Identifying stocks to buy and hold for decades rather than months or years can be difficult. The world and the economy are constantly changing, creating risks for long-term investors. A dividend payment from a large, profitable company in a stable or growing industry is about the closest thing to a guarantee a long-term investor can find. In fact, dividends alone have accounted for about 40% of total stock market returns since 1930.
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Here are seven attractively valued dividend stocks investors can bet on for the long term, according to Morningstar analysts:
| Stock | Implied upside over July 24 closing price | Forward dividend yield as of July 25 |
| Verizon Communications Inc. (ticker: VZ) | 67.7% | 7.7% |
| Honeywell International Inc. (HON) | 7.5% | 2% |
| Amgen Inc. (AMGN) | 13.8% | 3.7% |
| Goldman Sachs Group Inc. (GS) | 14.2% | 2.9% |
| Travelers Cos. Inc. (TRV) | 11% | 2.3% |
| Dow Inc. (DOW) | 37% | 5.3% |
| Walgreens Boots Alliance Inc. (WBA) | 30.5% | 6.5% |
Verizon Communications Inc. (VZ)
Verizon Communications is the largest U.S. wireless carrier, and the company also offers wireline phone and broadband services. Verizon’s 7.7% dividend is the highest yield on this list and is the highest yield of any stock in the Dow Jones Industrial Average
. Analyst Michael Hodel says he does not expect significant financial liability for Verizon following recent media reports of lead in cable sheathing, news that sent Verizon shares sharply lower. Long-term dividend investors can buy the dip and lock in an even higher dividend yield. Morningstar has a “buy” rating and $57 fair value estimate for VZ stock, which closed at $33.98 on July 24.
Sector: Communication services
Honeywell International Inc. (HON)
Honeywell is an industrial conglomerate that specializes in aviation, industrial process automation, building automation, industrial materials and safety equipment. Analyst Joshua Aguilar says Honeywell’s recent earnings beat and guidance hike are clear signs the company’s management is confident in its backlog and order outlook. Aguilar says Honeywell is one of the top multi-industrial investments in the market, and the company has successfully pivoted to address energy efficiency, carbon reduction, and other markets that appeal to investors and funds emphasizing environmental, social and governance initiatives. Morningstar has a “buy” rating and $225 fair value estimate for HON stock, which closed at $209.32 on July 24.
Sector: Industrials
Amgen Inc. (AMGN)
Amgen is one of the world’s largest biotechnology companies. Analyst Karen Andersen projects probability-adjusted sales of $2.6 billion for Amgen’s obesity drug candidate AMG 133 by 2032, assuming a 30% chance of approval by 2026. She says the pending acquisition of Horizon Therapeutics PLC (HZNP) will improve Amgen’s rare disease and immunology drug portfolio, but the deal’s steep price tag of $27.8 billion adds little value for investors. Andersen projects Horizon’s drug portfolio will generate greater than $6 billion in sales by 2028. Morningstar has a “buy” rating and $268 fair value estimate for AMGN stock, which closed at $235.42 on July 24.
Sector: Health care
[See: 7 Best High-Dividend Mutual Funds.]
Goldman Sachs Group Inc. (GS)
Goldman Sachs is one of the world’s leading investment banks and securities companies. Financial sector stocks have been weighed down by the banking crisis earlier this year, but analyst Michael Wong says Goldman’s roughly $1 billion in impairments for its consumer banking platforms business and various real estate investments in the second quarter aren’t material for a company like Goldman that has a market value of more than $100 billion. Wong projects Goldman can reach a return on tangible common equity of 14.5%. Morningstar has a “buy” rating and $410 fair value estimate for GS stock, which closed at $358.93 on July 24.
Sector: Financials
Travelers Cos. Inc. (TRV)
Travelers is a commercial and personal lines property-casualty insurance company. Analyst Brett Horn says $1.5 billion in catastrophe losses in the second quarter represented 16.1% of net earned premiums, roughly double the company’s loss levels from a year ago. Despite catastrophes taking a huge bite out of insurance profits, Horn says Travelers’ core business trends remain positive, including an 89.4% underlying combined ratio. Horn says weakness in personal auto insurance has hurt Travelers’ personal insurance segment, but its commercial insurance business is strong. Morningstar has a “buy” rating and $194 fair value estimate for TRV stock, which closed at $174.84 on July 24.
Sector: Financials
Dow Inc. (DOW)
Dow is a global chemical producer and distributor that specializes in polyolefins, chlor-alkali products, and coatings. Dow’s stock is up 7% this year, including dividends, through July 24 — the best performance of any stock on this list. Dow’s history dates back more than 125 years, and analyst Katherine Olexa says DOW is her top petrochemical stock pick. Olexa says Dow faces near-term macroeconomic headwinds, but petrochemical demand should remain robust over the next five years. She says Dow benefits from reduced U.S. natural gas prices. Morningstar has a “buy” rating and $72 fair value estimate for DOW stock, which closed at $52.55 on July 24.
Sector: Materials
Walgreens Boots Alliance Inc. (WBA)
Walgreens Boots Alliance is a drug store retailer that also serves as an integrated pharmacy and health care services provider. WBA stock is down 15.6% this year, including dividends, the worst performance of any stock on this list. Analyst Keonhee Kim says the company’s poor financial performance has been driven largely by a sharp drop in COVID-19 related services. In addition, Kim says inflation is causing customers to reduce their discretionary spending. Fortunately, Kim says international expansion and new Village Medical locations provide growth opportunities. Morningstar has a “buy” rating and $40 fair value estimate for WBA stock, which closed at $30.64 on July 24.
Sector: Health care
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7 Dividend Stocks to Buy and Hold Forever originally appeared on usnews.com
Update 07/25/23: This story was previously published at an earlier date and has been updated with new information.
