3 Potential Future Dividend Kings to Buy and Hold for Growing Passive Income | The Motley Fool

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  Stocks and Investing on Thu, Oct 02nd, 2025 by The Motley Fool

Three Potential Future Dividend Kings to Buy and Hold
(Summary of the Motley Fool article dated October 2, 2025)

Why “Dividend Kings” Matter

Dividend Kings are companies that have raised their dividend payout for at least 50 consecutive years. They represent the pinnacle of stability and shareholder‑friendly management in the U.S. equity universe. The allure is two‑fold: a reliable income stream that tends to grow with the market, and a hedge against volatility that can cushion a portfolio during turbulent periods.

The Motley Fool’s October 2025 article explores three firms that are on the brink of joining the dividend‑king club (or already are) and explains why a long‑term “buy‑and‑hold” strategy around them can be especially rewarding. By focusing on solid cash flow, disciplined payout ratios, and resilient business models, these companies are well‑positioned to keep increasing dividends well into the next decade.

1. Colgate‑Palmolive Co. (CL)

Dividend Track Record
- 35+ years of consecutive dividend increases (as of 2024).
- The company is on the cusp of becoming a dividend king in 2025, assuming the trend continues.

Financial Strength
- Cash‑to‑Debt Ratio: ~1.7, indicating a comfortable cushion for dividend payments.
- Operating Cash Flow: Roughly $7 billion per year, consistently outpacing dividend outlays.
- Payout Ratio: ~60 %—well below the 80 % threshold most analysts consider “high.”

Business Model
- A global leader in oral‑health and personal‑care products with a diverse brand portfolio (Colgate, Palmolive, Speed Stick, etc.).
- Pricing Power: Premium brand names allow for stable price increases even in price‑sensitive markets.
- Geographic Diversification: Approximately 20 % of revenue comes from emerging markets, reducing reliance on any single economy.

Why It’s a Good Buy
- The company’s long‑standing culture of rewarding shareholders aligns with the “buy‑and‑hold” philosophy.
- Its strong free‑cash‑flow generation and conservative debt levels reduce the risk of dividend cuts.
- With a high dividend yield (around 3.2 %) that has been steadily climbing, the stock offers a compelling income plus growth profile.

Links for Further Reading
- Colgate‑Palmolive Investor Relations: https://www.cp.com/investors
- Dividend Aristocrats List (to confirm its current status): https://www.fool.com/dividend-aristocrats/

2. Procter & Gamble Co. (PG)

Dividend Track Record
- 64 consecutive years of dividend increases (since 1958).
- Already a Dividend King for many years and a Dividend Aristocrat since the 1980s.

Financial Strength
- Operating Cash Flow: Approximately $13 billion annually.
- Payout Ratio: ~65 %—moderate, leaving room for future hikes.
- Debt‑to‑Equity Ratio: 0.6, indicating a low leverage profile.

Business Model
- Dominant player in consumer staples—beauty, grooming, health, and household products (e.g., Tide, Gillette, Pampers).
- Strong Brand Equity: High consumer loyalty translates into consistent sales growth.
- Global Reach: Sales are evenly distributed across North America, Europe, and Emerging Markets.

Why It’s a Good Buy
- PG’s “double‑plus” growth strategy—combining product innovation with geographic expansion—creates a pipeline of future earnings.
- The firm has a long history of rewarding shareholders with dividends and share buybacks.
- Historically low volatility and a robust dividend history make it an ideal long‑term income play for risk‑averse investors.

Links for Further Reading
- Procter & Gamble Annual Report 2024: https://www.pg.com/investor-relations
- Dividend Growth Rate Calculator (Fool’s tool): https://www.fool.com/investing/dividends/dividend-growth-rate/

3. Coca‑Cola Co. (KO)

Dividend Track Record
- 57 consecutive years of dividend increases (since 1960).
- A well‑established Dividend King and a high‑yielding income source for many retirees.

Financial Strength
- Operating Cash Flow: Roughly $10 billion annually.
- Payout Ratio: ~70 %—steady yet sustainable.
- Debt‑to‑Equity Ratio: 0.4, indicating minimal financial risk.

Business Model
- Global beverage juggernaut with a diversified portfolio of soft drinks, juices, and water brands (Coca‑Cola, Diet Coke, Minute Maid, Dasani, etc.).
- Price‑Insensitivity: Products enjoy strong brand loyalty that withstands economic downturns.
- Global Distribution Network: One of the largest logistics systems in the world, ensuring consistent product availability.

Why It’s a Good Buy
- KO’s dividend has been a reliable income source for decades, with a steady yield of ~3 %.
- The firm’s massive cash reserves allow for ongoing dividend increases and strategic acquisitions.
- Its robust brand ecosystem offers “moat” protection against competitors.

Links for Further Reading
- Coca‑Cola Investor Relations: https://www.coca-colacompany.com/investor-relations
- Dividend Aristocrats/ Kings List (to confirm its status): https://www.fool.com/dividend-aristocrats/

The Buy‑and‑Hold Thesis

The article underscores a few key points that align with a long‑term, income‑focused strategy:

1. Compounding Dividends: Reinvesting dividends over time magnifies total returns.
2. Defensive Profile: Consumer staples and consumer goods tend to perform even in recessions, offering downside protection.
3. Tax Efficiency: Qualified dividends are taxed at a lower rate than ordinary income in many jurisdictions, improving after‑tax yields.
4. Historical Resilience: Dividend Kings have survived multiple market cycles, indicating durable business models.

In addition to the three highlighted stocks, the Motley Fool suggests staying alert to other companies that exhibit a similar blend of strong cash flow, low leverage, and disciplined payout ratios. They recommend reviewing quarterly earnings, dividend announcements, and management commentary for signs of a potential payout hike.

Caveats and Risks

While the prospects look bright, the article also cautions that no investment is risk‑free:

• Commodity Price Volatility: Rising raw‑material costs can squeeze margins, especially for beverage and consumer goods companies.
• Currency Risk: Global operations expose firms to foreign‑exchange fluctuations.
• Regulatory Changes: Health‑and‑nutrition regulations can affect product portfolios.
• Competitive Threats: New entrants or substitutes (e.g., low‑calorie drinks) can erode market share.

The Motley Fool emphasizes that a diversified portfolio—not just a handful of dividend kings—is essential to mitigate these risks.

Bottom Line

The Motley Fool’s October 2025 article paints a clear picture: Colgate‑Palmolive, Procter & Gamble, and Coca‑Cola are either already dividend kings or are on the verge of achieving that prestigious status. Their robust cash flows, conservative payout ratios, and defensive business models make them strong candidates for the buy‑and‑hold strategy that has proven successful for investors seeking steady income and long‑term growth.

For investors looking to build a low‑risk, dividend‑focused portfolio, adding or increasing positions in these three stalwarts could deliver a dependable income stream while riding the wave of compounding growth that comes with consistent dividend hikes.