Want to know a couple of ways to boost your investment returns? One is to buy stocks with growing dividends. Many investors might not realize that dividends accounted for roughly half of the S&P 500's total return over the last 30 years. Another way to increase your returns is to expand your investing timeline. The longer the period during which you're invested, the more money you could make.
Combining both of these approaches is an even better idea. Dividend Kings are S&P 500 members that have increased their dividends for at least 50 consecutive years. Buying and holding these stocks can pay off nicely over the long run. But some of these dividend stocks have better potential from here than others. Here are three top Dividend Kings to buy for the long haul.
1. AbbVie
AbbVie (ABBV -1.03%) has increased its dividend for 50 consecutive years, including the time it was part of Abbott Laboratories. Since it was spun off from Abbott in 2013, the big drugmaker's management has increased its dividend payouts by more than 250%. AbbVie's dividend yield currently stands above 3.6%.
This impressive track record is a key reason why AbbVie is on my list of the top 23 dividend stocks to buy and hold in 2023. But I also believe that this stock could be underrated by some who focus only on the company's near-term challenges.
Sales for AbbVie's top-selling drug, Humira, will inevitably decline sharply this year in the face of biosimilar competition in the U.S. It might make sense that the big pharma stock would fall in price as a result.
However, AbbVie already has two successors to Humira on the market -- Rinvoq and Skyrizi. Together, these drugs should eclipse Humira's peak sales within the next few years. The company also has other products with strong growth potential in its lineup as well as a promising pipeline.
2023 could be a rough year for AbbVie's top and bottom lines. If you have a longer-term perspective, though, this stock should continue to be a winner.
2. Johnson & Johnson
Income investors have liked Johnson & Johnson (JNJ -0.69%) for a long time. There's a good reason why. It has raised its dividend for an impressive 60 consecutive years, and its yield is now nearly 2.6%.
Johnson & Johnson is widely viewed as one of the best blue-chip stocks on the market. It's a healthcare giant with a long history of rewarding shareholders. It also has a resilient business that has successfully weathered plenty of storms in the past.
A big change is on the way for Johnson & Johnson this year. The company plans to spin off its consumer health unit as a stand-alone entity. This move should enable Johnson & Johnson to grow faster going forward than it has in recent years.
The downside to the spin-off is that the parent company's dividend will be lower afterward. However, investors who hold on to the shares they receive of the new company (to be called KenVue) should be fine. Johnson & Johnson management has said they expect the combined dividend for the two companies will remain at least at the same level after the transaction is finalized.
3. PepsiCo
Like AbbVie, PepsiCo (PEP 3.62%) has increased its dividend payouts for 50 consecutive years. Like Johnson & Johnson, its yield at the current share price is a little under 2.6%. Of course, PepsiCo's business model is quite different from either of those two healthcare leaders.
PepsiCo still generates significant revenue from its namesake sodas. However, the company's product lineup also includes a wide range of other beverages from bottled water to tea. PepsiCo also makes a lot of money from its food units, which include Frito-Lay and Quaker Foods.
Perhaps the best reason to buy and hold PepsiCo stock is the stability of its underlying business. The company's brands rank among the best-known in the marketplace. PepsiCo has also successfully adapted to changing trends in the food and beverage industry.
The company should be able to continue growing over the long term by launching new products and building its position in emerging markets. This, in turn, should lead to solid returns for investors.
