What's the top priority for income investors? That's an easy question. The answer is income -- preferably reliable and growing income.
Dividend stocks provide one of the best ways to generate income. Once you find great stocks with reliable and growing dividends, you're set to rake in money through the years. While there are many good alternatives for income investors, some stocks especially stand out. Here are three magnificent dividend stocks to buy and hold forever.
1. Johnson & Johnson
Johnson & Johnson (JNJ 0.02%) has been a favorite for income investors for decades. It's one of the biggest healthcare companies in the world with huge pharmaceutical and medtech businesses.
NYSE: JNJ
Key Data Points
Only a handful of companies can boast more impressive dividend track records than Johnson & Johnson. The healthcare giant has increased its dividend for 62 consecutive years, ranking it among the top Dividend Kings. J&J offers an attractive forward-dividend yield of more than 3.4%.
Johnson & Johnson has demonstrated remarkable resilience. The company, founded in 1886, has weathered economic recessions, wars, and global pandemics. Today, it generates annual revenue of nearly $90 billion and has a cash stockpile of over $26 billion.
To remain successful, Johnson & Johnson must continually roll out new products. That shouldn't be a problem. The company leads the industry in research and development spending. J&J also regularly bolsters its lineup through acquisitions, with recent examples including deals to acquire privately held biotech Proteologix and medical device maker Shockwave Medical.
2. Target
Target (TGT 5.15%) has been in business since 1902. It's now one of the largest discount retailers with nearly 2,000 stores across the U.S. Target also has a growing e-commerce business.
NYSE: TGT
Key Data Points
Like Johnson & Johnson, Target is a Dividend King. The company has increased its dividend for 52 consecutive years -- every year since it began trading publicly in 1967. It could soon extend that streak to 53 years. Target's forward-dividend yield stands at nearly 3%.
Investors should be able to count on Target's dividend for a long time to come. The company's business model of selling a wide variety of products at discounted prices is unlikely to be disrupted.
Target continues to find new ways to increase sales. For example, its Roundel advertising business is now the fastest-growing part of the company. The Target Circle loyalty program, one of the largest customer-loyalty programs in the U.S. with over 100 million members, helps retain customers and boost spending.
3. Verizon Communications
Verizon Communications (VZ 0.17%) is the newbie on the list. The telecommunications provider was created in 2000 by the merger of Bell Atlantic and GTE. However, those two companies had long histories. Verizon now offers data, voice, and video services around the world.
NYSE: VZ
Key Data Points
The company has increased its dividend for 17 consecutive years. Although that's not as impressive of a record as J&J's and Target's, Verizon has the longest streak of dividend hikes in the U.S. telecommunications industry. Income investors should especially like its ultra-high forward-dividend yield of over 6.7%.
Verizon needs to generate strong free cash flow to keep the dividends flowing and growing. There's good news on that front: The telecom giant reported free cash flow of $2.7 billion in the first quarter of 2024, up from $2.3 billion in the prior-year period.
Don't expect Verizon to deliver jaw-dropping growth. However, the company's wireless business is strong. Most importantly, Verizon should be able to give income investors the reliable and growing income they want.
