3 Dividend Stocks To Buy, Hold And Profit From For The Rest Of Your Life

Dividend investing requires a different investment philosophy. You become a partner in companies that you believe will continue to provide income through regular payouts. Once you buy these stocks, you hold them over the long run and focus on their income-generating capabilities.

A quality dividend stock is less likely to slash or suspend its dividend payments during market volatility, making it much easier to hold it in your portfolio over the long run. 

One way to find quality dividend stocks is to look for the industry leaders with a defendable “economic moat,” a term coined by Warren Buffett to identify quality stocks with a vast competitive advantage. Keeping these factors in mind, below we have short-listed three stocks that income investors could consider buying now.

1. TC Energy

When interest rates fall and bond yields decline, it’s one of the best times to buy energy stocks that provide crucial infrastructure, like pipelines and storage facilities. 

The sector is the most highly correlated to bond yields, and companies with limited commodity exposure tend to perform best in the current environment. Among the top energy infrastructure providers, TC Energy (NYSE:), formerly TransCanada, is a solid stock to consider for long-term holding.

The biggest attraction of owning this stock is the company’s long history of paying dividends and its diversified energy assets. TC has raised its dividend for 19 consecutive years and currently pays $0.60 a share quarterly, following an 8% increase in February. Trading at $45.20 at the close on Wednesday, TRP currently offers an annual dividend yield of 5.4%.

TC Energy 1-Year Chart.

The company plans to raise its dividend at an annual rate of 8-10% through 2021, helped by its relatively low-risk business, with about 95% of before interest, taxes, depreciation and amortization coming from assets that are either regulated or contracted on a long-term basis.

TC Energy’s assets include pipelines, pipelines, power generation and natural gas storage. The company has more than 92,600 kilometres of natural gas pipelines, 4,900 kilometres of oil pipelines, 650 Bcf of gas storage and 4,000 MW of power generation.

2. Johnson & Johnson 

When deciding about buying a dividend stock, focus on three key factors to eliminate bad choices: the forward dividend yield, the cash dividend payout ratio (the percentage of its free cash flow spent on dividends) and the track record of dividend growth.

Johnson & Johnson 1-Year Chart.

Johnson & Johnson 1-Year Chart.

The world’s largest maker of both consumer and pharmaceutical health-care products, Johnson & Johnson (NYSE:) ticks all the boxes. The company has raised its dividend every year for the past 58 years. It’s payout ratio is a low 45.93%, meaning there’s still plenty of room to run for future dividend hikes.

The current public-health environment further strengthens J&J’s position, where it has been benefiting from strong demand for its over-the-counter products. J&J makes everything from innovative cancer therapies to medical devices and over-the-counter staples, like pain reliever Tylenol.

In October, J&J said its net earnings for the  had more than doubled. 

In April, J&J increased its quarterly dividend by 6.3% to $1.01 a share from $0.95. Trading at $153.10 at the close on Wednesday, its annual dividend yield translates into 2.71%.

3. Brookfield Infrastructure 

Toronto-based Brookfield Infrastructure Partners (NYSE:) is another solid candidate for your income portfolio due to the company’s diversified operations and its ability to generate strong cash flows.

BIP owns and operates utilities, transport, energy and communications infrastructure companies globally. BIP manages a US$30-billion portfolio with assets spanning five continents. The company manages utilities and power transmission systems in North and South America; 37 ports in North America, the UK, Australia and Europe; approximately 3,800 kilometres of toll roads in South America and India; and large rail operations in Australia and South America.

Brookfield Infrastructure 1-Year Chart.

Brookfield Infrastructure 1-Year Chart.

With these cash-generating assets in the infrastructure space, the company’s main objective is to generate a of 12-15% on equity and provide sustainable distributions for investors while targeting annual distribution growth of 5-9%.

According to Brookfield, its strategy is to acquire high-quality businesses on a value basis, actively manage operations and opportunistically sell assets to reinvest capital into the business. Looking at the performance of Brookfield’s stock performance during the past five years, it’s obvious that the company has been quite successful in achieving its goals. BIP stock has returned 130% during that time, including dividend, beating the S&P-500’s 84% return.

Trading at $51.90 at the close on Wednesday and with an annual dividend yield of about 4%, the stock doesn’t come cheap, but it’s one of the top dividend stocks investors should consider adding to their portfolio.  

This site uses cookies to offer you a better browsing experience. By browsing this website, you agree to our use of cookies.