Three 20-Year Dividend Holders: A Value Investor's Analysis of Coca-Cola, P&G, and EPD

The case for a 20-year hold rests on a simple principle: compound your capital in businesses that can grow it, not just collect it. For this portfolio, the target is clear: wide-moat companies with sustainable dividends and a proven track record of returning cash to shareholders. The evidence suggests this approach is not just prudent, but historically rewarding. A study cited by The Motley Fool shows that over the past five decades, dividend growers have consistently outperformed the broader market while experiencing less volatility. More specifically, a 2015 Morningstar analysis found that wide-moat stocks significantly outperformed the S&P 500 over the previous decade, delivering a total return of 645% compared to 188% for the index. This is the power of durable competitive advantages.

Sustainable dividends are the hallmark of this durability. They require more than a high yield; they demand strong, predictable cash flow and a management team committed to shareholder returns. As Morningstar's David Harrell notes, there's a strong correlation between economic moats and dividend durability. A wide moat acts as a moat around the cash flow, protecting it from erosion. Coca-Cola, for instance, operates in a market that supports only a few large players, allowing it to leverage scale to dominate distribution and shelf space. Its intangible assets-its global brand identity and portfolio of trademarks-create immense brand loyalty, while its vast distribution network generates powerful network effects. This combination forms a formidable economic moat that underpins its ability to generate the steady cash flows needed to fund its 63 consecutive years of annual dividend increases.

For a 20-year investor, the purchase price is everything. It must reflect a reasonable estimate of long-term intrinsic value, not merely a high current yield. A high yield can be a red flag, often signaling that a company's prospects have dimmed or that the dividend is at risk. The goal is to buy a great business at a fair price. This is why Morningstar's approach emphasizes looking beyond yield to find companies with moats that are also trading at a discount to their fair value. By focusing on the quality of the business and the sustainability of its returns, rather than chasing a headline yield, the investor sets the stage for decades of compounding. The thesis is to own these durable engines, not because they pay a big dividend today, but because they are built to pay and grow it for the long haul.

Coca-Cola: The Brand Moat in Action

Coca-Cola's enduring success is a textbook case of a wide economic moat in action. Its competitive advantages are built on three interconnected pillars that create formidable barriers to entry. First, its brand dominance is unmatched, with a global identity that commands loyalty and premium pricing. Second, the company leverages efficient scale in a market that supports only a few large players, allowing it to dominate shelf space and distribution channels. Finally, its extensive distribution system creates powerful network effects, where the value of its products grows with its reach, encouraging more retailers to carry them. Together, these elements form a durable fortress around its cash flows.

Financially, this moat translates into a sustainable and growing dividend. The company's payout ratio of 65.04% is a key indicator of strength. It shows that Coca-Cola returns a substantial portion of its earnings to shareholders while retaining enough capital to fund operations, invest in its brand, and pursue growth. This balance is critical for long-term compounding. The commitment is further demonstrated by its 54 consecutive years of dividend increases. That streak is not just a number; it is a testament to management's discipline and the predictable cash flow generated by its wide-moat business. For a value investor, this history provides a high degree of confidence in the sustainability of the payout.

The bottom line is that Coca-Cola's model is built for decades of compounding. Its moat protects earnings, its payout ratio ensures financial flexibility, and its dividend history reflects a deep-rooted commitment to shareholders. The business is not merely collecting cash; it is actively reinvesting to maintain its dominance. This setup is exactly what a 20-year holder seeks: a durable engine capable of growing its returns over the long term.

Procter & Gamble: The Essential Consumer Moat

Procter & Gamble's business model is built on a moat as wide as the consumer staples aisle itself. Its competitive advantage stems from a portfolio of essential consumer brands and the global scale that supports consistent demand. With nearly 300 products marketed to over 5 billion consumers, P&G operates in daily-use categories where performance drives brand choice. This focus on fundamental needs-cleaning, hygiene, health-creates a remarkably stable revenue stream, less susceptible to the whims of fashion or economic cycles. The company's size allows it to leverage scale in manufacturing and distribution, turning its vast network into a powerful barrier that smaller rivals struggle to match.

Financially, this durability is reflected in a prudent and protective dividend policy. The company's dividend cover is approximately 1.6 times earnings, a solid buffer that provides a margin of safety against downturns. This ratio signals that P&G returns a substantial portion of its profits to shareholders while retaining ample capital to fund its integrated strategy and maintain its competitive edge. The commitment is underscored by a 57-year streak of annual dividend increases, a testament to the predictable cash flow generated by its essential products. For a value investor, this combination of a wide moat and a conservative payout ratio offers a high degree of confidence in the sustainability of the return.

Management's approach is a disciplined blueprint for long-term value creation. As CEO Jon Moeller stated, the company is executing an integrated strategy aimed at delivering sustainable, balanced growth and value creation. This model is built on three pillars: a focused portfolio in daily-use categories, a relentless drive for "superiority" in product and packaging, and continuous productivity improvements. The strategy is not about chasing short-term gains but about building a more efficient, agile organization capable of adapting to changing consumer needs. In a dynamic environment, this integrated plan provides a clear path for compounding returns, ensuring that the business remains a durable engine for shareholder value for decades to come.

Enterprise Products Partners: The Inflation-Resilient Cash Flow Engine

For a value investor, the ideal cash flow engine is one that generates predictable returns regardless of commodity prices. Enterprise Products Partners (EPD) operates in this exact niche, with a business model built on a wide moat of contracted midstream infrastructure. Its competitive advantage stems from owning and operating a vast network of pipelines and storage facilities-over 50,000 miles of pipelines and more than 300 million barrels of storage capacity-that are essential for moving energy products across North America. The key to its durability is that its income is stable, fee-based income derived from long-term contracts with shippers. This structure provides a powerful buffer against market volatility, as the fees are often inflation-protected, allowing EPD to raise rates to offset higher costs and maintain cash flow stability.

Financial discipline is evident in its capital allocation. In the fourth quarter of 2025, the partnership repurchased approximately $50 million of its common units. This action, part of a broader $5 billion buyback program, demonstrates a commitment to returning capital to unitholders when the stock trades below intrinsic value. It is a classic sign of management confidence and a disciplined use of excess cash, reinforcing the partnership's focus on shareholder returns. The consistent dividend growth, including a recent 2.8 percent increase in its quarterly distribution, further underscores this disciplined approach to capital.

The growth catalyst is clear and tangible. EPD expects to increase its predictable cash flow from key growth projects worth billions, with major developments like Athena and Mentone West 2 slated to be operational by the end of 2026. These projects are not speculative bets but expansions of an existing, contracted network, designed to capture incremental fee income from new capacity. This pipeline of projects provides a visible path for cash flow growth, enhancing the partnership's ability to fund distributions and buybacks without overextending its balance sheet. For a 20-year holder, EPD represents a cash flow engine built to compound through economic cycles, protected by a wide moat and fueled by a disciplined capital allocation strategy.

Synthesis: Building a Durable 20-Year Portfolio

The three holdings-Coca-Cola, Procter & Gamble, and Enterprise Products Partners-form a portfolio built on the classic value investing principle of owning a business you can understand and trust for the long term. Each operates within a wide moat, generating cash flow that funds a growing distribution and provides a margin of safety. The combined strength lies in their diversity: consumer staples offer predictable demand, while midstream infrastructure provides inflation-resilient cash flow. Yet, each faces its own specific risks and catalysts that a disciplined investor must monitor.

For the consumer staples, the primary risk is not a lack of demand, but a shift in the demand itself. The moats of Coca-Cola and P&G are built on brand loyalty and daily necessity, but they are not immune to brand erosion or fundamental changes in consumer health trends. A sustained move toward healthier beverages or natural products could pressure their core portfolios. Management's integrated strategy at P&G, focused on superiority and a portfolio of essential consumer brands, is the best defense. The key watchpoint here is the consistency of dividend increases-a 57-year streak at P&G and 63 at Coca-Cola are powerful signals of underlying cash flow strength and management discipline.

For Enterprise Products Partners, the catalyst is execution. Its wide moat is secured by long-term contracts, but the partnership's growth depends on successfully bringing major projects online. The company expects to increase its predictable cash flow from key growth projects worth billions, with Athena and Mentone West 2 targeted for operation by the end of 2026. The ability to raise fees under its inflation-protected contracts is the other critical lever, ensuring cash flow keeps pace with costs. The recent $50 million unit repurchase in the fourth quarter is a positive sign of capital discipline, but the real test is whether the promised cash flow from new projects materializes as planned.

Across all three, a key watchpoint is management's commitment to returning capital to shareholders. This is evidenced by the consistent dividend increases and the use of buybacks when the stock trades below intrinsic value. For a 20-year investor, this is the ultimate proof of a durable engine. It shows management is not just collecting cash, but actively compounding it for those who have the patience to hold through cycles. The portfolio's strength is its simplicity: three wide-moat businesses, each with a clear path to grow their returns, providing a foundation for long-term compounding.