Cash in on long-term income potential with these dividend stocks.
When it comes to investing, it’s hard to see a few months into the future let alone several decades. After all, nobody expected a pandemic or double-digit inflation or a prolonged war in Ukraine, and these are just occurrences from the last three years. That means investors looking at the long term have to prioritize resilience and stability above almost anything else. Dividends are an important indicator of stability, as companies have to have a steady stream of cash to support those payouts. They’re also a way to supercharge your returns over the long run if the company is committed to growing its dividends over time. The following stocks in seven different sectors all have a lot to offer on these fronts, and are worth considering if you’re looking for holdings you can buy once and hold on to forever.
Coca-Cola Co. (ticker: KO)
If ever there was a stock with staying power, it’s Coca-Cola. This consumer staples stock is a global giant with more than 120 years of operating history, operations in 200 nations around the world and an enviable track record of 61 straight years of dividend growth. Sure, sugary soft drinks aren’t what they used to be in the U.S., but Coke products have plenty of growth potential overseas as well as incredibly strong baseline demand in Western markets. Besides, there’s much more than just Coca-Cola to drink up here with a product portfolio that includes Vitaminwater, Fuze teas, Powerade sports drinks and Minute Maid juices, among other brands. As proof of the long-term income potential of this stock, Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) is its largest shareholder with more than 9% of the company ownership. That provides strong institutional buying pressure to support shares, and strong pressure to keep up consistent dividends going forward.
Sector: Consumer staples
Yield: 3%
Consolidated Edison Inc. (ED)
Though certainly no small fry, Consolidated Edison is a fraction of the size when compared with the biggest names in the utility sector. Still, there’s more to a long-term dividend stock than scale alone. What ConEd offers is consistency, as well as a safe position in a very attractive regional market around metropolitan New York City. Electricity is a necessity, just like food and housing, which means guaranteed baseline demand. On top of that, most U.S. electricity companies are regional monopolies with very little competition. That’s what makes ED stock so attractive to income investors, with its 3.5 million customers in the New York City area and natural gas connections serving 1.1 million more. A lot may change in the decades ahead, but since ConEd has provided about 50 years of consecutive dividend increases to its stockholders, it seems a good bet that this dividend stock will still be delivering income to shareholders.
Sector: Utilities
Yield: 3.5%
Johnson & Johnson (JNJ)
The bluest of the blue chip stocks, Johnson & Johnson is one of the 10 largest stocks on Wall Street, with a massive brand and almost 140 years of operations. It’s also one of just two U.S. companies with a top AAA credit rating. That adds up to an incredibly stable foundation that ensures this company isn’t going anywhere. From a long-term dividend perspective, the health care giant has raised its payouts for 60 years running — one of the longest track records on Wall Street — but still has a payout ratio of less than 50%, indicating more increases are possible down the road. With a dominant consumer health business that includes Tylenol and Band-Aid products as well as high-margin drugs and medical devices, this is a health care stock with staying power.
Sector: Health care
Yield: 2.8%
JPMorgan Chase & Co. (JPM)
JPMorgan is one of the most dominant players in the financial sector. And thanks to massive operations and steady profits, it is definitely the kind of dividend stock you can buy and hold forever. JPM was the first major financial organization in the US to eclipse its 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. Compare that with a stock like Citigroup Inc. (C), which was paying $5.40 per quarter in 2007 and now only pays a mere $2.04 per year. This megabank has weathered all manner of crises since its birth more than 220 years ago, and is the largest U.S. bank by assets today. For long-term investors, that’s the kind of history that should give you confidence for the future.
Sector: Financials
Yield: 2.9%
Microsoft Corp. (MSFT)
It’s hard to imagine the technology sector will look the same in 10 years, let alone 100 years. That makes picking a stock to own “forever” quite a challenge. Still, Microsoft seems to stand up. It’s a $2 trillion powerhouse of unrivaled scale and, just like the aforementioned Johnson & Johnson, is also one of the only U.S. corporations with a AAA credit rating. On top of that, it has a staggering $100 billion hoard of cash on hand as of December 31. The dividend is the smallest on this list as measured by current yield. However, its first regular dividend instituted in 2013 was 23 cents per share and a decade later MSFT is paying more than double that at 68 cents per share. If you’re looking for long-term dividend growth, then there’s incentive to buy and hold for bigger paydays down the road.
Sector: Technology
Yield: 1.1%
Prologis Inc. (PLD)
Though perhaps not a household name like the other companies that make up this list, Prologis is actually the largest publicly traded real estate firm on U.S. markets. That scale gives it unrivaled stability that few other companies can match, in any sector. But what really makes PLD a stock you can buy and hold forever is the fact that its business isn’t related to volatile housing or commercial real estate trends, but rather the operation of massive warehouses, industrial properties and logistics hubs. All told, it leases 1.2 billion square feet of space to about 6,600 customers in about 20 countries worldwide. Though the global economy is certain to go through ups and downs, there’s little doubt that Prologis will be there in the long run for businesses looking for space in the future.
Sector: Real estate
Yield: 2.4%
Verizon Communications Inc. (VZ)
Everyone knows telecom titan Verizon, the largest U.S. wireless provider with nearly 150 million retail connections — significantly higher than the 110 million held by No. 2 T-Mobile US (TMUS). The necessity of mobile communication and the “stickiness” of its customers means an incredibly reliable stream of cash that is certain to keep flowing for many years to come. What’s more, Verizon is estimated to tally $4.71 in earnings per share for fiscal 2023 while only paying $2.61 in dividends per share at present. That’s only about 55% of total profits, meaning payouts aren’t just sustainable but ripe for future increases. And considering the yield is already quite generous, that makes VZ a very attractive bet for long-term buy-and-hold investors.
Sector: Telecom
Yield: 6.5%
7 dividend stocks to buy and hold forever:
— Coca-Cola Co. (KO)
— Consolidated Edison Inc. (ED)
— Johnson & Johnson (JNJ)
— JPMorgan Chase & Co. (JPM)
— Microsoft Corp. (MSFT)
— Prologis Inc. (PLD)
— Verizon Communications Inc. (VZ)
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7 Dividend Stocks to Buy and Hold Forever originally appeared on usnews.com
Update 02/10/23: This story was previously published at an earlier date and has been updated with new information.
