3 Dividend Stocks That Can Power Your Portfolio for Decades

Holding some top dividend stocks in your portfolio can help you generate recurring income for years. This can bolster your savings for retirement or just give you extra money to help pay bills while you hold on to some great investments. Three stocks that you can potentially rely on for dividend income for decades are AbbVie (ABBV -4.58%), Home Depot (HD 0.94%), and Microsoft (MSFT 1.82%). Let's dive in and take a closer look at each one.

1. AbbVie

Healthcare giant AbbVie should please income-oriented investors with its sizable dividend that currently yields 4.3%. That's the highest one on this list. Plus, the company recently announced that it will be increasing its quarterly dividend payments by 4.7% to $1.55 per share. AbbVie has been doing well and recently raised its adjusted earnings per share (EPS) guidance for the year from a range of $10.86-$11.06 to $11.19-$11.23.

AbbVie has been focusing on what it calls its "non-Humira growth platform" as the company works on developing its business outside of Humira, its top-selling rheumatoid arthritis medication that has lost patent protection and is quickly losing market share. Humira's sales totaled $3.5 billion for the period ended Sept. 30 and were down 36% year over year. But two other immunology drugs, Skyrizi and Rinvoq, look to make up for its revenue in the long run. Last quarter, they generated $3.2 billion in sales combined while growing at rates in excess of 50%.

What's attractive about AbbVie is that it has many growth opportunities it can pursue. It generated more than $1 billion in revenue from multiple segments last quarter, including immunology (Humira, Skyrizi, and Rinvoq), oncology, aesthetics (it owns Botox), and neuroscience. It has more than 90 compounds in development and so there should be a lot more growth in AbbVie's future.

With its shares down 10% this year, investors may be focused too much on the decline in Humira's sales. AbbVie remains a good investment and now may be an optimal time for value investors to add the healthcare stock to their portfolios because it can be an excellent source of dividend income for years to come.

2. Home Depot

The second-highest yield on this list comes from home improvement retailer Home Depot. At just over 3%, the yield pays you nearly double the 1.7% you can expect from the average stock on the S&P 500. 

Like AbbVie, Home Depot has been increasing its dividend payment. This year, its quarterly dividend of $2.09 is 10% higher than the $1.90 the company was paying a year ago. And it has boosted its payout by 39% since 2020 as pandemic-induced spending led to some strong results for the retailer.

This year, Home Depot expects more of a slowdown. The company is projecting its comparable sales will decrease by as much as 5%. But the good news for dividend investors is that with a payout ratio of close to 50%, the company's bottom line is strong enough for it to absorb a decline and for the payout to remain safe.

Consumers are putting off discretionary purchases this year, but in the long run, renovations and spending on home repair are likely to rise again because those aren't expenses people can put off for too long. With a strong brand, resilient financials, and a great payout, this is another solid investment that income investors should consider adding to their portfolios. 

3. Microsoft

Microsoft's 0.9% dividend yield looks underwhelming, but it's what the dividend may look like in the future that should have investors excited. In September, the company announced a 10% boost to its dividend, which is consistent with the rate hikes Microsoft has made in previous years. In a span of five years, the company has increased its dividend by 63%, which averages out to a compound annual growth rate of 10%. And yet, with a modest payout ratio of less than 30%, there's still plenty of room for Microsoft to boost its dividend even further in the future.

The tech titan is an intriguing long-term investment because it has invested billions into artificial intelligence (AI), including ChatGPT maker OpenAI. It has been rolling out AI features for its Office products and its browser, Bing.

Microsoft is already starting to see the benefits. Sales of $56.5 billion for the period ended Sept. 30 were up 13% year over year, with CEO Satya Nadella saying that the company is "rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers." On top of that, there's the new potential for the business to expand its gaming segment now that its acquisition of Activision Blizzard is complete.

As the software giant continues to grow its top and bottom lines, there could be more room for the dividend to grow even larger, which is why Microsoft is an excellent dividend stock to buy and hold.