6 Dividend Stocks to Buy and Hold Forever
The top dividend stocks to buy are ones you can hold forever. Once you invest, you can sit back and watch the dividend income roll into your account. This approach is a favorite among some of the world’s best investors, like Warren Buffett. Here’s one of his many famous quotes…
When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.
Although, the downfall of this strategy is short-term swings. A portfolio of dividend stocks can jump around a lot in any given year. During a downturn, you could see a 30% loss. But if you’re in it for the long haul, you’ll see the markets recover and push higher.
The businesses backing the dividend stocks below have sound fundamentals. With their steady cash flows, they can continue rewarding shareholders through thick and thin. So without further ado, let’s get to it…
Top Dividend Stocks to Buy
Here are the six dividend stocks to buy and hold forever…
- 3M (NYSE: MMM)
- Archer-Daniels-Midland (NYSE: ADM)
- Emerson Electric (NYSE: EMR)
- Kimberly-Clark (NYSE: KMB)
- Sysco (NYSE: SYY)
- Hormel Foods (NYSE: HRL)
Dividend Yield: 3.7%
Annual Dividend Increases: 61
Since its humble beginning in 1902, 3M has grown to a more than $90 billion business. The company has economies of scale and markets more than 60,000 products. This diversification helps keep sales and profits flowing.
That consistency has helped 3M make it onto the list of Dividend Kings. These are companies that have increased annual dividends consecutively for at least the last 50 years. The recent trailing 12-month payout ratio also comes in below 70%. That, along with other financial stability, makes the dividend look safe going forward.
Dividend Yield: 3.1%
Annual Dividend Increases: 45
Archer-Daniels-Midland is one of the largest agricultural companies in the world. It not only produces raw food, but also processes it. This vertical integration and the company’s scale help it lead with pricing and profitability.
Getting down to brass tacks, as long as people continue to eat, Archer-Daniels-Midland will continue to make money. Also, the population continues to grow and consume more. This trend makes it one of the safest dividend stocks to buy.
Dividend Yield: 3.1%
Annual Dividend Increases: 63
Emerson Electric is a diversified engineering giant. It makes process and control systems, air conditioners, water heaters, and much more. The company’s Automation Solutions segment makes up more than half its sales and profit. And this segment will continue to expand as industries automate to stay competitive.
Each year, Emerson Electric pumps out steady cash flows to pay bigger dividends. It’s also an elite Dividend King, and the dividend looks safe going forward. The recent payout ratio comes in at 62%, and that gives it plenty of wiggle room to continue increasing its dividend.
Dividend Yield: 2.9%
Annual Dividend Increases: 47
Kimberly-Clark is one of the largest tissue and hygiene products producers. Its products reach an amazing one-quarter of the entire world’s population. And the pandemic has increased demand for some of its products.
The company’s diversification and scale have led to stable cash flows. The dividend yield also easily outpaces inflation and Treasury yields. The trailing 12-month payout ratio comes in at a low 56%. This, along with Kimberly-Clark’s financial health, makes the payout look safe going forward.
Dividend Yield: 2.9%
Annual Dividend Increases: 50
Sysco is one of the world’s largest food distributors. It helps deliver food products from producers to consumers. Some of its customers include restaurants, schools, governments, hotels, travel companies and healthcare buildings.
This diversification has helped it become one of the newest Dividend Kings. And similarly to Archer-Daniels-Midland, as long as people continue to eat, Sysco will profit along the way. As a result, Sysco is one of the best dividend stocks to buy and hold.
Dividend Yield: 1.9%
Annual Dividend Increases: 54
Hormel Foods makes a wide range of foods, and one large segment is meat products. And although plant-based products are becoming more popular, the company will continue to profit from the massive meat industry. One area in which the company shines is gaining market share and customer loyalty.
Hormel Foods offers the lowest dividend yield on this list. But it still easily outpaces what you could get from even a 30-year fixed-rate government bond. Also, the trailing 12-month dividend payout ratio comes in close to 50%. That means the company should be able to continue raising its dividend.
Final Thoughts Before Investing
These are some time-tested companies. They’ve continued to adapt and profit along the way. This consistency has helped them become some of the top dividend stocks to buy and hold.
If you have the ability to invest and stay invested, these companies will likely keep paying you bigger dividends each year. And if you’re looking for an even more frequent stream of income, check out these top monthly dividend stocks.
If you’re looking for more dividend investing opportunities, sign up for our free e-letter below. It’s packed with investing tips and research. Whether you’re a new or already experienced investor, you’ll find some useful insights from our market experts.
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About Brian Kehm
Brian Kehm double majored in finance and accounting at Iowa State University. After graduating, he went to work for a cryptocurrency company in Beijing. Upon returning to the U.S., he started working with financial publishers and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring the great outdoors.