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3 Dividend Aristocrats You Can Buy and Hold Forever

By Keith Speights - May 5, 2021 at 6:01AM

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They're built for the long run.

You might think that a company that can increase its dividend for 25 or more consecutive years would automatically be a good pick to invest in. That's not necessarily true though. Some of these companies prioritize their dividend programs but don't deliver growth that keeps pace with the broader market.

However, there are some stocks with rock-solid dividend track records that should keep the dividend hikes coming and deliver strong long-term growth. Here are three Dividend Aristocrats that you can buy and hold forever.

$100 bills connected to form an infinity symbol.

Image source: Getty Images.

Johnson & Johnson

My Motley Fool colleague Brian Orelli wrote years ago that any time is a good time to buy Johnson & Johnson (JNJ -0.53%) stock if you hold it long enough. He was right then -- and he's right today. 

Johnson & Johnson isn't just a Dividend Aristocrat; it's a Dividend King. The company has increased its dividend for a remarkable 59 consecutive years. Its dividend currently yields north of 2.5%.

Aside from its dividend, probably the best reason to buy and hold J&J is that it's a way to invest in the growth of the healthcare sector. Johnson & Johnson ranks as the biggest healthcare company in the world. It operates in many of the most important markets in the healthcare sector, including consumer health products, medical devices, and pharmaceuticals.

Close to 70% of J&J's sales come from products that hold a No. 1 or No. 2 global market share. Roughly 25% of its total revenue stems from products launched over the last five years. Those two numbers underscore Johnson & Johnson's market leadership and innovation -- two factors that should help keep the stock in the winner's circle over the long term.

Lowe's

Lowe's (LOW 1.39%) isn't far behind Johnson & Johnson when it comes to dividend hikes. The home improvement giant has increased its dividend for 58 consecutive years. Its dividend yield of 1.2% isn't spectacular, but there are other reasons investors should consider Lowe's.

The company continues to deliver exceptional growth. In 2020, Lowe's reported revenue of $89.6 billion, a 24% year-over-year jump. Its earnings soared 36% to more than $5.8 billion.

Granted, the COVID-19 pandemic helped boost the company's performance last year. However, the interest in home improvement is poised to remain strong over the long run.

Lowe's is also beefing up its offerings for professional contractors. This move could significantly increase the company's profits in the future.

Walmart

Unlike Johnson & Johnson and Lowe's, Walmart (WMT 0.81%) is still only a Dividend Aristocrat and hasn't attained the status of Dividend King. However, the huge retailer is getting close: Walmart announced its 48th consecutive annual dividend increase in February. As is the case for Lowe's, though, Walmart's dividend yield of 1.57% isn't going to cause investors' mouths to water.

You might wonder about Walmart's growth prospects after looking at its fiscal year 2022 guidance. The company projects year-over-year revenue and earnings declines on a constant-currency basis. However, this outlook isn't as problematic as it seems.

Walmart's divestitures of businesses in Argentina, the U.K., and Japan will cause its top and bottom lines to fall in fiscal 2022. Adjusting for these divestitures, though, the company's financial performance should look much better. 

More importantly, Walmart has solid long-term opportunities, especially with online shopping and home delivery. The company is even investing in General Motors' Cruise self-driving car business with the goal of developing a low-cost and highly scalable delivery system. With its continual focus on driving cost savings, Walmart should be in a good position to keep its dividend streak going.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson and Lowes. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$127.61 (0.81%) $1.03
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$170.20 (-0.53%) $0.91
Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
LOW
$201.84 (1.39%) $2.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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