I have invested in dividends for 25 years—These stocks built my passive income factory from day one

Income investing isn’t meant to create fabulous wealth in a month or even a year. After a quarter-century of successful dividend collecting and reinvesting, I’ve learned to think of my stock allocations as snowballs that gradually grow over the long term.

At the beginning of my 25-year journey, I didn’t fully appreciate how powerful a dividend reinvestment strategy can be. Yet, I’ve applied this technique year after year and created a dividend snowball effect.

Today, I’m not just a dividend supporter; I’m a full-on dividend believer. Without any further ado, I’d like to share with you some superior stocks that helped me build my dividend snowball since day one.

Cisco Systems (CSCO)

I’ve applied a principle of portfolio diversification during the past 25 years, even with my dividend stocks. You might not assume that technology stocks can contribute significantly to your dividend snowball, but Cisco Systems (NASDAQ:CSCO) actually offers an attractive yield in 2025.

More important than the dividend yield is the financial firmness of the company. I want super-solid businesses in my dividend portfolio, and Cisco Systems definitely checks that box.

I like to use recent sales growth as evidence of a company’s sound fundamentals. In this case, Cisco Systems increased its revenue by 11% year over year to $14.1 billion in 2025’s first quarter.

It’s also encouraging when a business is highly profitable as this indicates that the company’s dividends are probably safe. Thus, it’s a good sign that Cisco Systems earned $0.96 per share (adjusted/non-GAAP) in Q1 2025, up 9% year over year.

To show that CSCO stock has created a dividend snowball over the past 25 years, I used a calculator to determine that $10,000 invested in Cisco Systems stock since January 3, 2000, would be worth $14,745.40 today — but that’s without reinvesting the dividends. In contrast, reinvesting the dividend distributions would have turned $10,000 into $17,910.46.

In other words, picking fundamentally reliable businesses like Cisco Systems and consistently reinvesting the dividends is how I built up a snowball of income. Today, Cisco Systems offers a forward annual dividend yield of 2.57%, so feel free to start building your nest egg with shares of CSCO stock.

Eli Lilly (LLY)

Drug manufacturer Eli Lilly (NYSE:LLY) features a pipeline of unique therapeutics, but are there decent dividends coming down the pipeline as well? The answer is definitely yes as Eli Lilly’s a fundamentally strong drugmaker with a consistent track record of dividend distributions.

Let’s check the recently released data to confirm my bullish stance. In the first quarter of 2025, Eli Lilly managed to grow its revenue by a whopping 45% year over year to $12.73 billion. Furthermore, the company increased its earnings by 29% to $3.34 per share on a non-GAAP basis.

Can you feel the snowball building already? Taking a look over the past 25 years, $10,000 invested in LLY stock on January 3, 2025, would have grown to $119,641.47 today — quite impressive, but that’s without having reinvested the dividends.

Using the magic of compounding would have made a huge difference in total returns. In particular, reinvesting all of the dividends with Eli Lilly would have turned a $10,000 investment into $221,739.92. 

Nowadays, Eli Lilly stock features a forward annual dividend yield of 0.83%, which might not seem very big. However, my snowball strategy prioritizes great businesses over massive yields, and a share stake in Eli Lilly could help you build your portfolio’s value if you stick to the plan.

Charles Schwab (SCHW)

We’ve covered the technology and healthcare sectors, and now we can diversify even further with a financial-sector pick. My choice for the past quarter-century has been Charles Schwab (NYSE:SCHW), typically just referred to as Schwab.

A recent filing for the quarterly period ended March 31, 2025, indicates that Schwab grew its net revenue by 18% year over year to $5.599 billion. Additionally, Schwab’s net income rose 40% to $1.909 billion, and that’s certainly a green flag for fundamentals-focused investors.

Adhering to the snowball strategy with SCHW stock would have worked out extremely well during the past 25 years. Investing $10,000 in Schwab stock without reinvesting the dividends would have grown that stake’s value to $26,697.14.

That’s not too bad at all, but there’s more to the story. Reinvesting the dividend payments over that time span would have grown a $10,000 SCHW stock position into $32,835.73. This would have been a much better outcome, you must admit.

In 2025, Schwab’s forward annual dividend yield of 1.22% is competitive among financial-sector firms. Consequently, you should think about enhancing your dividend snowball strategy with some shares of SCHW stock. And if you’re eager for more snowball-building dividend stocks, take a look at Lowe’s (NYSE:LOW), Lockheed Martin (NYSE:LMT), and Chevron (NYSE:CVX).

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