When you are looking for dividend stocks to buy and hold forever, it pays to take advice from the guru of long-term investing, Warren Buffett. He recommends the six stocks listed below. They all pay great dividends while being priced right.
As it is well known, Buffet doesn’t buy overvalued stocks. Furthermore, these stocks are all market leaders with barriers to competition, making them solid long-term prospects. Investing in these six also provides diversification as they offer exposure to multiple segments of the economy.
Dividend investing is one of the most profitable strategies. It provides income and growth while dividends can be reinvested to compound growth.
How Dividend Investing Works
Many profitable companies pay investors a quarterly dividend. Investors receive these dividend payments in cash. Many companies also offer a dividend reinvestment program (DRIP). DRIPs allow investors to automatically reinvest their dividends by purchasing commission-free shares rather than taking the dividends in cash. This provides compounded growth and tax benefits.
A stock’s dividend is determined by company management and expressed on a per-share basis. For example, a company may declare a $1 dividend, which means it pays investors 25 cents per share each quarter. The stock’s yield is determined by dividing the annual dividend by the current share price.
Nike pays a dividend of .80 per share. On January 10, 2018, the price was of $64.22 while its yield stands at 1.25 percent. If you’re searching for excellence, Nike provides it in the sporting-shoes and sporting-apparel segments. It is the industry leader thanks to top-of-the-line products and brand equity. Nike is also expanding, particularly into China. As a result, continued revenue growth can be expected.
Beyond handsome dividends and growth prospects, Nike’s financials are strong. This aspect ensures those dividend payments will keep on coming. The company has very little debt and over $4 billion in cash. This puts it in the position to leverage expansion opportunities that will create even more value.
As of January 2018, IBM is selling at a very attractive PE ratio of 12. For such an innovative company, this seems like a bargain, and Warren Buffet certainly thinks so as well. With a yield of 3.6 percent, IBM is doubtless one of those dividend stocks to buy and hold forever.
Some investors have questioned if Buffet made the right decision by buying IBM stock. He rebutted that even if his timing turns out to be a mistake, he’s glad he picked IBM out of all. That’s because he sees it as a solid, long-term performer that will be profitable in the years to come.
This oil and gas giant pays a 1.4 percent yield as of January 2018. ConocoPhillips is involved in almost every aspect of the energy business, from drilling to refining and gasoline to natural gas. It even has retail exposure.
The stock is currently trading at a bargain price because of declines in global energy prices. Despite the declines in the overall margins for refining and other energy sectors, management has kept the company on track by prudently curtailing spending. As oil and gas prices are expected to rebound, this company is particularly positioned to benefit. All these good leadership choices made this one of the dividend stocks to buy and hold forever.
Shoppers can not only save big money by shopping at Costco, but they can also make big money by investing in it too. This retail giant sells almost everything, from food to clothes to electronics to furniture to eyeglasses to gasoline. Its customers love it, so you can rest assured this investment is one of those solid, long-term dividend stocks to buy and hold forever.
On top of that, Costco also has a great financial track record of slow, steady growth. With all of its yearly membership fees going straight to its bottom line, Costco can afford to pay a generous dividend. More exactly, we’re talking about $2.00 per share as of January 2018.
5. Coca Cola
With a whopping 3.21 percent yield as of January 2018, this stock provides some serious income to its investors. It’s also a stalwart company. Coca-Cola has provided steady income for years, making it an ideal investment for income-oriented investors with lower risk tolerances.
It also makes a great steady stock to round out a more aggressive portfolio that needs to be balanced with a few more safer stocks. Its steady income makes it one of the great dividend stocks to buy and hold forever. With sales growth in overseas markets, it’s bound to provide growth as well.
6. Proctor & Gamble
Proctor & Gamble is no gamble—it is one of the sure and steady players. This company is going to be around more than long enough to make it one of the best dividend stocks to buy and hold forever. You see P&G products everywhere when shopping. Its array of brands includes Tide, Pampers, Gillette, Crest, and Duracell, to name a few.
Management also has a strategy aimed at keeping this stock as solid as a rock. It aims to compete only in market segments where it is a market leader. This strategy leaves it free to raise prices with production cost increases, protecting profits. As of January 2018, it pays a dividend of $2.76 per share, offering income-oriented investors seeking safe harbor investments a great opportunity.
Warren Buffet has been one of the most successful investors because he understands value stocks. He also understands how to invest for the long term. When it comes to dividend stocks to buy and hold forever, this is exactly the type of investor you want to take advice from.
Investing in strong companies with strong dividends is a tried and true strategy. It provides income and the opportunity for growth. By choosing high-quality stocks, you can minimize risk. By reinvesting dividends, your portfolio grows and grows. Over many years, these reinvested dividends create compounding that allows you to attain true, stable wealth.
High-flying stocks and cryptocurrencies may have their place for those looking for a short-term profit at the risk of severe financial losses. For those who want to see their hard earned money grow over the years, these 6 stocks have the seal of approval of one of investing’s most successful gurus.