Forever? Seems like a long time. But some of the best stocks that offer dividends have pretty much been around forever. At least most of our lifetimes. These companies belong to an elite class called Dividend Aristocrats. To be part of the aristocrats, a company must be in the S&P 500 and paid/increased its dividend every year for 25 consecutive years. Every company in our list belongs to this elite class and some even fall under a more... noble class if you will. Let's dive in.
Proctor & Gamble
Have you ever looked at the label of a household product? Odds are you will find the P&G logo on that label. Here are some of the companies owned by P&G:
These are products we use every day, and will most likely continue to use everyday for the rest of our lives. So, it would make sense to own shares in the stock that owns these products, no?
If that alone doesn't convince you, let's look at the dividends. Remember how we mentioned that some companies belong to even more elite class? Well, this is one of those names. Proctor & Gamble belongs to the uber elite Dividend Kings. To be a king, the company must increase its dividend for 50+ consecutive years. P&G has increased its dividend for 64 years straight! And this past year the company increased its dividend 10% to $0.87 per share. That's not something that happens often and if you were an investor, you would have been very happy.
There's many reasons why this company is the number one choice for us. Check out our full stock analysis here.
AbbVie
AbbVie was spun-off from Abbott Labs in 2013. Abbott now specializes in medical devices and diagnostic equipment, while AbbVie is a research based pharmaceutical company. In our opinion, either company will be a great hold for life, but we are going to focus on AbbVie.
Since 2013, AbbVie has had a ton of success, mostly coming from the best-selling drug in the world, Humira. In 2020 alone, Humira brought in nearly $20 billion in net revenue. The concern is that Humira's patent expires in 2023, resulting in a decrease in market share and possibility that the company will lose a large amount of revenue.
But AbbVie s a mega cap stock with a deep pipeline of drugs, including Skyrizi for plaque psoriasis and Rinvoq for rheumatoid arthritis. In 2019, AbbVie acquired Allergan and its products, including Botox, eye care products and women's health products. It is prepared for the patent cliff of 2023 and for many years to come.
Dating back to its Abbott years, AbbVie has increased its dividend for 49 consecutive years, meaning in less than a year, it will become a Dividend King. It's current yield of 4.5% will only continue to grow in our opinion. AbbVie is a very strong company, with huge growth potential and a fantastic dividend. Full analysis here.
Target
Many people believe brick and mortar stores are dead. While I do believe it is on life support, it is not quite gone yet. The coronavirus did its best to deliver the death blow, but some companies were able to survive and adapt. Being able to adapt is a sign that a company will last a long time and that is exactly what Target was able to do last year.
Target already had an online presence, but capitalized on an idea of using online for same day delivery and contactless store pickup. We all needed essentials last year, but we were scared of catching the virus. So Target allowed you to order online, park in front of the store and an employee would put the packages in your trunk without ever putting you or your family at risk. Or get the packages delivered same day. The fact that this idea was implemented quickly shows me that management will continue to come up with solutions, no matter the situation, and remain one of the leaders in the industry. In fact, Target reported sales growth of more than $15 billion in 2020, thanks in large part to digital sales.
Target's current dividend is $0.90 per share, a 32.4% increase from last year. 2021 marked Target's 50th consecutive year of raising dividends, allowing it to join the ultra elite Dividend Kings. Staying relevant, adapting and continuing to grow are all reasons we plan to hold forever. Full analysis here.
Realty Income
Real estate is a great cash flowing asset, there is no doubt about that. But people often refer to real estate as passive income. Between managing rentals, performing maintenance, and responding to emergencies, real estate is not passive in any sense of the word.
But along came REITs (real estate investment trusts). They allowed you to invest in real estate and receive dividends, without having to do anything. Actual passive income. And in our opinion, the best REIT in the market is Realty Income.
Realty Income is one of the largest companies in the REIT space. They currently own over 6,500 properties, many of which are net leases. A net lease is where the tenant is responsible for most of the operating costs of the property, making it a fairly low-risk asset. Here is a breakdown of the top tenants:
The company just announced an acquisition of a competitor, VEREIT, which will allow the company to accelerate growth and become an even more attractive company to invest in.
Realty Income is a Dividend Aristocrat, with 26 years of consecutive dividend increases. The current dividend yield is 4.16%, nearly double the average REIT dividend of 2.1%. Not to mention the dividend is paid out monthly, another enticing reason to own. Definitely one we will hold for a long time.
Enbridge
We don't recommend chasing dividend yield when investing for the long term. So while Enbridge's dividend yield is roughly 7.1%, that is not the reason to own the company - but it certainly doesn't hurt. And neither does the fact that it is a Dividend Aristocrat, increasing dividends for 26 straight years.
Enbridge is a Canadian oil pipeline giant. A majority of the company's earnings comes from its oil pipeline, which is estimated to account for 25% of all North American oil. Its natural gas pipeline accounts for another large portion of earnings, where 20% of all North American natural gas passes through. The rest of the earnings come from utilities and renewable energy.
Now, I know you're thinking oil is another industry on the way out. And as much as I want to agree, it is going to take a long time for that to be true. And as long as the world needs oil, someone will need to move it. That's where owning the pipelines makes sense. So, if you were Enbridge, wouldn't use the current system to finance the new renewable system? Well, that's exactly what Enbridge is doing; using its revenue to rapidly grow its renewable energy sector.
Since 1996, Enbridge has been developing its renewable energy sector. It has offshore wind developments in Europe, is building solar plants and is investing in its natural gas business, a much cleaner fuel than oil. This is a company adapting to the changing times and providing a ton of value to its shareholders. Another great name we will hold for the long term.
Conclusion
Dividends should have a place in your portfolio. These five names are stellar companies with amazing dividends that you can count on for years. Our goal here was to touch different sectors and provide a diverse group of stocks. There a plenty of great dividend stocks out there, but this are ones we will absolutely hold for the long term.
If you are new to the dividend investing world, we recommend "Dividend Investing Made Easy" by Matthew R. Kratter. It is a great option for new investors and breaks down the concept of dividends in very simple, easy to understand terminology.
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Disclosures
I am not a licensed financial advisor or financial professional. This is not investing advice. I am simply sharing my research and opinion based on that research. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
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