Look to reliable companies in solid sectors for long-term income.
When it comes to dividend investing, some folks chase yield above everything else. But that can come with big risks, as some stocks that pay a significant yield at present are in risky sectors like mortgage-related financing or the cyclical business of energy exploration. If you’re not willing or able to watch these stocks like a hawk, you can get burned when the market moves away from you — or even worse, when that once-juicy dividend is reduced or eliminated. For a less flashy but also lower risk way of investing, look to stable stocks with rock-solid business models that will withstand the test of time and continue to support dividends for many decades to come. The following stocks all are $20 billion or larger, with dividend payouts of 2.5% or greater and the kind of slow-and-steady operations that will be around forever.
American Electric Power Co. Inc. (ticker: AEP)
Midwestern electric utility AEP is headquartered in Columbus, Ohio, and has served the region by providing electricity for more than a century. It currently boasts about 5.5 million customers, and at roughly $48 billion in market value is one of the five largest publicly traded utility stocks on Wall Street. There are few sectors more reliable than utilities, as there is strong baseline demand for power and energy which are as much of a necessity in the 21st century as food and water. In October, AEP just logged its 450th consecutive dividend — an amazing feat that means it has delivered a payment to shareholders every single quarter dating back to 1910. It’s hard to imagine what the world will be like in another 110 years, but there’s a very good chance AEP will still be here delivering income to shareholders.
Dividend yield: 3.6%
Kellogg Co. (K)
Everyone knows Kellogg, the company behind Froot Loops, Pringles, Pop Tarts, Cheez-Its and more. With some of the most popular brands on the planet, it’s hard to imagine any economic environment where consumers drop Kellogg’s offerings from their shopping lists. And while you might think that in an inflationary environment like this one it can still be hard for a packaged foods company, management just boosted its full-year earnings and revenue expectations after a stronger-than-expected third-quarter earnings report in November. That’s because when you have premium brands, you can command premium prices to ensure a strong financial performance. The company is riding 17 years of consecutive dividend increases, and has paid dividends in some form since 1925.
Sector: Consumer staples
Dividend yield: 3.3%
Prudential Financial Inc. (PRU)
When most investors think about financial stocks, they typically imagine investment banks. However, Prudential offers a much more subdued and reliable option in the sector. While it does offer wealth management services, its bread and butter comes from life insurance and benefit administration for corporations. There’s not the potential for massive home runs when you’re helping small businesses manage their 401(k) plans or providing disability insurance, but there’s also far less chance of running into any bumps in the road. PRU stock is very stable as a result, and dividends have soared from $1.60 annually in 2012 to $4.80 presently. That’s the kind of long-term income you should look for if you want to buy and hold a stock forever.
Dividend yield: 4.5%
Coca-Cola Co. (KO)
When it comes to consumer stocks, it’s hard to top the powerhouse that’s Coke. The Atlanta-based company has a global scale with more than 120 years of operating history, and one of the most recognizable brands on the planet. It also counts Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) as its largest shareholder, holding more than 9% of the company and providing a strong institutional presence to keep shares stable in the long run. While sugary soft drinks may not be as fashionable as they once were, KO isn’t standing still as it leans into brands like Vitaminwater, Fuze teas, Powerade energy drinks and more. In 2022, the company approved its 60th consecutive annual dividend increase, offering even more proof that this is a stock worth hanging on to for the long term.
Sector: Consumer staples
Dividend yield: 2.8%
AbbVie Inc. (ABBV)
Spun out of parent company Abbott Laboratories (ABT) in 2013, ABBV took control of branded biopharmaceutical products to forge its own path without the stodgy and lower-margin business of medical devices and consumer health products. Since then, ABBV has more than tripled to outperform the remaining ABT business. AbbVie has worked hard to keep its product pipeline full of profitable treatments, including the company’s FreeStyle Libre glucose monitor for Type 2 diabetes patients, which should hit $4 billion in sales this year. Thanks to a strong outlook, several industry publications predict ABBV will eclipse all other competitors to be the biggest pharmaceutical company in the next five years. With recession-proof drug sales and scale that’s unmatched, it’s hard to imagine a world without AbbVie in it.
Sector: Health care
Dividend yield: 3.8%
AT&T Inc. (T)
AT&T is a stock with staying power, and has increased its dividend each year for the last 36 consecutive years. This entrenched telecom has also streamlined its operations recently, spinning off its stake in Warner Bros Discovery Inc. (WBD) to pay down debt and focus on the core business of telecom. Shares are roughly flat on the year, but have surged about 35% from their October lows as proof that Wall Street likes what it sees as we enter the New Year. As a classic risk-off stock with a generous dividend and staying power, this is definitely the kind of income investment you want to buy and hold forever.
Dividend yield: 5.9%
Consolidated Edison Inc. (ED)
While it isn’t the largest utility stock out there, ConEd is hard to top when it comes to reliability. For starters, it distributes electricity to about 3.5 million customers in the New York City area and natural gas to 1.1 million more. This dense area of the U.S. has strong and reliable baseline demand for energy. Looking back at its history, ConEd has delivered more than 48 years of consecutive dividend increases and has a proven track record of sharing the wealth with stockholders. And of course, the highly regulated nature of utilities and the near-monopolistic makeup of regional power providers mean competition and disruption are incredibly unlikely. It all adds up to a great argument in favor of buying and holding this utility stock for many years to come.
Dividend yield: 3.4%
Johnson & Johnson (JNJ)
J&J has a great resume when it comes to why you should buy and hold this stock forever. It is among the 10 largest stocks on Wall Street, and is one of just two U.S. corporations with a top AAA credit rating — Microsoft Corp. (MSFT) being the other. But more importantly for income investors, it has raised its dividend for an amazing 60 years running. With a dominant consumer health business that includes Tylenol and Band-Aid products as well as high-margin drugs and medical devices, this stock is deeply embedded in the health care system. And since perhaps the only certain thing in life is that people will get old and get sick, that makes JNJ a rock-solid investment to believe in regardless of the ups and downs of the global economy.
Sector: Health care
Dividend yield: 2.6%
JPMorgan Chase & Co. (JPM)
Many investors burned by big banks during the financial crisis have come to see the sector as risky in a globally interconnected economy. However, while there is certainly risk involved with poorly run or aggressive operations, there is little concern around megabank JPMorgan Chase. This icon of Wall Street has roots dating back to 1799, and has weathered all manner of storms over the years. That includes becoming the first major financial organization to return to pre-crisis dividend levels; in 2008 it was paying $1.52 annually and by the end of 2014 it had paid $1.56 per share. Right now, it doles out an impressive $4.00 per share — proof that a stock like this can do more than just survive a brutal downturn; it can go on to thrive and deliver shareholder value in the years that follow.
Dividend yield: 3.0%
9 dividend stocks to buy and hold forever:
— American Electric Power Co. Inc. (AEP)
— Kellogg Co. (K)
— Prudential Financial Inc. (PRU)
— Coca-Cola Co. (KO)
— AbbVie Inc. (ABBV)
— AT&T Inc. (T)
— Consolidated Edison Inc. (ED)
— Johnson & Johnson (JNJ)
— JPMorgan Chase & Co. (JPM)
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Update 11/22/22: This story was published at an earlier date and has been updated with new information.