Got $5000, 3 High Yield Dividend Stocks To Buy and Hold Forever

Investing in dividend stocks is one way to create wealth. Whether investing for retirement or using passive income to cover monthly expenses, dividend stocks can make a huge difference. While growth stocks get the most investor attention, dividend stocks can be a great investment in uncertain times like today. 

No amount is too small when it comes to starting your investment journey. If you’ve got $5,000 and want to generate passive income, here are the three high-yield dividend stocks to buy and hold forever. 

PepsiCo

Dividend yield: 4.41% 

Beverage giant PepsiCo, Inc. (NASDAQ: PEP) is a familiar name across households. The global giant has expanded its offerings and owns some of the most popular brands including Doritos, Mountain Dew, Frito Lay, and Quaker. It is also investing in healthy food and beverage brands to attract consumers. PepsiCo purchased a prebiotic soda brand, Poppi recently and aims to add more protein products to its portfolio. 

With a diverse portfolio of snacks and drinks, PepsiCo has remained steady despite the market volatility. It is a dividend aristocrat that has increased dividends each year for over 50 years. The stock is down 14% year-to-date and 23% in 12 months. It is exchanging hands for $129 and is almost at its 52-week low of $127. I believe a dip in the stock is a chance to buy. 

The current dip is due to lower consumer spending and tariff impacts. But the business hasn’t lost it all. While one shouldn’t expect the company to grow as it did in the past, its dividends will remain stable with a payout ratio of 72%. 

In 2024, PepsiCo reported a free cash flow of $7.2 billion and paid the same in dividends. Besides that, it invested $5.3 billion in the business which will pay off in the coming years. It is transitioning to more natural ingredients and aims to turn around its North American business.

Pepsi is a very stable dividend stock since the management believes in rewarding shareholders and they’ve done it for decades. As the revenue increases, we can expect Pepsi to raise the dividends. Despite the soft performance, PepsiCo is a giant worth betting on. 

Verizon Communications

Dividend yield: 6.40%

Telecom stock Verizon (NYSE:VZ) is a high-yield dividend investment that will pay off in the years to come. It is the largest wireless carrier in the country and has a business that generates steady cash flow. With its impressive network and new devices on the horizon, the company is on the high road. 

Trading for $42.36, Verizon stock is up 5.35% year-to-date and 6.4% in 6 months. It has a forward P/E ratio of 10.07 which is much lower than the industry average of 20.69. VZ stock is trading at a discount which is a chance to buy. The company has increased dividends for the past 18 years and has a dividend yield of 6.40%.

For the first quarter, the company reported an operating cash flow of $7.8 billion and a free cash flow of $3.6 billion. Verizon generated $18.7 billion in cash flow in 2024 and paid $11 billion in dividends. It has enough cash to reward shareholders and also invest in the business. The management is taking additional steps to retain existing customers which can help regain its market share. 

One thing to keep in mind is that the telecommunications industry will always remain relevant. People are glued to their phones and nobody will be willing to give up their wireless services. This is where Verizon benefits. It operates in one of the most important industries as the largest carrier and has a solid balance sheet. 

The revenue and profit growth have remained stagnant in recent years but the company hasn’t faltered on the dividends. It has maintained the payout for over a decade and has the ability to sustain it. 

Chevron Corporation

Dividend yield: 4.66%

When holding stocks forever, you want to pick companies that will never run out of business. These are well-established, strong players with the right assets and market share. Chevron Corporation (NYSE: CVX), Warren Buffett’s favorite stock is a solid bet even if oil prices fall. 

Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) owns 6.8% of Chevron’s shares. The oil and gas industry is one of the most important sectors in the U.S. and if the tensions across the Middle East continue to rise, we could see oil prices soar. Chevron stock is exchanging hands for $145 and has remained flat year-to-date. It has dropped 8.8% in 12 months due to the dip in crude oil prices. The company has a dividend yield of 4.71% and has raised dividends for 38 years.

In the first quarter, it reported earnings of $3.5 billion and returned $6.9 billion to shareholders. It saw a significant dip in net profit due to the falling oil prices but its long-term picture looks promising. Despite the asset price volatility and geopolitical tensions, Chevron has never suspended its dividends which makes it a highly stable stock to own. 

The oil giant has several projects that could boost its production in the coming years. It completed the Future Growth Project in Kazakhstan and another in the Gulf of Mexico. They could generate an additional $9 billion in free cash flow next year. The highly diversified business is also working to expand its carbon energy business. Even if oil prices drop to $60 per barrel, Chevron is in a position to generate a profit. 

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