If you’re a grandparent — or if you aspire to be one, at some point — one of the best gifts you can give your youngest family members is a firm financial foundation. While part of that could be an inheritance, it’s also important to teach the little tykes how grandma and grandpa managed to do so well in their golden years. So, don’t be afraid to introduce them to investing and the magic of dividend stocks.

Dividend stocks are great long-term investments because in addition to your quarterly return, you also get a quarterly (or sometimes, a monthly) dividend. And when you turn around and reinvest those dividends directly into your stock, your position grows consistently over time — and so does your investment portfolio.

Knowing the best dividend stocks to buy and hold, coupled with understanding the magic of compounding interest, is the best way for your grandkids to build their portfolios and start on the path to a comfortable life and retirement.

What better gift can one give?

Here are some highly rated dividend stocks to buy for your grandkids and start their financial journey on the right foot.

Dividend Stocks: C.H. Robinson Worldwide (CHRW)

Unless you’ve been hiding in a cave, you’re all too familiar with the supply chain — the complex global network of materials, workers, manufacturing and shipping that lets you sit on your living room couch and order a product from halfway across the globe. Supply chain issues have been a serious drag on manufacturing and some companies’ profits since Covid-19 reared its ugly head.

C.H. Robinson Worldwide (NASDAQ:CHRW) brokers truckload and intermodal freight transport and connects manufacturers with air and ocean freight service providers.

While some companies are feeling serious pain from the supply chain issue, CHRW is a big winner. The stock is up 13% from early February and is also outperforming the greater market on a year-to-date (YTD) basis. Earnings for the second quarter beat analysts estimates, coming in with revenue of $ 6.8 billion and earnings per share (EPS) of $ 2.67, versus expectations of $ 6.78 billion in revenue and EPS of $ 1.99.

On top of that, CHRW stock pays a dividend of 2%, helping it get an A grade in my Dividend Grader.

Commercial Metals Company (CMC)

If you ever wondered what happens to scrap metal when someone’s done with it, then Commercial Metals Company (NYSE:CMC) is a possible answer. The Texas-based company operates as the largest manufacturer of rebar in North America and central Europe. It helps make highways, bridges, sports stadiums and more — and uses 100% recycled steel.

CMC stock is up 8% so far this year, and its fiscal third-quarter earnings reported in June kept the company’s momentum. Earnings included revenue of $ 2.52 billion and EPS of $ 2.61 — far better than the $ 2.32 billion revenue and $ 1.85 EPS that analysts had called for.

CMC pays a dividend of 1.4% and also has an A rating in the Dividend Grader.

ConocoPhillips (COP)

ConocoPhillips (NYSE:COP) may be best-known as an oil stock, but it’s really more than that. The company splits its production nearly equally between oil and natural gas. It has upstream, midstream and downstream operations, meaning it has more control over its operating margins than other companies.

Energy production will continue to be a big driver of the economy no matter what happens with gas prices, natural gas supplies and the related conflict in Ukraine. COP stock is up 27% so far this year as gas prices have moved higher.

Earnings for the first quarter were above expectations, with revenue coming in at $ 19.29 billion and EPS of $ 3.27, versus expectations of $ 18.36 billion in revenue and $ 3.22 EPS.

COP pays a dividend of 1.97% and has an A grade in my Dividend Grader.

Dividend Stocks: Kroger (KR)

You could rightly call Kroger (NYSE:KR) stock a huge pre-pandemic disappointment, as the Cincinnati-based grocery-store chain saw its stock bounce around the breakeven point while major indices surged more than 20%.

And while Kroger did a great job of turning things around during the Covid-19 pandemic, inflationary pressure seems to be weighing on Kroger’s performance now. KR stock is up by 3.5% on the year — much better than the market — but that also includes a significant drop since April.

Kroger reported fiscal Q1 2023 earnings of $ 44.6 billion in revenue and EPS of $ 1.45. That beat analysts’ estimates of $ 43.06 billion and EPS of $ 1.28. If you’re looking for a quality dividend stock to buy and hold (Kroger pays 2.2%), then this grocer may be a good bet. It gets an A rating in the Dividend Grader.

OGE Energy (OGE)

Electric utility company OGE Energy (NYSE:OGE) doesn’t have a huge footprint — it serves Oklahoma and Arkansas — but it’s a solid dividend pick for your grandkids.

Why? For one, OGE is investing in clean energy like solar. And clean energy will be important for future generations. It also pays a solid dividend of more than 4%.

The stock is up 5% so far in 2022, but that includes a 12% bump since mid-June. OGE stock has an A rating in the Dividend Grader.

Penske Automotive Group (PAG)

One side effect of the supply chain issue and the Covid-19 pandemic has been a squeeze in used-car prices. The value of used vehicles has gone up because of a shortage of semiconductors and shipping issues that make new cars scarcer, coupled with a reduced supply of used cars on the market. Americans are now keeping their vehicles for more than 12 years. That means when you go to the car lot to buy a used car, you’re going to be paying a premium.

That’s worked out well for automotive stocks such as Penske Automotive Group (NYSE:PAG), which is up 3% so far on the year and by 19% since early April. Second-quarter earnings were a mixed bag, with revenue of $ 6.91 billion missing analysts’ estimates of $ 7.07 billion. But EPS of $ 4.93 was better than the Street’s estimate of $ 4.48.

PAG stock pays a dividend of 1.6% and has an A rating in the Dividend Grader.

Dividend Stocks: Westlake (WLK)

Houston-based Westlake (NYSE:WLK) plays an important role in manufacturing and supplying petrochemical, polymers and fabricated building products. The company has operations in Asia, Europe and North America, and contributes to the manufacturing of everything from the vinyl siding on your home to the food packaging in your freezer.

The stock is down more than 2% YTD but represents a buying opportunity. This spring, WLK stock was up 44% on the year before pulling back. The stock also pays a dividend of 1.2% and has an A rating in the Dividend Grader.

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