Imagine being able to buy a machine that would work day after day and year after year to make you money. Now imagine being able to buy several such machines. This would be a utopia for anyone seeking passive income.
The good news is you don't have to use your imagination. These "machines" exist -- and they're called dividend stocks. There are no guarantees in investing, but these stocks can help set you up for success. If you want decades of passive income, here are three stocks to buy now and hold forever.
1. AbbVie
AbbVie (ABBV 2.29%) pays a dividend with a forward yield of 3.2% as I write this. Even better, though, is the drugmaker's dividend track record. AbbVie has increased its dividend for an impressive 52 consecutive years, ranking it among the elite group of stocks known as Dividend Kings.
NYSE: ABBV
Key Data Points
If you want a textbook example of a resilient stock, AbbVie is it. Consider that only two years ago the company faced the loss of U.S. patent exclusivity for Humira. This autoimmune disease drug wasn't just AbbVie's best-selling product, it ranked for years as the top-selling drug in the world.
However, AbbVie continues to thrive. How? It invested heavily in research and development. It made smart business development deals. Today, the company has two successors to Humira on the market that should together generate much higher annual sales by 2027 than Humira did at its peak.
AbbVie has demonstrated its ability to deliver long-term growth despite the inevitable disruptions from patent expirations. As a result, its stock can provide reliable passive income for decades.
2. Brookfield Infrastructure
Brookfield Infrastructure (BIP 1.86%) (BIPC 2.32%) is another remarkably resilient stock. The company operates data centers, electricity transmission lines, natural gas pipelines, semiconductor manufacturing foundries, telecommunications towers, terminals, toll roads, and more.
NYSE: BIP
Key Data Points
These businesses provide Brookfield Infrastructure with stable and steady cash flow. Around 85% of the company's funds from operations (FFO) are contracted or regulated. Roughly the same percentage is also indexed for or protected from inflation.
For investors seeking passive income, this translates to dependable and growing distributions. Brookfield Infrastructure has increased its distribution by a compound annual growth rate (CAGR) of 9% since 2004. Its yields are also juicy. The limited partnership (LP) trading under the BIP ticker offers a forward yield of 5.3%, while the corporate entity trading under the BIPC ticker's forward yield is around 4%.
Brookfield Infrastructure also has a solid strategy for growth. It acquires infrastructure assets when they're valued attractively. The company then enhances the value of those assets by making operational improvements. Over time, Brookfield recycles mature assets -- selling them to raise capital to repeat the cycle.
3. Realty Income
If you want especially significant passive income, consider buying shares of Realty Income (O 1.23%). This real estate investment trust (REIT) offers a forward dividend yield of 5.8% as I write this. And it pays those dividends on a monthly rather than quarterly basis.
NYSE: O
Key Data Points
Realty Income's story gets even better, though. The company has increased its dividend for 30 consecutive years. During this period, the dividend grew by a CAGR of 4.3%.
This isn't a run-of-the-mill REIT. Realty Income ranks as the seventh-largest REIT in the world. It owns 15,621 properties leased to 1,565 clients representing 89 industries. Nearly one-third of the company's annual rent comes from convenience, grocery, discount, and home improvement stores -- the kinds of businesses that hold up well regardless of how the economy is faring.
Realty Income might not deliver jaw-dropping growth, but its growth prospects could be better than you think. The company is targeting a $5.4 trillion total addressable market in the U.S. and an $8.5 trillion total addressable market in Europe. It should have key growth opportunities in freestanding retail, industrial, and data center properties.
