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25 Dividend Stocks You Can Buy and Hold Forever

Dan Burrows, Contributing Writer, Kiplinger.com


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Finding a company with a long track record of consistent dividend payments is only part of the winning formula for investing in dividend stocks. Dividend growth matters, too. Rising dividends not only make a stock more attractive to new income investors, but steady dividend hikes also reward existing investors with increasingly higher yields on shares purchased at lower prices in the past.

It's an opportune time to target dividend growers, according to Heidi Richardson, an investment strategist for BlackRock. Companies raising dividends are attractive in an aging bull market, when the pace of shareholder-friendly stock buybacks and mergers can slow. Dividend growers, she adds, can also offer an edge when interest rates are going up: "Stocks with a history of consistently growing their dividends have historically tended to perform well and exhibit less volatility in a rising-rate environment." Kiplinger expects at least two Federal Reserve rate hikes in 2017.

Identify reliable dividend stocks by concentrating on the Dividend Aristocrats, 50 companies in Standard & Poor's 500-stock index that have hiked their dividends every year for at least 25 consecutive years. Since size, longevity and familiarity can provide comfort amid market uncertainty, here are the 25 biggest Dividend Aristocrats by market capitalization. Dominated by household names, the list is a good starting point to find high-quality companies for your long-term portfolio.

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ExxonMobil



A descendant of John D. Rockefeller's Standard Oil, today's ExxonMobil remains one of the world's largest oil companies and the single largest company among the 50 Dividend Aristocrats. As a dividend stalwart--Exxon has paid a dividend since 1882--it continued to hike its payout even as oil prices declined in recent years. Over the last 34 years, Exxon's dividend payment has increased at an average annual rate of 6.4%.

SEE ALSO: 12 Stocks Paying Dividends for 100 Years or More

Johnson & Johnson



Johnson & Johnson, founded in 1886 and public since 1944, operates in several different segments of the health care industry. In addition to pharmaceuticals, it makes over-the-counter consumer products such as Band-Aids and Listerine. It also manufactures medical devices used in surgery. Like many health care companies, a radical change in Obamacare under the Trump administration could hurt business, so it's comforting that J&J has raised its dividend every year for 54 straight years.

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AT&T



Telecommunications stocks are synonymous with dividend payments. Customers pay for service every month, which ensures a steady stream of cash to fund dividends. AT&T has been raising its dividend every year for more than three decades. It also happens to have one of the highest dividend yields in the entire S&P 500.

SEE ALSO: 5 Telecom Stocks Paying Big Dividends

Procter & Gamble



With major brands such as Tide detergent, Pampers diapers and Gillette razors, Procter & Gamble is among the world's largest consumer products companies. Although the economy ebbs and flows, demand for products such as toilet paper, toothpaste and soap tends to remain stable. That hardly makes the company recession-proof, but it has proven to be a reliable dividend payer for over a century. P&G has paid shareholders a dividend since 1891 and has raised its dividend annually for 60 years in a row.

Chevron



Chevron, like its competitors, was hurt when oil prices started to tumble. The company has been forced to slash spending, but--reassuringly--it hasn't slashed its dividend. The outlook for oil remains uncertain, with Kiplinger forecasting that prices will stay below $60 a barrel at least through the spring. But with 31 consecutive years of dividend growth under its belt, Chevron's track record instills confidence that the payouts will continue.

Walmart Stores



The world's largest retailer isn't conceding the race to Amazon.com, even as the online juggernaut claims an ever-larger piece of the retail pie. Walmart went on the offensive in 2016 by spending more than $3 billion to acquire Jet.com, an up-and-coming online retailer. More recently, Walmart took another jab at Amazon by unveiling free two-day shipping on more than 2 million items--no membership fee required. (Amazon charges $99 a year for a Prime membership, which includes free two-day shipping among other perks.) Walmart has increased its dividend every year since 1974.

Coca-Cola



Coca-Cola has long been known for quenching consumers' thirst, but it's equally effective at quenching investors' thirst for income. The company has paid a quarterly dividend since 1920, and that dividend has increased annually for the past 54 years. With the U.S. market for carbonated beverages on the decline for more than a decade, according to market research, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product lineup to keep the cash flowing.

PepsiCo



Like Coke, Pepsi is working against a long-term slide in soda sales. It, too, has responded by expanding its offerings of non-carbonated beverages. One advantage Pepsi has is that it also owns Frito-Lay, and demand for salty snacks remains solid. Through the nine months ended Sept. 5, 2016, Frito-Lay's sales rose 3% year-over-year even as Pepsi's overall sales fell 3%. Founded in 1965, Pepsi has increased its dividend 46 years in a row.

3M



Industrial conglomerate 3M, which makes everything from adhesives to electric circuits, has been hurt by the renewed strength of the U.S. currency. Since the company sells its products worldwide, a strong dollar makes 3M's goods more expensive to overseas buyers and reduces revenue when foreign sales made in local currencies are converted into greenbacks. Foreign-currency translation reduced sales by 1.2% in 2016. Still, the company has weathered tough times before without sacrificing a dividend that dates back a century and has increased annually for 58 consecutive years.

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Medtronic



Medtronic is one of the world's largest makers of medical devices, ranging from insulin pumps for diabetics to stents used by cardiac surgeons. Look around a hospital and there's a good chance you'll see its products. The company is focused on the health of its shareholders as well as its patients: Medtronic has been steadily increasing its dividend every year over the past four decades.

McDonald's



The world's largest hamburger chain also happens to be a dividend stalwart. Changing consumer tastes will always be a risk, but McDonald's dividend dates back to 1976 and has gone up every year since. Fast-food competition remains intense, but in 2017 the company is looking to hold on to the momentum it gained from the introduction of all-day breakfast in the U.S.

AbbVie



You might not recognize the AbbVie name, but its corporate heritage will ring a bell. The pharmaceutical maker was spun off from Abbott Laboratories in 2013. (More on Abbott's dividend later.) Including its time as part of Abbott, AbbVie has increased its dividend payment for 46 consecutive years. Best-selling treatments include Humira for rheumatoid arthritis and AndroGel, a testosterone replacement therapy.

Walgreens Boots Alliance



The nation's largest drugstore chain by store count is about to get even bigger. A deal to buy Rite Aid is expected to close later this year, adding thousands more locations to the 13,000-plus stores that Walgreens already operates in 11 countries. Tracing its roots back to a single drugstore founded in 1901, Walgreens has boosted its dividend every year since 1975. It merged with Alliance Boots in 2014 to form the current company.

Abbott Laboratories



Following its 2013 spin-off of AbbVie, another Dividend Aristocrat on this list, today's Abbott is focused on branded generic drugs, medical devices, nutrition and diagnostic products. The company, which dates back to 1888, first paid a dividend in 1924. Abbott has raised its dividend for 46 straight years.

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Lowe's



Home improvement chain Lowe's has paid a dividend every quarter since going public in 1961, and that dividend has increased annually for more than half a century. Rival Home Depot is also a longtime dividend payer, but its string of annual dividend increases only dates back to 2009. In a sign that Lowe's has plenty of excess cash to support ongoing dividend hikes, the company recently announced plans to spend up to $5 billion on share repurchases.

Colgate-Palmolive



Selling staples ranging from toothpaste to dish detergent, demand for Colgate-Palmolive's products tends to remain stable in economies both good and bad. However, the company derives the vast majority of its sales from outside the U.S., making it vulnerable to a strong dollar like the one we have today. (The value of foreign sales gets diminished when local currencies are converted into dollars.) Over the long haul, however, you can count on Colgate's dividend, which dates back more than a century to 1895 and has increased annually for 53 straight years.

General Dynamics



Defense contractor General Dynamics is one of the newest members of the Dividend Aristocrats, having been added to the elite list of dividend growers at the end of January. Shares in the company are up 19% since the November presidential election, and analysts are generally bullish on its prospects under the new Trump administration. With a payout ratio of just 31%--the payout ratio reflects dividends as a percentage of net income--General Dynamics should have ample room for more dividend hikes. The S&P 500 has an average payout ratio of 40%.

Illinois Tool Works



Founded in 1912, Illinois Tool Works makes construction products, car parts, restaurant equipment and more. Cost cuts, asset sales and share buybacks helped its stock rise 41% over the past year vs. a 24% gain for the broader market. Illinois Tool Works has hiked its dividend every year since 1964.

Kimberly-Clark



Kimberly-Clark's brands include Huggies diapers and Kleenex tissues. Like other makers of staple consumer products, Kimberly-Clark holds out the promise of delivering slow but steady growth along with a healthy dividend to drive total returns. Sales slowed down in 2016, in part due to heavier competition, but they're expected to rebound a bit in 2017. Kimberly-Clark has raised its dividend annually for the past 45 years.

SEE ALSO: 10 Best Dividend-Paying Stocks for 2017

Automatic Data Processing



If you get a paycheck, you probably know Automatic Data Processing. It's the world's largest payroll processing firm, with 56,700 employees in the U.S. and overseas. One of its great advantages is its "stickiness." It's difficult and expensive for corporate customers to change payroll service providers. In addition to that competitive advantage, ADP has been a dependable dividend payer, with annual raises for shareholders since 1976.

Emerson Electric



Emerson Electric makes a wide variety of industrial products, ranging from control valves to electrical fittings. The prolonged downturn in oil prices weighed on Emerson last year, as energy companies continued to cut back on spending. However, the company reported some improvement in orders from North American energy customers toward the end of 2016. Emerson has boosted its dividend payout for 60 straight years.

Becton, Dickinson



Medical-devices maker Becton, Dickinson bulked up with its 2015 acquisition of CareFusion, a complementary player in the same industry. The company is increasingly looking for growth to be driven by markets outside the U.S., including China. Annual dividend increases stretch back 45 years and counting, a track record that should offer peace of mind to antsy income investors.

Target



The number-two discount retail chain after Walmart recently had to cut its latest profit and sales forecasts due to some disappointing developments during the holiday shopping season. A generally weak retail environment is also weighing on sales, but investors can still have confidence in the dividend. Target paid its first dividend in 1967, seven years ahead of Walmart, and has raised its dividend annually since 1971.

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Ecolab



Count Ecolab as yet another company grappling with a strong dollar and the effects of low oil prices. It provides water treatment and other industrial-scale maintenance services for the oil and gas industry. Like Emerson Electric, another Dividend Aristocrat on this list, Ecolab's fortunes can wane when energy companies pare spending. Over the long haul, though, this stock has proven to be a winner, thanks in no small part to a dividend that dates back 80 years. According to Ecolab, this is its 25th consecutive year of dividend growth.

SEE ALSO: 12 Stocks Paying Dividends for 100 Years or More

Air Products and Chemicals



Air Products and Chemicals spent much of last year restructuring, spinning off some businesses under pressure from investors. The slimmed-down company now focuses on industrial gases. Air Products was founded in 1940 and has raised its dividend annually for 35 years in a row.

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Copyright 2017 The Kiplinger Washington Editors