Dividend stocks are a must-have for any investor's portfolio in any market environment. With extreme volatility shaking the markets currently and stocks across sectors seeing share prices rise and fall from one day to the next, investing in quality companies with a commitment to paying and raising their dividends can provide peace of mind and maximize your portfolio returns, even in uncertain times.
Let's take a look at two powerhouse dividend stocks you can buy and hold for decades if you have $1,000 to invest in the market right now.
1. Pfizer
With a yield of 3.6%, Pfizer's (PFE 2.40%) dividend more than outpaces that of the average stock trading on the S&P 500, which is around 2%. The pharmaceutical giant has paid a dividend since 1989, and has increased its dividend every year for a decade and counting.
To put those numbers in perspective, Pfizer has increased its dividend by more than 80% over the trailing 10-year period. The stock has also delivered a total return of approximately 172% during this window. And Pfizer returned $4.5 billion in cash through shareholder dividends in the first six months of 2022 alone.
There's no denying the huge effect that the success of COVID-19 vaccine Comirnaty and oral antiviral pill Paxlovid have had on Pfizer's top and bottom lines. In the most recent quarter, revenue jumped 47% year over year, while net income and diluted earnings per share rose 78% and 77%, respectively. It's inevitable that these numbers will start to decline at some point as COVID-19 becomes increasingly endemic.
But Pfizer has so much more in its portfolio and pipeline than just its COVID-19 products. Blockbuster drugs like Eliquis and Ibrance raked in combined sales of roughly $3 billion in the second quarter alone. Plus, Pfizer has accumulated a significant cash stockpile that it's using in highly strategic ways, such as in its acquisition of Arena Pharmaceuticals and upcoming purchase of Biohaven Pharmaceuticals.
The company also continues to invest heavily in research and development for its promising pipeline, which features drugs targeting everything from cancers like prostate cancer and metastatic breast cancer to various rare diseases like sickle cell disease and hemophilia. All of this bodes well for a long runway of growth for Pfizer, and long-term buy-and-hold investors can reap the rewards.
2. Target
Target (TGT 1.03%) has such an impressive history of paying and raising its dividend that it's a member of the exclusive club known as Dividend Kings. It currently yields 2.8%. The company has raised its dividend every year for 51 years and counting. Over the past five years, Target has increased its dividend by more than 70%, delivering a total return to shareholders of 185%.
While some investors may be concerned about potential near-term headwinds for Target, given fears that people may pull back on spending in the coming months, it's important to take a step back and look at the bigger picture. While short-term spending trends may indeed affect Target's top and bottom line, the company remains a staple in consumers' daily lives, and that's not going to change over the long term.
Shoppers still rely on Target for a range of essential and non-essential product needs. In the second quarter, while comparable sales rose just 2.6% year over year, digital comparable sales rose 9% and same day services rose 11%. Target just announced that it still intends to hire 100,000 workers for the upcoming holiday season, just as it usually does.
And in the company's most recent quarterly report, management noted that Target "reduced its inventory exposure in discretionary categories while investing in rapidly growing frequency categories. Additionally, Fall season receipts in discretionary categories were reduced by more than $1.5 billion." This realigned focus on essential items bodes well for Target as it navigates the current environment, offloads excess inventory, and moves back toward profitability.
