around $5 billion [19][20]. - The company's private 5G networking venture is seen as a potential growth engine, warranting further evaluation in the future [21].