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The Best Dividend Stocks to Buy and Hold Forever

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  Published in Stocks and Investing on Tuesday, November 4th 2025 at 6:11 GMT by The Motley Fool

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The Dividend Playbook: Stocks That Keep Paying

When it comes to building a portfolio that generates passive income and appreciates over time, dividend‑paying stocks are a staple of many long‑term strategies. A recent roundup of “best dividend stocks to buy and hold forever” pulls together a list of blue‑chip names that have a proven track record of raising cash for shareholders while maintaining solid fundamentals. Below is a comprehensive overview of the highlighted companies, their dividend metrics, and why they’re considered cornerstones for a dividend‑focused portfolio.

1. Johnson & Johnson (JNJ)

Johnson & Johnson, a diversified health‑care conglomerate, is the textbook example of a stable dividend grower. With a yield of around 2.5% and a payout ratio close to 49%, the company has consistently increased its dividend for over 50 consecutive years—an impressive achievement that earns it the “Dividend King” status. The firm’s robust cash flow, backed by a portfolio of pharmaceuticals, medical devices, and consumer products, cushions it against economic swings. JNJ’s 2023 earnings report also underscored a 5.6% growth in earnings per share, providing further confidence that dividends will continue to rise.

2. Procter & Gamble (PG)

Procter & Gamble’s yield sits at roughly 2.4%, but its true appeal lies in its 65+ year history of dividend hikes. The company’s payout ratio is around 71%, reflecting a disciplined approach to balancing shareholder returns with investment in growth initiatives. PG’s broad range of household staples—from Tide to Gillette—provides a steady revenue stream that withstands discretionary spending dips. Its 2023 financials showed a modest 3% increase in free cash flow, underscoring the company’s ability to sustain and grow its dividend.

3. Coca‑Cola (KO)

Coca‑Cola offers a yield near 3.3% and has increased dividends for over 58 years. The beverage giant’s payout ratio sits around 67%, which is healthy for a company that has shifted towards premium products and diversification. KO’s 2023 earnings highlighted a 4% growth in operating income, bolstered by strong performance in emerging markets. The brand’s global footprint and diversified beverage portfolio shield it from sector‑specific downturns.

4. PepsiCo (PEP)

PepsiCo’s yield is approximately 2.9%, with a payout ratio near 71%. The company’s strategy of blending beverages with snack foods (think Lay’s and Doritos) has helped maintain stable cash flow even as consumer preferences shift. PepsiCo’s 2023 results showed a 3% rise in net income, while its dividends have grown consistently for more than 48 years. The firm’s international presence, coupled with its brand equity, positions it well for long‑term dividend sustainability.

5. 3M (MMM)

The industrial giant 3M offers a yield of around 2.5% and a payout ratio of 56%. Its 2023 earnings report confirmed a 4% increase in operating income and robust free cash flow, which is essential for dividend growth. 3M’s diverse product line—from safety equipment to consumer adhesives—provides a buffer against cyclical industry trends. The company’s commitment to research and development also supports future growth opportunities that can translate into higher dividends.

6. McDonald’s (MCD)

McDonald’s presents a yield of roughly 2.0% and a payout ratio near 51%. The fast‑food giant’s 2023 financials showed a 4% rise in earnings per share, indicating a solid profitability base. McDonald’s global franchise model delivers predictable cash flow, which the company uses to maintain a consistent dividend track record spanning more than 30 years. The firm’s focus on menu innovation and technology upgrades continues to attract investors seeking reliable returns.

7. Walmart (WMT)

Walmart’s yield sits at about 1.8%, but its payout ratio is around 57%. The retail behemoth’s 2023 earnings reflected a 5% growth in net income, thanks in part to its e‑commerce expansion. Walmart’s massive scale and diverse product mix provide resilience against economic downturns. Although the yield is modest, the company’s strong cash generation capacity supports its dividend growth trajectory.

8. IBM (IBM)

IBM offers a higher yield near 4.7% and a payout ratio close to 75%. The tech firm’s 2023 results highlighted a 3% increase in operating income and a solid return on equity. IBM’s transition towards cloud services and artificial intelligence has begun to bear fruit, which is reflected in its dividend growth. The company’s long history of dividend increases—over 40 years—adds a layer of credibility for income‑seeking investors.

9. AT&T (T)

AT&T’s yield is one of the highest on the list at about 8.5%, but the company’s payout ratio is around 71%, and its debt levels are significant. The telecom giant’s 2023 earnings revealed a 6% decline in revenue, partially due to the shifting media landscape and increased competition. While AT&T’s dividend is attractive, the company’s high leverage and the volatile nature of the telecom sector may warrant careful consideration for risk‑averse investors.

10. ExxonMobil (XOM)

ExxonMobil offers a yield near 6.1% and a payout ratio around 67%. The oil and gas giant’s 2023 financials reported a 5% rise in earnings per share, buoyed by higher commodity prices. However, the company’s heavy reliance on oil demand and environmental regulatory risks could affect its long‑term dividend prospects. Investors should weigh the attractive yield against the exposure to cyclical energy markets.

11. Chevron (CVX)

Chevron’s yield is roughly 5.2%, with a payout ratio of about 66%. The company’s 2023 results showed a 4% increase in operating income, driven by higher oil prices and cost‑control initiatives. Chevron’s diversified energy portfolio—spanning upstream to downstream—provides a platform for stable cash flows, yet the inherent volatility of energy prices remains a concern for dividend sustainability.

Dividend Strategy for the Long Haul

The common thread among the highlighted companies is a blend of steady cash generation, disciplined payout ratios, and a long history of dividend increases—the hallmarks of dividend‑investing success. A few tactical pointers emerged from the article:

1. Diversification Across Sectors
   Investing in a mix of consumer staples, healthcare, technology, telecom, and energy ensures that a downturn in one industry is offset by stability or growth in another. For instance, pairing a high‑yield telecom stock with a more stable consumer‑staple name can balance risk.

2. Focus on Dividend Aristocrats
   Stocks that have increased dividends for 25 or more consecutive years (Aristocrats) or 50 years (Kings) exhibit resilience. The article underscored that such companies are better positioned to weather economic turbulence.

3. Reinvest Dividends
   Dividend reinvestment plans (DRIPs) allow investors to compound returns over time. Even modest dividends can grow significantly when reinvested consistently.

4. Monitor Payout Ratios and Cash Flow
   A payout ratio below 70% generally indicates that a company retains enough earnings to sustain and grow its dividend. Coupled with strong free‑cash flow, this is a green light for long‑term investors.

5. Beware of Over‑High Yields
   Extremely high yields (e.g., AT&T’s 8.5%) may signal a stock’s price decline or underlying financial stress. A deeper dive into debt levels, profitability, and industry trends is warranted before adding such a name.

Bottom Line

Building a dividend‑focused portfolio isn’t about chasing the highest yield; it’s about choosing quality, sustainable cash generators that have demonstrated a track record of rewarding shareholders. The companies highlighted in the roundup—spanning healthcare, consumer staples, technology, and energy—offer a blend of growth potential and income reliability. By diversifying across these sectors, reinvesting dividends, and staying vigilant about payout ratios and cash flow, investors can create a portfolio that delivers steady income now and the potential for capital appreciation over the decades.