Holding a stock forever can seem crazy, but as investors, we want to have the kind of time horizon that allows us to think in terms of decades.
Two companies that fit that description of forever stocks are Brookfield Renewable (BEPC -0.09%) and Colgate-Palmolive (CL 0.33%). They don't have the highest yields on the market at 4.1% and 2.5%, respectively, but they have sustainable businesses and payouts that should continue for the foreseeable future.
1. Brookfield Renewable
At its core, Brookfield Renewable is simply an energy asset owner. It makes money by buying or building renewable energy assets that pay out consistent cash flows over the course of decades.
Some of that cash flow goes to pay down debt; some is returned to shareholders in the form of a dividend that now yields 4.1%.
The question is: Why can you hold this stock forever? On average, Brookfield Renewable's assets hold 14-year power purchase agreements to sell electricity to utilities, 70% of revenue is linked to inflation, and no single market accounts for over 10% of revenue. That's incredible safety and diversification.
When it comes to growth, the company has a 100-gigawatt development pipeline, which would nearly double its current 120-gigawatt asset base.
As a leader in renewables financing, Brookfield Renewable has a lower cost of capital than competitors, and it has proved to be a good capital allocator. That's the kind of stock I want to own forever, and the 4.1% dividend yield should grow steadily over time.
2. Colgate-Palmolive
Among toothpaste, soap, and other household brands, Colgate-Palmolive controls a large number like Colgate shampoo, Palmolive dishwashing liquid, Irish Spring soap, and Speed Stick deodorant. I'm willing to bet that 100 years from now, these brands will still be prevalent on store shelves.
This isn't a high-growth or a flashy business, but you can see below that it keeps churning out profits and paying dividends to investors. The current yield is 2.5%, and it's steadily rising.
CL revenue (TTM) data by YCharts; TTM = trailing 12 months.
I also think we could be past the biggest competitive threats a company like Colgate-Polmolive has ever faced.
The last decade has brought us dozens of consumer goods start-ups aimed directly at consumers. These niche brands took some sales, but for the most part were unsustainable in their business models. As venture capital funding dries up for money-losing consumer companies and the market punishes companies that can't grow profitably, Colgate-Palmolive's position looks even stronger.
Consumer goods ebb and flow, but they aren't going anywhere in the long term. This is a company with the brands and the scale to thrive, so with Colgate-Palmolive in your potfolio, you can just set it and forget it.
Rock-solid dividend stocks
Brookfield Renewable and Colgate-Palmolive aren't going to get many headlines or make many splashy acquisitions, but they're slow and steady winners for investors. If you want dividend stocks likely to pay you for decades, these two are a great place to start.
