7 Dividend Stocks to Buy and Hold Forever

These seven dividend stocks have stood the test of time.

Given the meteoric rise in interest rates over the last year, many investors may be taking a closer look at bonds, which now offer meaningful yields for the first time in more than 15 years. But for investors who may not want to totally ignore the capital appreciation potential that the stock market offers, established dividend stocks are an attractive middle ground. Passive investors especially should seek out solid, established companies with long track records, strong competitive positioning and sustainable payouts with room to grow. The following seven large-cap stocks all fit that bill. Here are seven of the best dividend stocks to buy and hold forever.

Abbvie Inc. (ticker: ABBV)

When looking for dividend stocks to buy and hold forever, few things are more important than a company’s proven track record in paying — and increasing — its dividend. Here, pharmaceutical giant Abbvie is in elite territory: It’s a “dividend aristocrat,” which means it’s one of the rare S&P 500 companies that has increased its dividend payout for at least 25 straight years. ABBV’s record is even more impressive, with 50 consecutive years of raising its dividend. With sales of blockbuster arthritis drug Humira set to wane due to a loss of patent protection, analysts see overall revenue slipping 6.7% in 2023. That said, it has other up-and-coming drugs on the market like immunology medications Skyrizi and Rinvoq, which saw year-over-year sales growth of 75.4% and 53.5%, respectively, in the third quarter of 2022.

Sector: Health care
Dividend yield: 3.8%
Market capitalization: $270 billion

The Coca-Cola Co. (KO)

Famously a favorite of Warren Buffett, who holds it as one of his top portfolio components at Berkshire Hathaway Inc. (BRK.B, BRK.A), Coca-Cola is about as time-tested a stock as can be imagined. The Atlanta-based beverage and snacks giant was founded in 1886, and with one of the most recognized consumer brands on the planet and a loyal customer base, it’s hard to imagine a scenario in which KO isn’t a dominant global stock several decades from now. With 60 years of dividend increases to brag about, few income stocks are more reliable. You won’t get dynamic growth out of Coca-Cola — analysts expect just a 3% bump in revenue in 2023 — but it’s also incredibly resilient, posting a total return of 10.6% in 2022, a year when the S&P 500 itself plunged 19.4%.

Sector: Consumer defensive
Dividend yield: 2.8%
Market capitalization: $260 billion

Costco Wholesale Corp. (COST)

Founded in 1976 and based in the humble town of Issaquah, Washington, Costco has come a long way from its humble roots. Now a sprawling $200 billion membership warehouse retailer, Costco is the cream of the crop in its industry. Its simplistic business model of charging a modest membership fee and then selling goods in bulk at near-cost has proven incredibly profitable. Those membership fees add up quickly, with COST raking in $4.3 billion in membership dues in the 12 months through Nov. 20, 2022. Although a 0.7% dividend yield won’t change your life, its $3.60 per share annual payout is up ninefold since being initiated at 40 cents in 2004. Costco shares are off to a good start in 2023, rising 5.7% through Jan. 12 on the heels of news that December same-store sales rose 7.3%, excluding gasoline and foreign exchange fluctuations.

Sector: Consumer defensive
Dividend yield: 0.7%
Market capitalization: $200 billion

Johnson & Johnson (JNJ)

Next up is arguably the prototype for all blue-chip dividend stocks, Johnson & Johnson. Buying JNJ shares is almost like buying a diversified exchange-traded fund. The company’s business is spread across three divisions: pharmaceuticals, medical devices and consumer health. Another member of the elite dividend aristocrats club, like Coca-Cola, Johnson & Johnson has roots going back to 1886 and has now grown its dividend annually for six decades and counting. Consumer brands include dozens of trusted global names like Benadryl, Listerine, Pepcid, Tylenol, Sudafed and Band-Aid, to name just a few. JNJ’s pharmaceutical segment, however, is both the largest of its three divisions and the fastest growing, advancing 9% in the third quarter of 2022 as drugs like Darzalex (multiple myeloma), Tremfya (plaque psoriasis/arthritis) and Stelara (inflammatory diseases) drove results.

Sector: Health care
Dividend yield: 2.6%
Market capitalization: $450 billion

United Parcel Service Inc. (UPS)

Headquartered in Atlanta and founded in 1907, UPS is a dominant player in transportation, logistics and package delivery on a global scale. Regardless of how digitized the economy becomes, folks will still need raw, physical goods to get from point A to point B, and UPS’ long-standing freight infrastructure and know-how make it an established player in an oligopolistic industry with relatively high barriers to entry. Don’t let this staid, boring business mislead you: UPS grew from $66.6 billion in revenue in 2017 to an expected $101 billion in sales in 2022. Although its final 2022 numbers aren’t out yet, if analyst estimates are correct, its 2022 earnings per share of $12.92 will reflect a roughly 130% jump from the $5.61 in EPS it reported for 2017. Trading at less than 15 times earnings, UPS has a payout ratio (the percentage of earnings that it pays out in dividends) of just 44%, reflecting plenty of room for future increases.

Sector: Industrials
Dividend yield: 3.3%
Market capitalization: $150 billion

PNC Financial Services Group Inc. (PNC)

Although its $65 billion market cap makes it the smallest company on this list, regional bank PNC isn’t small by any measure of the imagination. Pittsburgh-based PNC was formed all the way back in 1852. It has managed to survive and thrive throughout some of the toughest times in American history, escaping the Civil War and Great Depression and the many other crashes and recessions that hampered businesses over the last 170 years. With bank stocks beaten down in 2022 as investors anticipated another recession, PNC should be in great shape if the economy manages to make a soft landing. Even if it doesn’t, the indefatigable PNC looks like a value stock, trading for just over 10 times forward earnings despite analyst expectations for roughly 10% revenue and earnings growth in 2023.

Sector: Financial
Dividend yield: 3.6%
Market capitalization: $65 billion

Cisco Systems Inc. (CSCO)

Last but not least is Cisco, the sprawling communications equipment company that provides much of the proverbial plumbing that makes the modern internet and technological world hum. As a tech stock, the company’s history dates “only” back to 1984. But Cisco managed to quickly establish itself as a vital part of the world’s information technology infrastructure and, perhaps even more impressively, stay there. Sure, Cisco won’t break any growth records these days — analysts expect both top- and bottom-line growth between 5% and 6% in fiscal 2023 — but after the 2022 tech sector sell-off, long-term investors have a chance to get into Cisco at reasonable levels. Shares currently go for less than 14 times earnings, and the company’s conservative 54% payout ratio shows that profits could be nearly cut in half without putting the dividend at risk.

Sector: Technology
Dividend yield: 3.1%
Market capitalization: $195 billion

7 dividend stocks to buy and hold forever:

— Abbvie Inc. (ABBV)

— The Coca-Cola Co. (KO)

— Costco Wholesale Corp. (COST)

— Johnson & Johnson (JNJ)

— United Parcel Service Inc. (UPS)

— PNC Financial Services Group Inc. (PNC)

— Cisco Systems Inc. (CSCO)

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