3 Dividend Stocks You Can Safely Hold for Decades

Dividends are not guaranteed — their payment is totally at the discretion of a company’s board of directors. So if you are looking for a long-term dividend stock, you’ll probably want to start with industry-leading names that have shown a consistent commitment to paying dividends over time.

Realty Income (O -1.64%), Procter & Gamble (PG -1.93%), and Enterprise Products Partners (EPD 0.97%) all pass that consistency test. Here’s why these three dividend stocks are worth owning for the next few decades.

1. Realty Income: The 800 lb. gorilla

Realty Income is a real estate investment trust (REIT) that owns net-lease properties. That means that it owns assets, but its tenants are responsible for most of the operating-level costs. Net-lease properties are generally single-tenant, which increases risks, but spread over a large portfolio this is actually a pretty low-risk approach. Realty Income owns a massive portfolio of over 11,000 properties. It is the biggest name in its space, with around 80% of the portfolio in retail properties. The dividend has been increased annually for 27 years, making it a Dividend Aristocrat

The stock is not cheap, with the current 4% dividend yield falling toward the low end of its historical range. This isn’t as terrible as it sounds, because, combined with an investment-grade credit rating, it helps ensure a low cost of capital. And that, coupled with Realty Income’s size, means it can do deals that smaller peers couldn’t even consider. Dividend growth isn’t likely to be huge — it has averaged around 4.4% over time — but slow and steady growth can produce impressive results and provide a solid foundation for your portfolio. It also has the added benefit of paying out its dividends on a monthly rather than quarterly basis, which can provide just a bit more compounding benefit if the stock is held long term.

2. Procter & Gamble: A focus on quality products

Like Realty Income, Procter & Gamble tends to trade at a premium price, but there’s a pretty good reason for that. For starters, it is a giant in the consumer staples space, with iconic brands like Bounty and Tide. It has created a powerful distribution machine and has the wherewithal to advertise aggressively. All of this gives it clout with retail partners, which benefit from the customers P&G can bring into stores. And the company has long focused on innovation, creating entirely new categories of products, like Swiffer, and continually upgrading its existing fare. The word “new” gets even more customers to buy. 

That core operational strength has allowed Procter & Gamble to increase its dividend annually for a massive 66 years and counting. That streak makes the company a Dividend King, a very rare group. With such an entrenched industry position, there’s no reason to believe that streak is at any risk.

Still, inflation is raging, and P&G’s profit margins could eventually get pinched. So far, it is holding up well and has been able to pass price increases on to consumers. If you are willing to pay up for quality, it could be worth buying now with a market-beating yield of 2.4%. Given the current environment, however, those with more of a value bias might want to put it on their watch list just in case investors sour on the name.

3. Enterprise Products Partners: Moving energy around

Enterprise Products Partners, the last name here, offers the most impressive yield at 7%. The distribution has been increased annually for 24 consecutive years, putting it on the verge of becoming a Dividend Aristocrat. What’s most interesting about that streak, though, is that this master limited partnership (MLP) hails from the energy sector, a notoriously volatile space.

The key is that Enterprise operates in the midstream niche, which helps to move oil and natural gas from where it is drilled to where it eventually gets used. It is one of the largest midstream names in North America. Most of its revenue comes from the fees it charges for the use of its assets. Commodity prices aren’t all that important — demand is the big story. Think of the MLP as a toll booth on the energy highway. And while the current zeitgeist is pushing the world toward cleaner alternatives, this is likely to be a very slow transition, with carbon fuels needed for decades to come. This is a bit of a contrarian play, but if you can stomach going against the crowd, Enterprise will pay you well for sticking around. One thing for retail investors to be aware of regarding the stock is its MLP status can create some additional form filing at tax time. Be sure you understand what that can mean before buying in on the stock.

Some key themes

If you didn’t notice, Realty Income, P&G, and Enterprise are all big, industry-leading names. They have each proven their ability to excel and reward investors well at the same time. And there’s no particular reason to think their dominant positions are at risk, making them attractive options even though they often command premium prices on Wall Street. Of the trio, Enterprise is probably trading at the most attractive valuation levels. But for conservative investors, paying full price for great companies isn’t necessarily a bad thing, especially if collecting regular dividend checks is your passion.

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