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 with a leading market share in a stable or growing industry is about the closest thing to a guarantee a long-term investor can find in the market. In fact, dividends alone accounted for about 40% of total stock market returns from 1930 through mid-2022, according to Fidelity.
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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 from Sept. 27 closing price | Forward dividend yield |
| Verizon Communications Inc. (ticker: VZ) | 66.7% | 8.1% |
| Honeywell International Inc. (HON) | 21.4% | 2.2% |
| Goldman Sachs Group Inc. (GS) | 27.4% | 3.4% |
| 3M Co. (MMM) | 40.2% | 6.3% |
| Travelers Cos. Inc. (TRV) | 15.5% | 2.4% |
| Dow Inc. (DOW) | 41.2% | 5.6% |
| Walgreens Boots Alliance Inc. (WBA) | 71.3% | 9.1% |
Verizon Communications Inc. (VZ)
Verizon Communications is the largest U.S. wireless carrier, and the company also offers wireline and broadband services. Analyst Michael Hodel says shareholders have been concerned about Verizon’s financial exposure tied to its lead-sheathed cabling, but he believes Verizon will not face significant lead-related liabilities. Hodel says Verizon will ultimately have to pay to remove some of its lead cabling, but the stock remains very attractively valued at current levels. Verizon’s average revenue per postpaid account was up 4% year over year in the second quarter, an encouraging trend. Morningstar has a “buy” rating and $54 fair value estimate for VZ stock, which closed at $32.40 on Sept. 27.
Sector: Communication services Yield: 8.1%
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 the market has overreacted to cyclical weakness in Honeywell’s business, and the stock’s 2023 pullback is a buying opportunity for longer-term investors. Aguilar says Honeywell is one of the best multi-industrial investments in the market, and the company is well positioned in key investing trends, such as energy efficiency, warehouse automation and e-commerce. He projects mid-single-digit annual revenue growth over the next five years. Morningstar has a “buy” rating and $228 fair value estimate for HON stock, which closed at $187.88 on Sept. 27.
Sector: Industrials Yield: 2.2%
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 regional banking crisis earlier this year. Goldman reported roughly $1 billion of impairments in the second quarter tied to its consumer banking platforms business and its real estate investments. Analyst Michael Wong says a bank like Goldman, with its $106 billion market cap, can easily digest $1 billion in impairments. Meanwhile, underwriting revenue was up 25% year over year in the second quarter and Wong says investment banking revenue may be bottoming. Morningstar has a “buy” rating and $410 for value estimate for GS stock, which closed at $321.95 on Sept. 27.
Sector: Financials Yield: 3.4%
3M Co. (MMM)
3M is a diversified global manufacturing company that provides a wide range of manufacturing, industrial, health care, safety and consumer products. In late August, 3M announced that it had agreed to pay $6 billion in cash and stock between 2023 and 2029 as part of a settlement to resolve all claims over the company’s Combat Arms earplugs. Aguilar says the settlement significantly reduces 3M’s risk outlook. In addition, the settlement doesn’t change his bullish long-term view of the company and is a step in the right direction for shareholders. Morningstar has a “buy” rating and $131 fair value estimate for MMM stock, which closed at $93.46 on Sept. 27.
Sector: Industrials Yield: 6.3%
Travelers Cos. Inc. (TRV)
Travelers Companies is a commercial and personal lines property-casualty insurance company. Travelers reported a net loss of $14 million in the second quarter thanks to $1.5 billion in catastrophe losses. However, analyst Brett Horn says the company’s underlying trends remain mostly positive, including a combined ratio of 89.4% in the quarter, slightly lower than 92.4% a year ago. A combined ratio is a measure of profitability. Horn says the personal auto business has been a headwind, but Travelers’ commercial insurance profitability outlook is positive and commercial underwriting margins are attractive. Morningstar has a “buy” rating and $194 fair value estimate for TRV stock, which closed at $167.92 on Sept. 27.
Sector: Financials Yield: 2.4%
Dow Inc. (DOW)
Dow is a global chemical product producer and distributor that specializes in polyolefins, chlor-alkali products and coatings. In addition to its dividend, Dow’s stock is up 5.2% on a total return basis through Sept. 27 this year, the best performance of any stock on this list. Dow’s history dates back more than 125 years, and analyst Katherine Olexa says the company’s performance should improve along with global economic conditions in 2024 and beyond. Unfortunately, Olexa says the second half of 2023 could remain challenging, and China’s sluggish economic performance exacerbates Dow’s weak near-term outlook. Morningstar has a “buy” rating and $72 fair value estimate for DOW stock, which closed at $51 on Sept. 27.
Sector: Materials Yield: 5.6%
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 has a negative 41.1% total return through Sept. 27, the worst performance of any stock on this list. On the bright side, the stock’s severe underperformance has driven its dividend yield up to 9.1%, the highest yield on this list and the highest yield of any stock in the Dow Jones Industrial Average. Analyst Keonhee Kim says Walgreens shares are attractively valued following the stock’s 2023 sell-off. Morningstar has a “buy” rating and $36 fair value estimate for WBA stock, which closed at $21.02 on Sept. 27.
Sector: Health care Yield: 9.1%
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7 Dividend Stocks to Buy and Hold Forever originally appeared on usnews.com
Update 09/28/23: This story was previously published at an earlier date and has been updated with new information.
