3 ‘Forever’ Dividend Aristocrats to Buy and Hold
Investors seeking long-term opportunities in the stock market should focus on passive income stocks that offer the promise of steady dividends and sustainable growth. In this article, we’ll dive into three resilient Dividend Aristocrats—companies that have consistently increased their dividends for at least 25 years. These are not just any stocks; they are solid, time-tested choices that can be held in your portfolio indefinitely. Let’s explore these ‘forever’ aristocrats, their financial health, and what makes them vital components of a long-term investment strategy.
‘Forever’ Aristocrat #1: Procter & Gamble (PG)
Procter & Gamble (PG) is a colossus in the consumer products industry, selling its broad range of products in over 180 countries. From household names such as Pampers and Tide to personal care staples like Gillette and Olay, Procter & Gamble has carved a permanent niche in American homes. The company raked in a whopping $84 billion in sales for its fiscal year 2024, which ended on June 30.
In late July 2024, Procter & Gamble reported flat sales but saw a 2% rise in organic sales due to strategic price increases. Its earnings per share (EPS) grew 2%, exceeding analysts’ expectations, illustrating the company’s robust pricing power even amidst cost inflation. With guidance for organic sales growth between 3% and 5% and expected EPS growth of 5% to 7% for fiscal 2025, Procter & Gamble clearly has a solid growth trajectory.
Furthermore, the company has an impressive dividend growth streak, having raised its dividend by 7% in April 2024 to $1.0065 per share. A dividend payout ratio fluctuating between 50% and 75%—currently at 58%—is acceptable for a company of this caliber. Procter & Gamble is a titan in the industry, making it a prime candidate for long-term investors seeking stability. Currently, PG shares yield 2.3%.
‘Forever’ Aristocrat #2: McDonald’s (MCD)
Founded in 1940, McDonald’s (MCD) has established itself as the premier global restaurant chain, boasting 41,822 locations in approximately 119 countries. With nearly 95% of its outlets franchised, McDonald’s minimizes operational risks while still maintaining a significant portion of real estate ownership—a strategic boon that puts them ahead of the competition.
In 2023, McDonald’s reported total system sales nearing $130 billion, with total revenue of approximately $25.5 billion. While Q2 2024 showed a slight dip in revenue, McDonald’s has successfully adopted its “Accelerating the Arches” strategy, focusing on digital convenience and optimizing its supply chain to enhance customer experience and margins.
McDonald’s competitive edge lies in its global brand recognition and differentiated business model. Transitioning to a more asset-light structure allows it to focus on franchise growth while maintaining solid profit margins. With 49 consecutive years of dividend increases, McDonald’s shares currently yield 2.3%. This remarkable resilience makes MCD an excellent choice for investors who value both growth and reliability.
‘Forever’ Aristocrat #3: Johnson & Johnson (JNJ)
Johnson & Johnson (JNJ) has long been recognized as a leader in healthcare, innovating in both medicines and medical devices since its inception in 1886. Employing around 132,000 globally, the company is projected to generate over $89 billion in revenue this year alone.
In its most recent quarterly results, Johnson & Johnson reported a 4.3% increase in revenue, exceeding expectations. The company’s strategic focus on innovative medicines and targeted acquisitions, such as the $13.1 billion purchase of Shockwave Medical, enhances its growth outlook. Importantly, J&J has demonstrated resilience through recessions, with a solid annual earnings growth rate of 6.3% over the last decade.
In April 2024, Johnson & Johnson announced a 4.2% increase in its quarterly dividend to $1.24 per share, marking the 62nd consecutive year of dividend growth. With shares currently yielding 3.1%, JNJ is a compelling option for income-seeking investors looking for solid company fundamentals.
Conclusion
Investing in Dividend Aristocrats like Procter & Gamble, McDonald’s, and Johnson & Johnson ensures a measure of safety and predictability in your portfolio. Each of these companies has demonstrated the ability to not only weather economic storms but thrive, consistently rewarding shareholders with growing dividends. For those who value traditional financial principles and seek reliable long-term investments, these are stocks you should consider holding forever.
