Country music singer Willie Nelson was a relatively young 48 when he released a song with the lyrics, "Nothing lasts forever but old Fords (F 2.53%) and a natural stone." Nelson is 92 now, but his sentiment that only a few things last forever is still applicable (though we could probably quibble over exactly which items make the list).
Investors sometimes talk about "forever" stocks. However, exceptional stocks that you can truly hold onto for decades are rare. That said, they do exist – and some offer attractive dividends. Here are my picks for the best dividend stocks to buy and hold forever.
Image source: Getty Images.
1. AbbVie
Let's start with the fact that AbbVie (ABBV 0.54%) is a Dividend King. To become a member of this exclusive group, a company must increase its dividend for at least 50 consecutive years. AbbVie's streak of dividend increases is now at 53 years, including the time it was part of Abbott Laboratories (ABT 0.15%).
Some Dividend Kings offer paltry dividend yields. Not AbbVie. The big drugmaker's forward dividend yield is around 3.2%, almost three times higher than that of the S&P 500 (^GSPC 0.36%). And AbbVie's yield would be even higher if its stock hadn't delivered such strong gains over the past few years.
NYSE: ABBV
Key Data Points
You might question why I'd include the stock of a company that has existed as an independent entity for only 13 years on the list of the best dividend stocks to buy and hold forever. My first answer is that AbbVie has actually been in business much longer. Its parent, Abbott, was founded in 1888.
More importantly, though, AbbVie has demonstrated its resilience. The company faced a scary patent cliff when its longtime best-selling autoimmune disease drug, Humira, lost patent exclusivity three years ago. However, AbbVie's investments in research and development and smart acquisitions paid off. The big drugmaker continues to grow, thanks to a strong lineup of rising stars.
2. The Coca-Cola Company
The Coca-Cola Company (KO +0.68%) is an even "kinglier" Dividend King than AbbVie. The beverage giant has increased its dividend for 63 consecutive years. It's highly likely that Coca-Cola will extend the streak soon.
Coca-Cola's forward dividend yield currently tops 2.8%. This level is slightly below the average dividend yield over the last 10 years of nearly 3.1%, but it's still high enough to be attractive to income investors.
NYSE: KO
Key Data Points
I doubt many people would argue against Coca-Cola's credentials as a stock to buy and hold forever. After all, the company has survived and thrived for going on 140 years. The stock is one of the bluest blue chip stocks on the market.
Don't write off Coke's growth prospects, either. The company's market share in developed markets is only 14%, with its market share in developing and emerging markets an even lower 7%.
3. Realty Income
Realty Income (O +0.12%) isn't a Dividend King like AbbVie and Coca-Cola. It hasn't been around for more than a century as those two companies have, either. However, I believe this real estate investment trust (REIT) is still a compelling dividend stock to buy and hold forever.
One reason why is Realty Income's sterling track record of dividend hikes. The REIT has increased its dividend for more than 30 consecutive years. It has also increased its dividend 133 times since going public in 1994.
NYSE: O
Key Data Points
Realty Income's dividend is more attractive than AbbVie's and Coca-Cola's on two fronts. First, its forward dividend yield of 5.3% is much higher. Second, the company pays its dividend monthly rather than quarterly.
While AbbVie and Coca-Cola have demonstrated their stability through the years, so has Realty Income. Its beta over the last three decades is a low 0.5, indicating a low volatility level. The REIT has also generated positive total operational returns (adjusted funds from operations growth plus dividend yield) for 29 consecutive years.
