There are a few different ways a long-term investor can make money trading stocks. When you invest in high-quality companies that have the ability to contribute consistent growth to your holdings over the long haul, their rise in share price over time can pump serious value into your portfolio and make you richer in the process.
Another way to maximize your returns as an investor is to buy high-caliber dividend stocks. Dividends are a great way to increase your cash on hand, which you can use to invest in more stocks, put toward your nest egg, or simply sock away.
Dividend investing is an excellent strategy to incorporate into your overall long-term stock buying thesis, but with so many options to choose from, finding the best dividend stocks for your portfolio isn't always easy. Today, we're going to take a look at two of the top dividend stocks for long-term investors that you can easily buy and hold for decades.
Let's get started.
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1. Realty Income
Realty Income (O 0.24%) pays its dividend on a monthly basis rather than just once per quarter, and it also has an impressive track record of consistently raising that dividend. In fact, the company has boosted its payouts a whopping 111 times since going public nearly three decades ago, and it's in the elite club of stocks known as Dividend Aristocrats. As if that wasn't enough, Realty Income's dividend yield of 4.2% is roughly double that of the average stock trading on the S&P 500.
Realty Income operates as a real estate investment trust (REIT). It boasts a broad portfolio of more than 6,600 commercial properties that it leases to big brand names like Walgreens, Dollar General, FedEx, CVS, and Walmart. Its portfolio features clients from a well-diversified mixture of industries ranging from grocery to health and fitness to home improvement.
Realty Income has continued to grow its balance sheet and portfolio throughout the pandemic, all while steadily enriching investors with its robust dividend payout. In 2020, the REIT generated 11% revenue growth, and funds from operations (FFO) grew by a healthy 10% from the prior year.
And in the first quarter of 2021, Realty Income's revenue shot up 7% from the year-ago period. Management also said that the company collected more than 94% of its contractual rent across its entire portfolio of properties and roughly 90% of the rent owed by its top 20 clients during the three-month period.
Realty Income's robust dividend and continued growth in this volatile market environment make it a compelling buy for investors with a range of trading styles and experience. Shares of the company have also gained about 10% over the past year. If you're searching for a stock that can lend stable growth to your portfolio and consistently increase your cash position with virtually zero effort from you, Realty Income is a no-brainer buy to add to your list.
2. Johnson & Johnson
Johnson & Johnson (JNJ -1.15%) is a stock I write about often, and it's one that investors can return to again and again to capitalize on its blue-chip status and attractive dividend. As one of the oldest and largest pharmaceutical companies in the world with a distinctive lineup of top-selling products, Johnson & Johnson offers shareholders the advantage of recession resilience and long-term value potential.
The company's dividend yields about 2.6% at the time of this writing, and with more than a half-century of consecutive dividend increases to its name, Johnson & Johnson has made it into the Dividend King club.
The company's stable of offerings experienced varied effects from the height of the COVID-19 pandemic last year. Even so, Johnson & Johnson still closed 2020 with about 1% overall sales growth and respective sales spikes of 3% and 8% in its consumer health and pharmaceutical divisions.
Its first-quarter 2021 financial performance was even more impressive. During this three-month period, total sales increased 8% and net earnings grew 7% year over year. While the consumer health division saw a slight decline in sales, the company's pharmaceutical division generated robust year-over-year sales growth to the tune of 7%, and sales of its medical devices increased nearly 9% from the year-ago period.
With well-known consumer products including Tylenol, Benadryl, Motrin, Aveeno, and Listerine as well as blockbuster prescription drugs like Darzalex (for blood cancer) and Stelara (for psoriasis), Johnson & Johnson caters to a broad array of consumer needs that face invariable demand in a mixture of market environments. This makes the company far less prone to fall prey to headwinds during a market crash or recession.
In the current market environment, with inflation on the rise and talk about another market crash lingering, Johnson & Johnson is a smart stock to buy that can keep your portfolio on track while generating enviable cash flow at the same time.
