Patience can pay off for long-term investors.
The stock market is always rife with uncertainty, but that’s particularly true in 2022 as we face disruptions caused by commodity price inflation, rising interest rates and the threat of a broader economic downturn. But while there’s no such thing as a sure thing on Wall Street in the short term, there are ways for long-term investors to limit the volatility of their portfolio by pursuing high-quality stocks with a track record of stability. The following nine dividend stocks may see short-term ups and downs, but exhibit staying power by offering up 3% dividends as well as businesses that have strong long-term outlooks. Dividends are calculated using a trailing-12-month, or TTM, average unless stated otherwise.
Alexandria Real Estate Equities Inc. (ticker: ARE)
Alexandria is one of the oldest operators of dedicated life science and technology research campuses in the U.S. Structured as a real estate investment trust, or REIT, it is focused on what it calls “innovative clusters” near top-tier academic institutions and urban talent centers. All told, it has roughly 50 million square feet of space in top markets including San Francisco, Boston, New York and Seattle. This allows ARE stock to outlast more cyclical real estate plays that depend on consumer spending. It also insulates it from commercial real estate trends that have been disrupted by remote work for white-collar employees. Dividends have jumped from 51 cents quarterly in 2021 to $1.18 at present, amounting to a 130% surge in the last 10 years to prove its long-term potential for dividend growth.
Dividend yield: 3%
Campbell Soup Co. (CPB)
Campbell makes so much more than its namesake soups, with an arsenal of popular consumer brands, including V8 juices, Pepperidge Farm baked goods, Snyder’s pretzels and Pop Secret popcorn. The company was founded in 1869 and has proven its staying power across all kinds of economic disruptions. After all, whatever goes wrong for the broader stock market or consumer spending doesn’t change the fact that we all have to eat. CPB stock has managed to deliver a modest gain in 2022 through July 25 thanks to a flight to stable “risk off” stocks like this one, and it should continue to provide consistent returns for many years.
Dividend yield: 3%
Amcor PLC (AMCR)
Never heard of Amcor? Well, it may be time to learn about this low-risk long-term dividend stock. Amcor is a packaging products company that produces specialized pouches, containers, cans, bottles and jars. It’s not glamorous work, but it’s certainly necessary as a wide array of clients use its products across beverage, medical, personal care and other industries. This allows for a diverse customer base that gives it slow-and-steady performance over the long haul. Case in point: AMCR is a “dividend aristocrat” that has increased its payouts at least once a year for 25 years running, proving a long-term commitment to shareholders.
Dividend yield: 3.8%
Cardinal Health Inc. (CAH)
Cardinal Health is a low-risk stock that provides products and services to health care facilities including nursing homes, medical offices and surgery centers. This includes the distribution of lab products, protective equipment, bandages and other necessities that may not have massive margins but certainly have massive demand. The result is a consistent revenue stream that has powered 35 consecutive dividend increases for this $15 billion health care player. With deep relationships with health care facilities and a business model that doesn’t risk disruption from next-generation cures or technology, CAH is a stock worth buying and holding forever.
Dividend yield: 3.4%
Consolidated Edison Inc. (ED)
ConEd isn’t the largest utility stock out there, but it is better than many of its peers when it comes to long-term staying power. It distributes electricity to about 3.5 million customers in the New York City area and natural gas to 1.1 million more. While some areas of the nation may be susceptible to volatility in energy demand, this customer base is locked in. ConEd is also one of the oldest publicly traded utilities in America and has a 48-year track record of offering at least one dividend increase per year to shareholders. There may be other stocks in the sector with better yields or bigger market caps, but ConEd is the kind of stock you may want to buy and hold forever.
Dividend yield: 3.3%
Merck & Co. Inc. (MRK)
Merck is a top performer in 2022, with gains of more than 15% as of July 25 even as the rest of Wall Street has struggled. However, this Big Pharma stock isn’t just looking good in the short term, as it has significant long-term potential, as well. Merck’s portfolio of multibillion-dollar blockbusters includes cancer immunotherapy Keytruda and diabetic treatment Januvia. And on top of this, it is working on a $40 billion deal to acquire Seattle-based cancer biotech Seagen Inc. (SGEN) to further fuel its growth. With a dividend that has risen from roughly 40 cents per share each quarter in 2012 to 69 cents, there’s also a good track record of dividend growth for patient long-term investors who hang on to this stock.
Dividend yield: 3%
Unum Group (UNUM)
Global insurance and benefits giant Unum is headquartered in Tennessee but provides services across the United States, plus the United Kingdom and Poland. The company primarily offers group disability, life, dental and vision insurance to employers for the benefit of employees. This is an incredibly stable business and one that Unum is quite good at after crunching the numbers since its founding way back in 1848. Reliable revenue makes for reliable dividends, and payouts just edged up 10% to 33 cents per share — almost three times the 13 cents per share that was paid in 2012. This kind of dividend growth is exactly what you want to see in a long-term holding.
Dividend yield (based on most recent dividend): 4.0%
Altria Group Inc. (MO)
Altria is the company behind tobacco brands including Marlboro cigarettes, Black & Mild pipe and cigar products, and smokeless tobacco such as Copenhagen and Skoal. These products aren’t particularly healthy, but research about the risks of tobacco has been out there for decades, so it’s not like consumers are uninformed. And from an investing perspective, MO has continued to deliver reliable low-risk returns for many years — including an enviable history of more than 50 dividend increases over the last 50 years. The stock recently took a hit thanks to setbacks to its stake in Juul, an e-cigarette producer, but strong management and a strong balance sheet may mean the current pullback is a great opportunity for a long-term investment in a stock with staying power.
Dividend yield: 8.2%
Williams Cos. Inc. (WMB)
With oil prices off about 25% from their 2022 highs and the long-term threat of climate change looming large, it’s hard to have a lot of confidence in pure-play fossil fuel companies. However, Williams has two very important factors going for it that makes it more stable over the long term. To begin, it is primarily a natural gas play — and in addition to being a cleaner energy alternative to crude oil, natural gas is seeing major global supply shortages thanks to disruptions related to the Ukraine war that could last for many years. Second, WMB is structured as a “midstream” energy company that primarily operates pipeline and processing facilities. While margins in this segment are admittedly smaller, it doesn’t have the same commodity price risk as explorers and enjoys strong baseline demand. That fuels reliable dividends that should stand the ups and downs of Wall Street in the years ahead.
Dividend yield: 5%
9 dividend stocks to buy and hold forever:
— Alexandria Real Estate Equities Inc. (ARE)
— Campbell Soup Co. (CPB)
— Amcor PLC (AMCR)
— Cardinal Health Inc. (CAH)
— Consolidated Edison Inc. (ED)
— Merck & Co. Inc. (MRK)
— Unum Group (UNUM)
— Altria Group Inc. (MO)
— Williams Cos. Inc. (WMB)
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Update 07/26/22: This story was published at an earlier date and has been updated with new information.