These stocks offer decades of potential dividends.
There are a number of dividend stocks that have been surging in 2020, including plays related to consumer staples and social distancing amid the pandemic. However, income investors may not be best served by chasing these short-term trends. After all, dividend yields are calculated using a stock's payouts across 12 months' time -- so you have to hold them at least a year to get your full payout. That means if you're looking at dividend stocks, it helps to think in years or even decades rather than weeks or months. Sound impossible? Just look at a few ultra-long-term stocks that you can buy now and hold forever as potential income investments in any environment. Here are nine dividend stocks to hang on to for the long haul.
Novartis (ticker: NVS)
It has been a volatile year for many health care stocks, with some companies soaring based on potential related to the pandemic and others suffering amid economic uncertainty. However, Swiss drugmaker Novartis stands out with bright, long-term prospects thanks to its diversification. NVS offers a wide array of treatments for a host of diseases, across skin conditions, cancers, neurological disorders and a wide variety of other chronic ailments. Novartis admittedly only pays dividends once a year, but that shouldn't matter when your holding period is forever -- and with a robust product pipeline alongside a stable of proven moneymakers, the future looks very bright for this health care play beyond the fad of pandemic investments in 2020.
Current yield: 3.5%
National Health Investors (NHI)
A twist on the reliable business of health care is medical real estate firm National Health Investors. NHI specializes in financing solutions across the sector, largely focusing on senior-housing facilities and retirement communities. It also includes hospitals, medical office buildings and other sites. Nothing is more certain in life than getting old and needing more care as we age, so the result is a reliable stream of cash to fuel generous and reliable dividends from NHI that will withstand the test of time. As proof, while some medical real estate plays have cut their dividends lately, NHI actually increased its payouts from $1.05 to $1.10 per quarter in early 2020.
Current yield: 7.7%
PetMed Express (PETS)
Another very different take on health care is this smaller and pet-focused offering, PetMed. Though selling heartworm and flea medication is not as glamorous as treating cancer or developing a cure for Alzheimer's disease, investors should be interested in PETS for its dominance in the durable and fast-growing category of pet expenses. While Wall Street has really fallen in love with this stock this year as it has been growing rapidly, this is not a flash in the pan stock; reliable revenue fuels dividends that have surged from 18 cents in 2016 to 28 cents a share presently -- more than 55% growth in just under five years and an encouraging sign of future income potential. Whatever the future holds, you can be sure there will be pet owners in it. That's good news for PetMed and its shareholders.
Current yield: 2.9%
While online merchants such as PetMed have seen their day in the sun in 2020 thanks to social distancing, the reality is that more dollars are being spent digitally every year. Consider that in 2019, total e-commerce spending in the U.S. was up about 15% over the prior year, while overall spending and gross domestic product growth were in the low single digits. You can pick and choose individual merchants if you want to really cash in on this growth trend, but that's risky -- and besides, most highfliers like Amazon.com (AMZN) don't pay a penny in dividends. A lower-risk, long-term play on this trend is packaging giant Amcor, which makes all manner of containers that allow e-commerce businesses to thrive and ship their goods intact. It's not as high-margin as selling a TV or a mattress online, but it's certainly more reliable as evidenced by a steady stream of dividends.
Current yield: 4.4%
Verizon Communications (VZ)
Speaking of the internet, the only way you can have reliable connectivity to buy anything is through a key telecom provider such as Verizon. Its 5G -- or fifth generation -- wireless network continues to grow impressively, with about 35 metro markets covered at present. The company's core wireless business also continues to dominate as the largest network of subscribers in the U.S. On top of that, its FiOS fiber-optic service for homes and business is growing strong. Thanks to its investments in network quality, VZ will remain a force for many years to come. And as long as customers keep paying their bills, that will result in a reliable income stream for shareholders.
Current yield: 4.5%
Toronto-Dominion Bank (TD)
If you're looking for a "forever" financial stock, it's hard to forget about the 2008 financial crisis that resulted in catastrophic losses for big U.S. banks like Citigroup (C) and Bank of America (BAC). However, our neighbors to the north fared much better because banks like TD are more closely regulated institutions and do not engage in risky investment and lending practices. TD maintains little exposure to investment banking and trading to this day -- cutting out risky and cyclical business lines -- but it's one of the largest banks in the world anyway, at more than $80 billion in market capitalization. That's larger than Goldman Sachs (GS), and much less risky with its retail-banking focus. With a generous dividend that dates back to 1857, this is a long-term holding you can rely on.
Current yield: 5%
Duke Energy Corp. (DUK)
One of the largest for-profit utilities in the U.S., Duke boasts a market value of roughly $60 billion at present and nearly 8 million electric customers across six different states, covering a service area of more than 90,000 square miles. On top of that, it operates a natural gas distribution network serving close to 2 million more customers. There's a lot of uncertainty about the future of energy amid climate change concerns, but one thing is certain: A utility like Duke will remain entrenched regardless of what power source it uses to fuel its distribution network. Electricity is a necessity, particularly in a digital age, meaning a steady stream of payments to DUK and a steady flow of dividends back to shareholders as a result.
Current yield: 4.7%
An energy stock of a different flavor, Oneok is a "midstream" fossil fuel company focused on pipelines and processing facilities. It operates one of the largest natural gas systems in the country, with facilities to liquefy, store and transport gas. The company has been in operation for more than a century. There's not as much potential as energy exploration firms -- which find new oil and gas fields and bring them online -- and the margins are smaller than wholesalers and refiners that take fossil fuels and market them to the masses. That said, the pipelines and tanks business of OKE means reliable revenue for the long haul and dividends that are far less risky than other stocks in the energy sector that are more closely tied to trends of supply and demand.
Current yield: 13%
Speaking of less risk, Switzerland-based insurance giant Chubb is in the business of managing risk via its policies that cover residences, automobiles, businesses, boats and a host of other assets. With more than a century of operations under its belt -- and more than a century of dividend payments -- CB knows a thing or two about how to cover the costs of claims and still have plenty left over for its shareholders. Though not a household name, this nearly $60 billion financial company offers a dividend that is sure to stick around and even grow considerably in the years to come.
Current yield: 2.4%
Nine dividend stocks to buy and hold:
-- Novartis (NVS)
-- National Health Investors (NHI)
-- PetMed Express (PETS)
-- Amcor (AMCR)
-- Verizon Communications (VZ)
-- Toronto-Dominion Bank (TD)
-- Duke Energy Corp. (DUK)
-- Oneok (OKE)
-- Chubb (CB)
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