7 Dividend Stocks to Buy and Hold Forever

Jeff Reeves
·6 min read

These dividend stocks aren't going anywhere.

According to the definition of long-term capital gains, investors must hold a stock for at least 12 months in order to avoid the higher tax obligations associated with day trading. But many on Wall Street believe true long-term investing is measured in many years, not months. This is obvious in the amazing performance of high-growth stocks like Tesla (ticker: TSLA), which has surged more than 1,300% over the last five years, with plenty of short-term volatility along the way. However, "buy and hold" investing is also a powerful source of profits in mature dividend stocks as well as disruptors such as Tesla. These sleepy megacap stocks often offer reliable long-term returns, thanks to stable businesses and generous dividends. If you're the kind of investor who is in the stock market for the long haul, consider one of these seven dividend stocks that are so entrenched and stable that your holding period can be as long as you like, perhaps even forever.

AT&T (T)

Let's face it: AT&T is the top wireless provider in the U.S., with more than 40% market share of wireless subscriptions, and it's not going anywhere. Sure, its peer Verizon (VZ) is pretty close behind. But even if the No. 1 and No. 2 providers ever do swap positions, neither is going away anytime soon. In a digital age, the demand for data is constant, and that makes AT&T's revenue stream incredibly reliable. Its dividend isn't going anywhere, either, as the payouts of $2.08 are comfortable under the $3.15 in projected earnings per share this year and just 66% of total profits. In an industry where customers are very "sticky" and the barriers to competition from new entrants are incredibly high, long-term investors can depend on AT&T for many years to come.

Current yield: 6.9%
Market capitalization: $210 billion

Coca-Cola Co. (KO)

Way back in the late 1980s, Warren Buffett and his Berkshire Hathaway (BRK.A, BRK.B) investment firm bought into Coke stock with a $1 billion investment. And since then, Berkshire's stake has grown to about 9% of KO shares outstanding. The fact that Berkshire and Buffett have been riding high on KO stock for so long is a testament to the fact this is a stock to buy and hold forever. But in case you needed further proof, consider that Coca-Cola just executed its 59th consecutive annual dividend increase in February. Furthermore, those regular increases haven't been skimpy ones; KO currently pays 41 cents per quarter, up from 17 cents at the beginning of 2007 just before the financial crisis hit and almost double the 22 cents from a decade ago at the beginning of 2011. Considering KO increased its dividends during the current pandemic, the Great Recession and everything in between, there is a strong vote of confidence in this iconic consumer corporation.

Current yield: 3.2%
Market capitalization: $230 billion

Home Depot (HD)

Home Depot is the leading home improvement retailer in the U.S., with $140 billion in annual sales across nearly 2,300 stores. While HD is admittedly a cyclical stock that may see some short-term ups and downs based on the housing market or spending trends, it has proven itself to be a tremendous source of profits in the long term, thanks to both dividends and share price appreciation. Consider that since 2011, HD stock has exploded 760% higher compared with about 200% for the S&P 500 in the same period. And at the same time, dividends went from 25 cents per quarter in 2011 to $1.65 per quarter at present. Say what you want about short-term volatility, with returns like that, this is a stock you want to buy and hang on to forever.

Current yield: 2.1%
Market capitalization: $345 billion

Intel Corp. (INTC)

There has been a lot of talk over the last year or so about whether Intel has what it takes to remain relevant, now that it has floated the idea of getting out of the chip-making game. However, the hard reality is the real money comes in the design and patenting of premium microchips, not simply cranking them out. This is why Intel, with great intellectual property, is valued at many times more than smaller foundries that make thin margins producing chips designed by someone else. It's also why Intel's dividend has surged from 18 cents in 2011 to almost 35 cents at present because those semiconductor patents are in demand and produce reliable income like clockwork. Unless you think Intel's best-in-class designs are going away or that products are going to use fewer chips in the future, it shouldn't matter whether INTC actually prints the chips itself or not. Considering the ever-increasing demands on these products in a digital age, Intel is a stock to "buy and hold" forever.

Current yield: 2.2%
Market capitalization: $263 billion

JPMorgan Chase & Co. (JPM)

During the financial crisis of 2008, several banks including Citigroup (C) and Bank of America (BAC) took some serious lumps, JPM emerged as the most resilient financial stock on Wall Street. Case in point: Though it cut its dividend during the worst of the mayhem, it was back to precrisis payouts of 38 cents by 2013 and now pays a very generous 90 cents a share. At the same time, if you look at JPM stock since the beginning of 2007, this bank has actually outperformed the S&P 500 as a group while BofA and Citi are significantly underwater when compared with 2007 levels. That proves JPM has what it takes to be a very long-term investment.

Current yield: 2.4%
Market capitalization: $453 billion

Johnson & Johnson (JNJ)

Forget about the short-term interest in J&J, thanks to its development of a single dose of the COVID-19 vaccine. The real long-term potential in this stock comes from a diverse portfolio of health care equipment, prescription drugs and consumer health products like Band-Aids and Tylenol. In fact, JNJ stock has such reliable revenue that it is one of two U.S. corporations -- Microsoft Corp. (MSFT) is the other -- which has a perfect AAA credit rating. And when you throw in the fact that this megacorporation just celebrated its 58th consecutive dividend increase with its hike last year, it's plain to see that this is a stock that is committed to paying back shareholders generously over the long term.

Current yield: 2.5%
Market capitalization: $425 billion

Procter & Gamble Co. (PG)

When it comes to consumer staples stocks, P&G is in a class all by itself with a diversified and powerful portfolio of products that includes Gillette shaving products, Pampers diapers, Tide detergent, Tampax feminine products, Herbal Essences and Pantene hair products, among others. Suffice it to say that just about anyone who goes to the grocery store returns with something from PG in their shopping bags. While there's admittedly not a ton of breakneck growth or innovation here, there is certainly reliability in personal care products. That adds up to a consistent stream of cash in good times and bad, powering a generous dividend that you can depend on for probably forever. With $70 billion in revenue and roughly $17 billion in operating profits annually, this stable dividend stock isn't going anywhere.

Current yield: 2.6%
Market capitalization: $337 billion

Dividend stocks to buy and hold forever:

-- AT&T (T)

-- Coca-Cola Co. (KO)

-- Home Depot (HD)

-- Intel Corp. (INTC)

-- JPMorgan Chase & Co. (JPM)

-- Johnson & Johnson (JNJ)

-- Procter & Gamble Co. (PG)