Since the onset of the pandemic, the stock market has exhibited considerable volatility, experiencing sharp declines followed by rapid recoveries and new bull markets. Amid current uncertainties, including President Donald Trump’s trade policies, fiscal challenges in the U.S., and apprehensions about the economy, investors should brace for ongoing fluctuations. This landscape makes dividend stocks an appealing option for those seeking stable passive income, as they tend to offer more reliable returns compared to non-dividend-paying stocks, especially if they have a history of solid performance and opportunities for earnings and cash flow growth to support continuous payout increases.
Here are two dividend stocks that investors can confidently consider for long-term holding over the next two years.
Nike: A Turnaround That Promises Returns for Patient Investors
The well-known footwear and apparel brand Nike (NKE 0.22%) has recently struggled in the stock market, with shares down approximately 39% over the past five years (as of June 4). Factors such as increased competition, brand challenges, and an overemphasis on digital sales have hindered its recent performance.
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To redirect its path, the board appointed long-time Nike executive Elliot Hill as CEO. Hill intends to refocus the company on its core strengths—enhancing brand identity, leading product innovation, and strengthening sales relationships with wholesalers. He has highlighted a strategy that will concentrate on five product categories—running, basketball, football, training, and sportswear—as well as three target markets: the United States, the United Kingdom, and China.
Despite these efforts, some analysts warn that the turnaround may require more time than anticipated, particularly with ongoing trade tensions and the potential for an economic recession. If this prolongs the recovery, it could deter investors from purchasing and holding the stock. Nevertheless, Nike is committed to prioritizing its dividend program. Currently yielding around 2.6%, the dividend lags behind most Treasury yields, but the company remains steadfast in raising its payouts. In November, Nike elevated its quarterly dividend by 8%, marking the 23rd consecutive year of increases. It may soon join the ranks of Dividend Aristocrats®—S&P 500 companies that have raised dividends for at least 25 consecutive years.
Wells Fargo: Gaining Momentum After Seven Years of Setbacks
For those tracking Wells Fargo (WFC 1.99%), it’s clear the bank has faced numerous challenges over the past decade. In 2016, reports revealed that numerous employees had been opening unauthorized accounts in customers’ names, resulting in significant reputational damage and billions in fines. This led to various regulatory restrictions and an asset cap imposed by the Federal Reserve, which stunted the bank’s growth opportunities.
In 2019, CEO Charlie Scharf was appointed and worked diligently to revamp the bank’s regulatory framework and leadership. He made significant cuts to expenses, divested non-essential assets, and focused on higher-return business segments such as investment banking and credit card services. Following the administration change, regulators lifted previous monitoring measures and the asset cap, allowing Wells Fargo to expand its balance sheet and become more competitive in the financial services sector.
During the pandemic, Wells Fargo was one of the few banks compelled to reduce its dividend due to regulatory constraints. While it has since resumed dividend payments, its yield remains in the lower range compared to its peers. Analysts predict an 8% growth in diluted earnings per share this year, rising to around 14% in the following year. With its dividends only comprising about 31% of earnings in the last 12 months, Wells Fargo has significant potential to increase its payouts moving forward.
