3 Magnificent S&P 500 Dividend Stocks, Down 22% to 58%, to Buy and Hold Forever

It's difficult for companies to stay at the top of their industries for long. The competition in the global economy is just too fierce. Yet, there are proven winners, such as Nike (NYSE: NKE), Hershey (NYSE: HSY), and PepsiCo (NASDAQ: PEP), that have stood the test of time due to their beloved brands and the pricing power it gives them.

But even the best face adversity from time to time. As magnificent as they are, these stocks have fallen between 22% and 58% from their highs. All three currently face doubts from investors as they grapple with issues such as poor business execution, potential political threats, and even climate events.

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Here is a breakdown of each stock's problems and why dividend investors would be wise to buy them while they are down.

1. Nike's turnaround may take time, but the future still looks bright.

The sneaker and apparel giant has spent decades building its brand through iconic partnerships with athletes, including Michael Jordan and Cristiano Ronaldo. Unfortunately, Nike is currently paying for the sins of bad management. The company's former CEO embarked on a misguided path, prioritizing direct-to-consumer sales at the expense of wholesaler relationships and product innovation.

As a result, Nike's sales momentum has slipped, and the business is contracting. Smaller competitors like Hoka (Deckers Outdoor) and On (On Holding) have made inroads against Nike in the running shoe market. In response, Nike brought back former executive Elliott Hill as CEO to restore the business formula that helped it thrive for years.

NKE Dividend Yield data by YCharts.

Fundamentally, Nike is still rock solid. The company has more cash on its balance sheet than debt. Nike pays a dividend that yields over 2% today for only the second time since the 1980s. Management has raised that dividend for 23 consecutive years, and the payout ratio is only 64% of its estimated earnings. Nike also remains a pillar of global sports culture with licensing deals across the world's sports leagues. If Nike can return its sales to growth mode, the stock should be a winner for patient investors.

2. Hot cocoa prices could melt Hershey's profits.

Since early last year, a combination of disease and weather has ravaged the cocoa supply chain in West Africa. The region is responsible for an estimated 80% of the global cocoa supply. Cocoa is the key ingredient for many of the iconic sweets Hershey sells, including Hershey's, Reese's, KitKat (in America), and more. The shortage has sent commodity prices through the roof, forcing Hershey to raise prices to try and compensate. However, management admitted that higher prices have pushed some consumers away in this economy.

Industry experts anticipate the cocoa shortage persisting through 2025, which puts Hershey in a tough spot. The company has remained tight-lipped about its 2025 plans. Reports recently surfaced that Hershey had asked regulators for permission to buy a massive amount of cocoa through futures contracts that would exceed the exchange's limits.

HSY Dividend Yield data by YCharts.

The uncertainty has soured analysts, who currently estimate under 5% annualized earnings growth for Hershey over the next three to five years. Fortunately, this should eventually pass. In the meantime, Hershey's dividend is well-funded, with a 60% payout ratio, and its 3.6% yield is near its all-time high. A rebound may not happen in 2025, but this is a simple but proven company with staying power. Dividend investors may eventually relish the buying opportunity created by these uncontrollable obstacles.

3. PepsiCo must work through GLP-1 headwinds and potential political challenges.

The market has started to wonder about the future of junk food and soda. Consumers have flocked to GLP-1 agonists to curb their eating, and the looming arrival of Robert F. Kennedy Jr. as the (nominated) Secretary of Health and Human Services has pressured PepsiCo and other food and beverage stocks. Headlines can scare investors, and this could be a classic overreaction.

PepsiCo's CEO recently addressed these fears, highlighting the company's ongoing efforts to reduce the amounts of sugar, fats, and artificial colors in its products. The company has launched new products, like zero-sugar sodas, and has leaned into acquisitions. In late 2024, it acquired full ownership of Sabra (hummus and guacamole) and Siete Foods (specialty chips and other foods) in January 2025 to align itself with trending consumer preferences.

PEP Dividend Yield data by YCharts.

Overall, PepsiCo should be fine over the long term. Analysts still anticipate the business's earnings will grow by an average of 6% annually over the next three to five years. Meanwhile, pessimism has ratcheted the stock's dividend yield up to 3.6%, its highest ever! PepsiCo is a Dividend King with a manageable 66% payout ratio. Investors can confidently buy PepsiCo's historically high yield here and expect the dividend to keep going up.

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*Stock Advisor returns as of January 27, 2025

Justin Pope has positions in Hershey, Nike, and PepsiCo. The Motley Fool has positions in and recommends Deckers Outdoor, Hershey, and Nike. The Motley Fool recommends On Holding. The Motley Fool has a disclosure policy.