By: Bithi
Published on: Jun 12, 2025
When it comes to long-term investing, few strategies are as reliable and rewarding as holding high-quality dividend stocks. The magic lies in their ability to deliver a steady stream of passive income while also compounding your wealth over time—especially when dividends are reinvested. Legendary investor Warren Buffett himself champions the value of long-term stock ownership, often advising investors to buy into businesses they can confidently hold for a decade or longer.
Two standout dividend stocks that have consistently lived up to this principle are Coca-Cola (NYSE: KO) and IBM (NYSE: IBM). These companies not only boast impressive dividend histories but also possess durable business models and global relevance that make them prime candidates for long-term income investors.
In this article, we’ll explore why Coca-Cola and IBM remain compelling dividend stocks to hold for the next 10 years, and how they can contribute to a reliable and growing income stream in your portfolio.
Before diving into the specifics of Coca-Cola and IBM, it's important to understand why long-term dividend investing is so powerful:
Steady income stream: Dividends offer consistent cash flow, even when stock prices fluctuate.
Reinvestment power: Through DRIP (Dividend Reinvestment Plans), investors can buy more shares with each payout, accelerating portfolio growth.
Wealth compounding: Over time, reinvested dividends can significantly enhance total returns.
Inflation hedge: Companies that regularly raise dividends often outpace inflation, preserving purchasing power.
Let’s now break down each of these two dividend champions.
Coca-Cola is synonymous with dividend reliability. It's one of the top Dividend Kings, having increased its annual dividend payout for more than 60 consecutive years. This impressive track record underscores not just financial strength but also consistent profitability, brand power, and a long-term commitment to rewarding shareholders.
Warren Buffett began investing in Coca-Cola in 1988, and it remains one of Berkshire Hathaway’s (NYSE: BRK.A, BRK.B) most iconic holdings. Today, the company owns 400 million shares of Coca-Cola, generating more than $816 million in annual dividends.
Buffett paid just $3.2475 per share back then, and with the dividend now at $2.04 annually, the effective yield on that investment is an astonishing 62.8%. This exemplifies how long-term ownership in a high-quality dividend stock can translate into incredible cash flow over time.
While not everyone can match Buffett's scale, everyday investors can still benefit from Coca-Cola's consistent dividend growth. Let’s say you invested $10,000 in Coca-Cola stock 10 years ago at around $40 per share, giving you 250 shares. With dividend reinvestments and price appreciation, your investment could now be worth $24,460, and those shares would generate at least $687 per year in dividends, equating to a 6.9% yield on cost.
Global brand power: Coca-Cola is recognized and consumed worldwide.
Resilient business model: Beverages are staples; demand is steady even during downturns.
Expansion into health-conscious segments: Diversifying into bottled water, juices, and zero-sugar variants.
Dividend reliability: Uninterrupted and increasing payouts since 1961.
Verdict: Coca-Cola is a must-own stock for income investors, with unparalleled dividend dependability and long-term wealth-building potential.
IBM is not typically the first company that comes to mind in the fast-paced tech world, but it offers something that many newer tech companies don’t: a reliable, high-yield dividend. While its stock performance has been choppy over the past decade, IBM has maintained its status as a Dividend Aristocrat, delivering rising payouts year after year.
IBM is no longer just a legacy hardware company. Over the last few years, it has focused on transforming itself into a hybrid cloud and AI powerhouse, notably through its acquisition of Red Hat. While the transformation is ongoing, IBM’s new focus areas show promise:
Hybrid cloud services
Enterprise AI solutions
Cybersecurity and consulting services
These shifts are beginning to reflect in its financial performance, offering renewed optimism for future growth.
At the time of writing, IBM offers a dividend yield of approximately 4.5%, which is significantly higher than the S&P 500 average. Its payout ratio remains manageable, and the company has been increasing its dividend for over 25 consecutive years. With strong free cash flow and a clear roadmap for modernization, IBM looks well-positioned to maintain and grow its dividend in the years ahead.
High yield: Offers one of the most attractive yields in the tech sector.
Enterprise transformation: Focus on AI and hybrid cloud boosts growth prospects.
Long-term cash flow: Strong enough to support generous dividend payouts.
Undervalued stock: Offers decent upside potential in addition to income.
Verdict: IBM combines the stability of a legacy blue-chip with the transformation potential of a modern tech leader—an ideal setup for income-focused, long-term investors.
Both Coca-Cola and IBM are excellent choices for DRIP investors. By reinvesting dividends instead of cashing them out, you can:
Acquire more shares at lower prices during market dips.
Enjoy the power of compounding as your share count (and payouts) increase.
Reduce the impact of short-term volatility by focusing on long-term wealth generation.
Over a 10-year time frame, this strategy can significantly boost your total returns.
As Warren Buffett once wisely said:
"If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."
That advice is especially relevant when it comes to dividend investing. Coca-Cola and IBM are two classic examples of companies that reward patience, discipline, and a long-term perspective.
Whether you're a retiree seeking income, a young investor building a portfolio, or simply someone looking to sleep well at night knowing your money is working for you—these two dividend stocks deserve a place in your long-term investment plan.
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