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3 Dividend Stocks That Will Pay You Forever

By Royston Yang – Dec 16, 2021 at 2:10AM

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Looking for a growing stream of passive income? You can find it in these dividend-paying companies with great track records.

A stress-free retirement is something most of us are hoping to achieve. To help reach that goal, it helps to have a robust investment portfolio to ensure you have a nest egg that will make you feel financially safe, but it helps to have investments that generate a steady stream of passive income to fund our daily needs.

This is where dividend-paying stocks can make a difference. Investing in businesses that pay out a steady and growing dividend can not only provide you with a steady cash flow, but it can also help you combat inflation.

A roll of $100 bills held together with a red rubber band and wearing a Santa hat sits on a wooden table.

Image source: Getty Images.

There are plenty of companies operating today that have what it takes to increase dividend payments yearly over decades. As long as their businesses keep growing, there's no limit to how long they can keep paying out to their shareholders, which is stress-reducing news.

Let's talk more about three of these dividend stocks with strong businesses and brands that can pay you for life.

1. Procter & Gamble

Procter & Gamble (PG 0.84%) owns and manages a strong portfolio of quality consumer brands that includes Gillette, Pantene, Oral-B, and Pampers. This year, the company increased its quarterly dividend by 10% to $0.8698 per share, marking the 65th consecutive year that it has raised its dividend.

The company has steadily grown its sales over the last five fiscal years from $65.1 billion to $76.1 billion. Operating cash flow has also been positive during this period, averaging between $10 billion to $20 billion, allowing the company to steadily raise its dividend. This sales momentum has carried over into the current fiscal year, with Procter & Gamble's fiscal 2022 first quarter seeing a 5% year-over-year sales increase to $20.3 billion while free cash flow came in at $3.5 billion. 

Its wide portfolio of brands should see increased demand as the pandemic has sharpened the focus on products people can trust. Considering there is more time spent at home studying or telecommuting, its home care products should also enjoy high sales as consumers demonstrate an increased preference for established brands. With its strong market position and ability to appeal to numerous consumers, Procter & Gamble looks set to continue increasing its dividends well into the future.

2. Linde

Linde (LIN 1.11%) is an industrial gas and engineering company that serves a broad range of industries, such as food and beverage, electronics, healthcare, and metals and mining. For 2020, the company paid out an annual dividend of $3.85 per share. For its latest quarter, the board has approved the payment of $1.06 per share in quarterly dividends, representing a 10% year-over-year increase in annualized dividends and marking its 29th consecutive year of increase. 

The industrial conglomerate has reported a sparkling set of earnings for the first nine months of 2021, with revenue rising by 12.6% year over year to $22.5 billion and operating income jumping by 59% year over year to $3.6 billion. Net income clocked in at $2.8 billion, up nearly 62% year over year. Free cash flow increased by the same magnitude as net income during those nine months, rising to $4.2 billion from $2.6 billion, thus supporting Linde's ability to pay out rising dividends.

The company has also announced a sharp increase in its order backlog for the current quarter, up 81% quarter over quarter to $13.4 billion, as the company sees a return in spending for upstream natural gas production. The electronics sector is also active, and Linde has secured a $600 million investment to supply a world-class fab unit in Arizona. Meanwhile, the company has also started up a new hydrogen production facility in Texas, thereby increasing its hydrogen capacity to around 1.5 billion cubic feet per day. With the company being kept busy with numerous projects, investors can look forward to better earnings and dividends, too.

An equipment operator stands in front of a mining vehicle built by Caterpillar

Image source: Caterpillar.

3. Caterpillar

Caterpillar (CAT 1.92%) is a familiar name in the construction equipment industry, being a leading manufacturer of both construction and mining equipment, gas turbines, and diesel-electric locomotives. The company has a stellar track record of paying a quarterly dividend since 1933 and has increased its annual dividend for 28 consecutive years, putting it firmly in the Dividend Aristocrat category. The most recent increase was 7.8%.

The company has remained resilient throughout the pandemic and has reported healthy numbers for the first nine months of 2021. Total revenue increased by 21.8% year over year to $37.2 billion while operating income surged by 66% year over year to $5.3 billion. Net profit nearly doubled year over year to $4.4 billion. 

There's more good news to come for the heavy equipment manufacturer. President Joe Biden just signed a more than $1 trillion infrastructure deal into law last month. This plan will ensure new funds of $550 billion are pumped into transportation, broadband, and utilities to overhaul aging infrastructure within the country. This massive capital commitment should galvanize the construction industry and lead to healthy sales demand for Caterpillar's products moving forward.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns and recommends Linde plc. The Motley Fool has a disclosure policy.

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