7 Dividend Stocks to Buy and Never Sell: January 2024 Edition (2024)

One of the best ways to create wealth is finding the right dividend stocks to buy and hold. No other asset class has performed as well as buying equities, not gold, not bonds, not real estate.

Several years ago Deutsche Bank (NYSE:DB) published a study showing that over the past century, stocks beat out gold by 5.6% per year, housing prices by 6.6%, Treasuries by 6.8%, and oil by 8.4% per year.

And among the best stocks to buy have been dividend stocks. Over the past 100 years, they’ve outperformed non-dividend payers by a healthy margin. They’ve done so with less risk, which is what makes them the dividend stocks to buy and hold.

Ned Davis Research found between 1973 and 2022, dividend stocks that grew their payout returned over 10% while all other stocks did appreciably worse. Stocks that cut their dividends lost money over the past five decades.

What follows are three of the very best dividend stocks to buy and hold forever. They’ve grown their dividend payments to shareholders for years and are likely to keep doing so for decades to come.

LVMH Moet Hennessy Louis Vuitton (LVMUY)

French fashion house LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY)(OTCMKTS:LVMHF) owns some of the biggest luxury brands in the world across many categories.

From its namesake brands Moet & Chandon champagne, Hennessy cognac, and Louis Vuitton leather goods, it also owns Dior, Fendi, Bvlgari, Dom Perignon, Tag Heuer, and Sephora. There are some 75 different “houses” featuring 60 different brands.

Founder Bernard Arnault famously once said, “Luxury goods are the only area in which it is possible to make luxury margins.” That’s certainly true for LVMH which enjoys gross margins of almost 70% and operating margins north of 25%.

According to the Financial Times, LVMH’s customer base represents the top 5% of uber-luxury spenders and comprises 40% of all global luxury sales.

It’s why luxury goods stocks tend to hold up well during market downturns. The well-heeled are often the last to feel the pinch of a recession.

Since bear markets tend to be measured in months while bull markets go on for years, there’s a good chance the rich will not even slow their purchasing habits. They’ll blithely continue spending as if nothing’s happened and for them nothing mostly has.

LVMH pays its dividend twice a year, unlike most companies that do so quarterly. And the dividend has grown about 16% annually over the past five years and about 13% over the last decade. Free cash flow (FCF) is growing exponentially over that time giving the luxury goods maker plenty of support for its payout. This is a dividend stock you can buy and then ignore for years.

Johnson & Johnson (JNJ)

Pharmaceutical giant Johnson & Johnson (NYSE:JNJ) is a perennial name on any list of the dividend stocks to buy and hold forever.

It possesses one of the best records of success in the healthcare industry by focusing upon high-margin pharmaceutical drugs, which comprise 65% of total revenue.

It has a portfolio of billion-dollar therapies including Stelara and Tremyfa for plaque psoriasis, cancer therapy Darzalex, and Simponi for rheumatoid arthritis. Revenue is forecast to grow between 7% and 8% annually with 12% to 13% adjusted profits growth.

Earlier this year it spun off its consumer products business into Kenvue (NYSE:KVUE), a stand-alone company. It is now able to focus even more intently on its healthcare business. It is generating almost $16 billion in FCF over the past 12 months.

Because a company can only do so much with its cash profits, Johnson & Johnson richly rewards shareholders with dividends and stock buybacks. Year-to-day the healthcare stock has paid out $8.9 billion in dividends and $4.8 billion in share repurchases.

Johnson & Johnson has paid a cash dividend to shareholders every year since 1944. It has an unbroken streak of raising the payout for 61 years. With the dividend yielding 2.8% annually and the payout ratio of just 35%, it is an income stream that is safe with plenty of room for future growth.

Lowe’s (LOW)

Home improvement warehouse Lowe’s (NYSE:LOW) offers investors a decade’s worth of capital appreciation and income growth. Its 511% total return since 2014 easily eclipses the 210% returns of the S&P 500. The gap is even wider over the past 20 years.

That’s because Lowe’s has rapidly increased its dividend over the years. In the last decade the payout has grown at a compounded 20% annually. It’s been raising the dividend, though, for 60 years making the DIY leader a Dividend King.

Even better, it also sports a low payout ratio of just 34%. The payout ratio is how much of a company’s profits are paid out in dividends. Low percentages indicate the payout is safe and has room to grow further so long as there is plenty of FCF to support it.

Generating over $11 per share in FCF with an annual dividend of $4.38 per share, Lowe’s payout is well covered.

Although Lowe’s business is tied to the housing market, it’s not quite walking lockstep with it. That’s because although contractors and professionals turn to the home improvement center for materials, homeowners do so as well.

Particularly when the housing market declines, homeowners will spruce up their space. Paint is the easiest bang-for-your-buck project. And consumers go to Lowe’s more than rival Home Depot (NYSE:HD).

Lowe’s is the largest retailer of appliances with a 28% share of the market, ahead of Home Depot at 23% and Best Buy (NYSE:BBY) at 14%. Lowe’s is a stock investors can set and forget in their portfolios.

On the date of publication, Rich Duprey held a LONG position in JNJ and LOW stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.