Top 3 Buy and Hold Dividend Stocks forever
Here are my top 3 buy and hold stocks. These are the sort of companies you never sell. Above all, you buy and hold these sorts of stocks for life.
For example, the following are strong companies, with many years of continual year on year growth should be the bedrock of anyone’s portfolio. These top 3 buy and hold stocks will provide a sure footing for a great dividend growth portfolio. Here is my best dividend stocks Trading 212 has them all available to purchase.
Pepsi Co – Buy and Hold
Pepsi Co ticker symbol PEP. This is a company that I think every investor should have in their portfolio. Pepsi Co, of course, known mostly for its cola-flavored beverage Pepsi.
You may not realize that Pepsi also owns many other household name brands including but not limited to.
- Doritos
- Lay’s aka Walkers although in the UK it is slightly different.
- Mountain Dew
- 7-up
Just to name a few. They are extremely well diversified into the food and drinks industry.
This behemoth has a market capitalisation of $191.08 billion. With impressive earning to go along with it. Pepsi Co are already a dividend aristocrat and are just 3 years away from being a king.
In the USA a dividend aristocrat has raised its dividend every year for 25 years straight. Whilst a king has raised it for a massive 50 years. Seriously 50 years straight of raising their dividend it nothing short of amazing.
Currently Pepsi Co have done it for 47 years and I forsee them to be a king in 3 years time.
As of now, they are paying an annualized dividend of $3.82 per share this equates to a current dividend yield of 2.78%
With a payout ratio of 66% and only 3 years away from being a king. This dividend is extremely safe in my opinion. Not only are they growing their dividend every year, but they have been growing it at a good rate over the last few years.
With a 7.89% Compound Annual Growth Rate over the last 10 years – Yes, please! Even if the growth slows a little it is still very impressive.
Dividend Growth Summary
5.71% 1 Year Growth Rate (TTM)
8.61% 3 Year Growth Rate (CAGR)
8.41% 5 Year Growth Rate (CAGR)
7.89% 10 Year Growth Rate (CAGR)
47 Years of Growth.
A solid company that I will buy and hold. For up to date stock metrics I use seeking alpha. On to stock number two.
Johnson & Johnson JNJ – Buy and Hold
Johnson & Johnson ticker symbol JNJ is another household name. Founded in 1886 in New Brunswick, New Jersey USA. Everybody knows the name. The corporation of JNJ has more than 250 subsidiaries under its name.
Selling products to over 175 countries Johnson & Johnson are a global brand known the world over.
- Medications
- First-aid supplies
- Johnson’s baby products
- Neutrogena
- Beauty products
A staggering amount of products fall under its banner. Holding this company has the built in diversification of an ETF almost.
Johnson & Johnson – JNJ – has a current market capitalization of $400.78 billion. No that is not a typo.
Beating Pepsi Co to the chase they have already been a dividend king for 7 years. Yes, this means JNJ has consistently raised its dividend for an enormous 57 years. I’m willing to bet that is much older than most of you.
Currently, Johnson & Johnson are paying an annualized dividend of $4.04 per share. That equates to a 2.66% dividend yield at the current share price.
With a payout ratio of just 52.24%, they are one of the strongest companies in the S&P 500 in my opinion.
Here is the dividend growth rate for JNJ.
Dividend Growth Summary
5.93% 1 Year Growth Rate (TTM)
5.98% 3 Year Growth Rate (CAGR)
6.32% 5 Year Growth Rate (CAGR)
6.87% 10 Year Growth Rate (CAGR)
Consistent growth rates around the 6% mark are very nice to see. As an example of increasing growth rates on April 14th, they announced a healthy 6.3% increase on their quarterly dividend.
Increasing your dividend during a pandemic that has the world in lockdown, really is a testament to the strength of this company. Truly a buy and hold for generations to come.
Microsoft – Buy and Hold Stocks
Needing no introduction, if you have not heard of Microsoft ticker MSFT then honestly you should not be reading this article. Moreover, in all seriousness, Microsoft is the backbone of the computing and tech world.
They like many large companies have their fingers in many pies from software to hardware. To name a few for those who have been living under a rock.
- Microsoft Windows Operating System
- Xbox Games Console
- Internet Explorer (Edge)
- Office 365
- Skype
Known to virtually everybody on the planet, they are a tech powerhouse. Firstly, Microsoft has a market capitalization of $1.36 not billion, trillion! $1.36 trillion. A bewildering figure for sure.
Microsoft is a much younger company than either Pepsi Co or Johnson & Johnson so do not expect them to be a dividend king or aristocrat just yet.
However, they are well on their way. Currently, they have a 1.14% dividend yield based on the current share price. Seemingly low, many new investors are put off by this and chase higher yielding stocks.
This is not the full story mind. Microsoft has a current payout of $2.04 per share annualized. The giant has been growing this dividend for 16 years straight. Well on their way to becoming an aristocrat and no doubt king looking into the future.
If we look at the growth rate of the dividend you will see why I love this company. Although the yield is pretty low at 1.14% check this out.
Dividend Growth Summary
9.88% 1 Year Growth Rate (TTM)
8.74% 3 Year Growth Rate (CAGR)
10.45% 5 Year Growth Rate (CAGR)
13.77% 10 Year Growth Rate (CAGR)
Look at those compound annual growth rates. They are huge. Most importantly with a payout ratio of just 36.42%, they have plenty of room to continue increasing this dividend long into the future.
The current share price is $178 per share. Thanks to fractional shares though, this is a non-issue. By allowing investors with smaller amounts of capital to buy fractions of a share. This ensures everyone can get in on the action.
In addition, Microsoft has had fantastic growth over the years as well. For example, if you had put $10,000 into Microsoft just 5 years ago and reinvested the dividends, your investment would now be worth $46,190.
Amazing right. Not so put off by the seemingly low dividend yield now are we? In other words, those returns equate to a 361.9% ROI over just 5 years.
Top 3 Buy and Hold Stocks Summary
Do you like the sound of my Top 3 buy and hold stocks? Those 3 are just some of the best dividend stocks on Trading 212.
Pepsi Co – PEP
Johnson & Johnson – JNJ
Microsoft – MSFT
There are many more companies like these three that are worthy of your attention but those are for another time.
Buy and hold companies like these will be the backbone of many portfolios worldwide that aim to generate lifelong dividends and generational wealth.
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Above all none of the above should be used as financial advice, I am not a professional. Always do your own research.
Thanks,
Sean
