When most of us think of winning in the stock market, we envision stocks in our portfolios gaining. And that's definitely a huge part of investment success. But over time, another element could greatly add to your gains: dividend payments. Dividend-paying stocks offer a source of recurrent income, boosting your portfolio regardless of the economic or stock-market environment. And even if a particular stock is in the doldrums, your losses will be limited thanks to these payments.
Of course, to benefit the most from dividends, it's a great idea to go for companies with a proven track record -- such as Dividend Kings. These are players that have increased their payments over at least the past 50 years. Such commitment to rewarding shareholders is likely to continue, making them a safe bet if you're looking for dividend income over the long term.
The list of Dividend Kings is long, so you may be wondering where to start. Two healthcare stocks make particularly good bets thanks to their dividend strength, earnings track records, and future prospects. If you want decades of passive income, consider these two stocks to buy now and hold forever.
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1. Johnson & Johnson
Johnson & Johnson (JNJ -0.25%) is a healthcare giant; it sells pharmaceuticals across a wide range of therapeutic areas as part of its "innovative medicine" business, and medical devices through its medtech business. Last year the company completed a spinoff of its well-known consumer health business, one that sold products like Tylenol and Band-Aid bandages; it was a wise move, since this unit had been weighing on growth.
Today, J&J's focus is on growth through innovation, with a goal of introducing more than 20 new treatments and 50 product expansions by 2030 -- and this is just from the innovative medicine segment. In medtech, J&J aims to generate a third of sales from new products by 2027.
J&J also is growing through acquisition, most recently buying Shockwave Medical to strengthen its position in the high-growth area of cardiovascular intervention. The healthcare giant expects Shockwave to eventually become the medtech unit's 13th platform to deliver at least $1 billion in annual sales.
All of this means that, beyond dividend payments, J&J makes a great stock to buy for potential earnings growth over time.
Now, let's turn to the dividend. The company recently boosted its quarterly dividend by 4.2%, for its 62nd straight year of dividend increases. Based on the quarterly dividend figure, the company pays an annual dividend of $4.96 per share. Using the closing price from June 17, this reflects a forward dividend yield of 3.4% -- considerably higher than the S&P 500 yield of 1.35%.
So J&J could be a passive income-generating machine for you over time, making it a top pick to buy and hold.
2. Abbott Laboratories
Abbott Laboratories (ABT -0.58%) is another healthcare powerhouse you can count on for earnings performance over time. The company has four business units: medical devices, diagnostics, established pharmaceuticals, and nutrition. This diversification allows Abbott to seize various market opportunities. For example, during earlier pandemic days the company's diagnostics business helped it to become a giant in coronavirus testing. Today, as weight loss drugs soar in popularity, Abbott's nutrition business has introduced a brand to support those on the weight loss path.
All four of Abbott's business units have shown strength in recent times. In the past quarter, medical devices and established pharmaceuticals grew revenue by double digits, and diagnostics and nutrition increased revenue by middle- to high single digits. This helped Abbott report sales growth for the base business -- which excludes COVID-19 testing sales -- of more than 10%, the fifth straight quarter of double-digit growth.
So it's clear you can count on Abbott's earnings strength over the long haul. And as with J&J, you also can count on Abbott for passive income.
The company pays an annual dividend of $2.20, and using the stock's closing price from June 17, it provides a yield of 2.1%. This is another example of a yield higher than that of the S&P 500.
And this means, over time, an investment in Abbott could result in significant ongoing income for you -- no matter what the market is doing.
