9 Dividend Stocks to Buy and Hold Forever
By US NEWS & World Report: Jeff Reeves
NVS: It has been a
volatile year for many health care stocks, with some companies soaring based on
potential related to the pandemic and others suffering amid economic
uncertainty. However, Swiss drugmaker Novartis stands out with bright,
long-term prospects thanks to its diversification. NVS offers a wide array of
treatments for a host of diseases, across skin conditions, cancers,
neurological disorders and a wide variety of other chronic ailments. Novartis
admittedly only pays dividends once a year, but that shouldn't matter when your
holding period is forever -- and with a robust product pipeline alongside a
stable of proven moneymakers, the future looks very bright for this health care
play beyond the fad of pandemic investments in 2020.
NHI: A twist on the
reliable business of health care is medical real estate firm National Health
Investors. NHI specializes in financing solutions across the sector, largely
focusing on senior-housing facilities and retirement communities. It also
includes hospitals, medical office buildings and other sites. Nothing is more
certain in life than getting old and needing more care as we age, so the result
is a reliable stream of cash to fuel generous and reliable dividends from NHI
that will withstand the test of time. As proof, while some medical real estate
plays have cut their dividends lately, NHI actually increased its payouts from
$1.05 to $1.10 per quarter in early 2020.
(Retirement communities is a concern)
PETS: Another very different take on health care is this
smaller and pet-focused offering, PetMed. Though selling heartworm and flea
medication is not as glamorous as treating cancer or developing a cure for
Alzheimer's disease, investors should be interested in PETS for its dominance
in the durable and fast-growing category of pet expenses. While Wall Street has
really fallen in love with this stock this year as it has been growing rapidly,
this is not a flash in the pan stock; reliable revenue fuels dividends that
have surged from 18 cents in 2016 to 28 cents a share presently -- more than
55% growth in just under five years and an encouraging sign of future income
potential. Whatever the future holds, you can be sure there will be pet owners
in it. That's good news for PetMed and its shareholders.
AMCR: While online merchants such as PetMed have seen their
day in the sun in 2020 thanks to social distancing, the reality is that more
dollars are being spent digitally every year. Consider that in 2019, total
e-commerce spending in the U.S. was up about 15% over the prior year, while
overall spending and gross domestic product growth were in the low single
digits. You can pick and choose individual merchants if you want to really cash
in on this growth trend, but that's risky -- and besides, most highfliers like
Amazon.com (AMZN) don't pay a penny in dividends. A lower-risk, long-term play
on this trend is packaging giant Amcor, which makes all manner of containers
that allow e-commerce businesses to thrive and ship their goods intact. It's
not as high-margin as selling a TV or a mattress online, but it's certainly
more reliable as evidenced by a steady stream of dividends.
TD: If you're looking for a "forever" financial
stock, it's hard to forget about the 2008 financial crisis that resulted in
catastrophic losses for big U.S. banks like Citigroup (C)
and Bank of America (BAC). However, our neighbors to the north fared much better
because banks like TD are more closely regulated institutions and do not engage
in risky investment and lending practices. TD maintains little exposure to
investment banking and trading to this day -- cutting out risky and cyclical
business lines -- but it's one of the largest banks in the world anyway, at
more than $80 billion in market capitalization. That's larger than Goldman
Sachs (GS), and much less risky with its retail-banking focus.
With a generous dividend that dates back to 1857, this is a long-term holding
you can rely on.
DUK: Duke Energy
OKE: An energy stock of a different flavor, Oneok is a
"midstream" fossil fuel company focused on pipelines and processing
facilities. It operates one of the largest natural gas systems in the country,
with facilities to liquefy, store and transport gas. The company has been in
operation for more than a century. There's not as much potential as energy exploration firms -- which find new oil and gas
fields and bring them online -- and the margins are smaller than wholesalers
and refiners that take fossil fuels and market them to the masses. That said,
the pipelines and tanks business of OKE means reliable revenue for the long
haul and dividends that are far less risky than other stocks in the energy
sector that are more closely tied to trends of supply and demand.
CB (chubb): peaking of less risk, Switzerland-based insurance giant Chubb is in the business of managing risk
via its policies that cover residences, automobiles, businesses, boats and a
host of other assets. With more than a century of operations under its belt --
and more than a century of dividend payments -- CB knows a thing or two about
how to cover the costs of claims and still have plenty left over for its
shareholders. Though not a household name, this nearly $60 billion financial
company offers a dividend that is sure to stick around and even grow
considerably in the years to come.
