You've probably heard the phrase "Think long term" quite a bit if you've been an investor for a while. But what time frame qualifies as a long-term horizon? There's no magic number, but 10 years seems to be a good minimum threshold.
However, there are some stocks with such strong underlying businesses that even 10 years isn't nearly long enough to own them. The ones that pay dividends can deliver especially attractive total returns. With that in mind, here are three dividend stocks you can buy and hold for decades.
AbbVie (ABBV -1.08%) offers one of the most impressive dividend pedigrees around. The company is a Dividend King with 50 consecutive years of dividend increases (including the time it was part of Abbott (ABT -1.22%)). Since spinning off from Abbott in 2013, AbbVie has increased its dividend by more than 250%. Its dividend yield currently tops 3.7%.
The drugmaker's consistency isn't limited to its dividend program. AbbVie has met or exceeded its adjusted earnings per share guidance in every quarter since it became an independent entity.
Humira, AbbVie's best-selling drug, faces biosimilar competition in the U.S. beginning in 2023. For some companies, the loss of exclusivity (LOE) for a top drug might lead to years of stagnation. However, AbbVie has planned well for Humira's LOE and expects to quickly return to growth in 2024.
The company has fielded a strong product lineup through internal development and acquisitions. Products including Botox, Rinvoq, Skyrizi, and Venclexta continue to deliver robust growth. AbbVie also has a deep pipeline that features nearly 20 late-stage programs.
2. Brookfield Renewable
Brookfield Renewable (BEP -0.41%) (BEPC -1.21%) hasn't been around long enough to compile a track record like AbbVie's. However, the company has increased its dividend distribution by a compound annual growth rate of 6% since 2013. Its dividend yield now stands at close to 3.7%.
There are few markets with brighter futures than renewable energy. Countries across the world have committed to drastic reductions in carbon emissions. The only way to achieve those goals is to shift increasingly to renewable energy sources. Brookfield Renewable thinks that decarbonization "will create an unparalleled commercial opportunity."
The company is well-positioned to capitalize on that opportunity. Brookfield Renewable owns hydro, wind, solar, and storage facilities with a combined capacity of 21 gigawatts. And its development pipeline capacity totals roughly 62 gigawatts.
Unsurprisingly, Brookfield Renewable believes that it will be able to deliver strong growth for decades to come. The company expects to generate 12% to 15% returns over the long term, with its dividend distributions increasing on average between 5% and 9% annually.
Don't worry about inflation hurting Brookfield Renewable, either. CEO Connor Teskey noted in the company's recent quarterly conference call, "We see inflation as a tailwind." Around 70% of Brookfield Renewable's contracts are indexed to inflation.
3. Easterly Government Properties
Easterly Government Properties (DEA 1.58%) can make a claim that few companies can: Its cash flow is backed by the full faith and credit of the U.S. government. You won't find many stocks that offer that kind of stability.
The company is a real estate investment trust (REIT) that primarily leases properties to the U.S. government. It currently owns 89 properties (some through a joint venture). All but one of these properties are leased to federal agencies.
As a REIT, Easterly must return at least 90% of its taxable income to shareholders in the form of dividends. The company is highly profitable, which enables it to pay a juicy dividend yield of nearly 5.7%.
Rising interest rates shouldn't hurt Easterly too much. Around 96% of its borrowings have fixed rates with long-dated maturities. And if a recession is around the corner, as Easterly chairman Darrel Crate recently stated, "There's no better tenant to have than the United States federal government."