Stocks with Significant Dividends – Dropping by 15% to 64% – Ideal for 20-Year Investment and Holding Period
Dive into Dividend Stocks: Target, Starbucks, and Home Depot
Investing in dividend stocks can be a great way to build a passive income stream for the long haul. The current economic climate has taken a toll on several retail and consumer goods brands, causing their stocks to plummet and their yields to soar. Here’s why three experts believe Target (TGT), Starbucks (SBUX), and Home Depot (HD) are solid dividend stocks to invest in for the next 20 years.
Target Stock: 64% off its highs
Jennifer Saibil (Target)
Target is a prime example of a company that's bounced back from hardships and reached new heights. It's been down and out, but it's been there before. On the brink of the pandemic, it was struggling, investment-wise. However, it wisely put resources into an omnichannel strategy before it became trendy, enabling it to profit from the rapid increase in e-commerce. Despite its current troubles, growth persists in its digital channels such as same-day and pickup services. This digitally-forward approach gives hope that it can recover and thrive again in better times.
Target faces challenges such as the sheer size of its grocery segment compared to some competitors, waning customer spending due to inflation, revenue losses through markdowns, politically motivated consumer boycotts, and potential tariffs. However, the latter only affected its business in the 2025 fiscal first quarter, and uncertainty looms for the near future.
Total comparable sales dropped 3.8% y-o-y in the first quarter, although operating income surged 13.6%. Digital sales climbed 4.7% thanks to a 35% y-o-y rise in same-day delivery.
Despite the uncertainties, Target offers a lot of potential, with its vast store network, thriving membership program, and robust digital channels. It boasts the highly coveted title of a Dividend King, having raised its dividend annually for an impressive 53 years. That makes it a prime pick for passive income growth, and at the present price, it offers a hefty 4.6% yield, more than triple the S&P 500 average.
Starbucks Stock: 31% off its highs
John Ballard (Starbucks)
Starbucks is a globally recognized and beloved brand with over 40,000 stores. Currently, it grapples with a challenging sales environment, though it still manages to enjoy healthy margins that guarantee generous dividend payouts. The lowered share prices present an opportunity for substantial returns.
A weak sales performance and increased investments for recovery efforts have dragged the stock down by 31% from its prior high. Comparable store sales dropped 1% from the previous year in the last quarter, and earnings slumped 50%. The appointment of Brian Niccol, formerly of Chipotle Mexican Grill, as CEO of Starbucks bodes well for returning the company to growth, focusing on improving the customer experience and cost management to keep its dividend going strong for years to come.
Rising payout ratios (85% on a trailing 12-month basis) may put some pressure on the dividend, as companies shouldn't regularly pay out more than their earnings without risking a future reduction. However, expected improvements in margins and cost discipline under Niccol's leadership should alleviate this strain.
The current quarterly payout of $0.61 brings the annualized yield to an attractive 2.82%, which is reminiscent of the highest yields Starbucks has offered for years. Investors who buy Starbucks stock and hold onto it for the next two decades should enjoy a lucrative income investment.
Home Depot: 15% off its highs
Jeremy Bowman (Home Depot)
Home Depot is an industry titan alongside Lowe's. It's performed exceptionally well historically. More recently, however, the stock has underperformed the S&P 500, with a 19% gain compared to a 42% increase for the benchmark index.
The slowdown in the housing market, brought on by rising mortgage rates stemming from Federal Reserve tightening, has hampered its growth. Although it increased revenue by 9.4% in the first quarter, mostly due to the acquisition of SRS Distribution, same-store sales dipped 0.3%.
The housing shortage in the U.S. (estimated at around 4 million homes) will eventually create demand for home improvement products and spark a new growth phase for Home Depot. In the meantime, investors can capitalize on its dividend, which Home Depot has increased regularly for 16 years running. The current yield stands around 2.5%.
These companies offer attractive dividend prospects, combined with strong market positions. Whether you're seeking income or potential growth over the next 20 years, Target, Starbucks, and Home Depot are worth considering as pivotal pieces of your investment portfolio.
Insights: Target stands out for its high dividend yield of 4.8%, extensive store network, and long dividend growth history. Home Depot boasts a robust market position and solid dividend yield, with forecasts of substantial stock price appreciation. Starbucks, though not explicitly detailed, is generally regarded as a solid dividend stock due to its brand strength and consistent payout history.
These companies, with their stable or growing dividend payouts and strong market positions, make enticing picks for income-focused investors seeking both income and potential growth in the long run.
- Finance experts recommend investigating dividend stocks like Target, Starbucks, and Home Depot for a passive income stream in the coming two decades.
- Target, despite facing challenges such as inflation, markdowns, and politically motivated boycotts, is a Dividend King, having raised its dividend annually for 53 years.
- Starbucks, with over 40,000 stores worldwide, offers an appealing 2.82% annualized yield, despite experiencing a recent slump in sales and earnings.
- Home Depot's dividend has increased annually for 16 years, making it an attractive choice for investors seeking a stable income source.
- In the retail industry, Target's vast store network and thriving membership program set it apart from competitors, while Starbucks' brand recognition and customer loyalty provide a solid foundation for growth.
- Home Depot's status as an industry titan and its potential for growth in the U.S. housing market make it a compelling choice for investors seeking both income and growth opportunities.
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- Small-business owners can benefit from wealth management services to help manage their personal finance and make smart investment decisions.
- The housing market, stock market, and commercial real estate sectors are closely interconnected and can influence each other, impacting investments in these areas.
