Buying dividend stocks and forgetting about them isn’t as simple as it seems, even for seasoned income investors. The market could crash, the earning potential might not be worth it, and you might end up thinking your money would be better off elsewhere.
That said, the buy-and-forget approach isn’t impossible either. Buy and Forget stocks are investors’ “core holdings” that they hold forever, regardless of what happens. And today, I came up with three such dividend stocks from the Dividend Kings list that anyone can hold for as long as they want. Dividend kings are companies that not only have a strong track record of paying dividends, but have also increased them for over 50 years.
Using Barchart’s free evaluation tool, I used the following filters:
Investment ideas: Dividend kings.
Current Analyst Rating: 4 to 5. I prefer companies with a generally positive analyst consensus.
Number of analysts: 20 or more. The more analysts covering the company, the better and more reliable the consensus will be.
Market capitalization: Large to Mega. Companies with a larger market capitalization are generally safer for this strategy.
60 month beta: 0 to 1. I want companies that are relatively stable compared to the overall market. I consider any value greater than 1 point volatile.
5-year percentage change: 20% and more. Beyond income potential, I also prefer to have a little capital appreciation potential.
FWD Dividend Yield: I left this space blank on purpose so I could sort the list from the highest performing company to the lowest performing company.
After running the filters, I was left with 5 companies; I’ll cover the three highest-yielding dividend kings to buy and hold forever.
AbbVie develops drugs for diseases such as cancer and immune system disorders. Its main objective is to develop traditional medicines and advanced therapies for people with complex diseases.
Right now, AbbVie shares are trading around $227 and have gained about 112% over the past five years. Its 60-month beta is 0.50, so it is relatively stable.
AbbVie pays a forward dividend of $6.56, distributed $1.64 per share per quarter. This payment translates into a forward yield of 2.9%. The dividend payout ratio is 68.08% of the company’s profits, which is within a very acceptable range.
Looking at financials, AbbVie’s recent annual revenue increased 3.7% to $56.33 billion. However, net income decreased 12% to $4.27 billion, or $2.40 core EPS, driven primarily by a significant increase in R&D expenses.
Meanwhile, a consensus of 28 analysts rates AbbVie as a Moderate Buy with a score of 4.14 out of 5. That’s pretty close to a Strong Buy rating. This score has remained relatively stable over the past 3 months. The high price target for the stock is $289, suggesting an upside of up to 27% from current levels.
The next dividend king needs little to no introduction: the Coca-Cola Company. Almost every person on the planet encounters a Coca-Cola product at least once a day. They have a wide range of drinks beyond the iconic Coca-Cola.
Today, the stock is trading around $72 and has gained >35% over the last 5 years. It’s not explosive, but the upward trajectory is clear. The 60-month beta is 0.43, demonstrating the stability of this stock relative to the broader market.
Coca-Cola pays a forward dividend of $2.04, or $0.51, each quarter, reflecting a forward yield of 2.86%. The company’s payout ratio is 67.64%, which is also very acceptable for investors looking to increase their income.
Last year, Coca-Cola’s annual revenue rose 2.8% to about $47 billion, while net income declined less than 1% to $10.63 billion, or $2.47 per share, as operating expenses rose slightly.
According to the consensus among 24 analysts, Coca-Cola stock has an average rating of Strong Buy with a near-perfect score of 4.75 out of 5. The score has remained relatively stable over the past 3 months, or maybe even years. The lofty target for Coca-Cola is $85 per share, which translates to a 17% upside from current levels.
Finally, the last dividend king on my list is Johnson & Johnson, a healthcare giant that operates in several segments including pharmaceuticals, medical devices, and consumer health products. Johnson & Johnson also develops treatments for complicated health conditions.
Today, JNJ stock trades at approximately $207 per share and has gained ~38% over the last 5 years. It’s not too explosive, but the stock is certainly stable, with a 60-month beta of just 0.38.
As for the payout, Johnson & Johnson pays a quarterly dividend of $1.30, which translates to an annual forward dividend of $5.20 per share, which translates to a yield of about 2.6%. The payout ratio is also within a very acceptable range of 48.63%.
The company’s most recent annual revenue rose 4.3% to $88.82 billion. Meanwhile, net income fell 60% to $14 billion, or $5.84 per basic share. However, investors should remember that 2023 net income is inflated, as J&J posted a one-time gain of about $21 billion from the spinoff of Kenvue, its Consumer Health segment. As a result, the 2026 figure should normalize relative to this fiscal year.
Meanwhile, a consensus among 25 analysts points to a Moderate Buy rating with a score of 4.12 out of 5, which has been gradually increasing in recent months. The high price target for JNJ is $230 per share, which implies approximately 11% upside potential from where we are now.
Mega-cap dividend kings are some of the safest options for a buy-and-forget strategy. For the companies mentioned above, the possibility of them reaching zero is also almost zero. However, the market can do curious things. The smart money stays on top of the news, keeps an eye on the financials, and reinvests those dividends for explosive compound growth, especially if it’s years away before the income is needed.
As of the date of publication, Rick Orford had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
