Dividends are an important factor for many investors. The quarterly and annual payouts to shareholders can have a big impact on a portfolio’s growth over time. Dividend stocks can also serve as an income stream to people in retirement.
For this reason, many investors seek out stocks that have high dividend yields.
Even some of the most successful and richest investors are focused on dividend payments. Warren Buffett, the Oracle of Omaha himself, is a notorious dividend collector. Consider that in 2021 Buffett collected $672 million in dividend payments from the 400 million shares of Coca-Cola (NYSE:KO) that he owns and you get an idea of the impact dividends can have and why certain investors appreciate and rely on them.
Here are three dividend stocks for investors to buy and hold forever.
Dividend Stocks to Buy: AbbVie (ABBV)
Pharmaceutical manufacturer AbbVie has been a winner since it was spun off from Abbott Laboratories (NYSE:ABT) in 2013. In its nine years as a public company, ABBV stock has delivered a 300% return to shareholders, which is great in and of itself.
However, AbbVie also pays a healthy 4.2% dividend yield and has grown its dividend at annualized rate of 18% over the past five years. That should put AbbVie on the radar of any investor looking for strong dividend payments in addition to share price appreciation. And, with it trading at about 10x its trailing 12 month free cash flow, AbbVie is a value investor’s dream.
If there’s one drawback to investing in ABBV stock it is that the company is going to lose the patent exclusivity on its blockbuster medication Humira that is used to treat inflammatory bowel conditions, namely Crohn’s disease. Sales of Humira accounted for a third of AbbVie’s $14.4 billion in revenue during the third quarter of 2021, so the patent expiration in 2023 is going to be a big blow to the company’s finances and valuation moving forward.
AbbVie has been working to increase sales of its other drugs, such as Rinvoq and Skyrizi, forecasting that they could combine for annual sales of $15 billion by 2025, which would help to offset any losses from Humira.
Kroger (KR)
Supermarket operator Kroger is another company that continues to deliver outsized gains to shareholders. In the past 12 months, KR stock has advanced 24% to just under $50 a share. The stock rallied nearly 10% in the last month after the company announced a new $1 billion share buyback program.
Additionally, the company maintains a decent 7% dividend yield that management is committed to and plans to grow in coming years. The combination of share growth, stock buybacks and dividend payments provides a lot of value to investors and makes Kroger a great option for any portfolio.
In terms of its operations, Kroger remains focused on growing its digital operations, which have accelerated 103% over the last two years, and which the company expects will double again by 2023. Additionally, Kroger is growing its advertising business that is contributing more to the company’s bottom line and beefing up its logistics capabilities by adding new grocery fulfillment centers and expanding its delivery network across the U.S.
Last fall, Kroger announced the opening of two new fulfillment centers in California and one in North Carolina, as well as a new “delivery spoke” situated in Indiana. Kroger is a company on the move.
Dividend Stocks to Buy: Chevron (CVX)
Energy stocks are hot right now, and shares of Chevron have been marching higher as a result. CVX stock is up 31% over the past six months, including a 13% gain in the last 30 days.
While the gain in the stock’s price has been great, Chevron has the added bonus of providing shareholders with a hefty dividend yield of 4.1%, which equates to a quarterly dividend payout of $1.34 per share and an annual total of $5.36 per share. And the company has increased its dividend payment for 34 consecutive years. While investors love the dividend payout, they also like that Chevron is an integrated oil producer, meaning it explores, extracts and refines the commodity.
With oil price holding steady above $80 a barrel, now is a good time to take a position in Chevron. Other reasons to be bullish on the San Ramon, California-based company include that management recently raised their annual share repurchase target to $3 billion to $5 billion of stock from a previous target of $2 billion to $3 billion.
Chevron is also efficiently run and has managed to lower its operating costs in recent years despite challenges posed by the pandemic. If that weren’t enough, Chevron has also committed to spend $10 billion through 2028 to lower the carbon intensity of its worldwide operations.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
