Buy, hold, earn solid income. This seems like a very good investment strategy. You just need to find the right stocks that are worthy of holding for the long term and that pay attractive dividends.
Three Motley Fool contributors think they can help on that front. Here’s why they chose AbbVie (NYSE:ABBV), Elie Lilly (NYSE:LLY)And Pfizer (NYSE:PFE) as dividend stocks to buy and hold for the next decade.
An unstoppable passive income machine
Thrive Junior Bakina (AbbVie): Many dividend investors are concerned about experiencing reduced payouts. In a worst-case scenario, companies could suspend their dividend programs altogether. While there are no certainties in life – or in the stock markets – investors can be as confident as possible that AbbVie is unlikely to resort to dividend cuts. It’s not just because management has explicitly and repeatedly stated that returning money to shareholders through dividend increases is one of the company’s priorities.
CEOs make empty promises all the time. However, AbbVie has demonstrated its commitment to this goal through concrete actions. Since he separated from Abbott Laboratories, AbbVie increased its payouts by 287.5%. Despite recently losing patent protection for what was by far its most important product, the immunology drug Humira, AbbVie has continued to increase its dividend. Additionally, even without Humira driving revenue growth, AbbVie’s underlying business remains strong.
Drugs such as Skyrizi and Rinvoq – two immunology products – AbbVie’s Botox franchise, migraine treatments Qulipta, schizophrenia treatment Vraylar, etc., will help the company return to growth in its income next year. Beyond that, AbbVie had a deep pipeline that should allow it to regularly tweak and improve its product mix. AbbVie is a King of dividends: He has increased his payments for 52 consecutive years. Its forward yield of 3.69% is well above average.
The company’s cash payout stands at just under 48%, a reasonable figure that leaves plenty of room for further dividend increases. Investors looking for income stocks to hold for a while can safely add the drugmaker’s stock to their portfolios.
Eli Lilly offers investors the best of both worlds
David Jagielski (Eli Lilly): Normally, when thinking about which dividend stocks to buy for your portfolio, you might start by filtering out investments that offer only modest yields, like the one Eli Lilly pays – 0.7%. But it would be a mistake to overlook this healthcare giant, as it can be a fantastic dividend stock to hold for the long term.
While its performance seems disappointing, that’s only due to the size of Eli Lilly’s growth stock. In five years, the stock’s value has increased by more than 500%. But the company’s dividend also doubled during this period. Eli Lilly has generously rewarded its shareholders with significant rate hikes. The $1.30 quarterly dividend it currently pays is 15% higher than the $1.13 payment it paid to shareholders a year ago. A decade ago,…
