3 Top Dividend Stocks to Buy for Long-Term Growth


  • These are the long-term dividend stocks for high total returns.
  • Lockheed Martin (LMT): Strong order backlog provides clear free cash flow visibility.
  • Pfizer (PFE): Deeply undervalued with a strong pipeline of new molecular development coupled with inorganic growth.
  • Apple (AAPL): Innovation-driven growth and high financial flexibility for a robust increase in dividends in the coming years.
long-term dividend stocks - 3 Top Dividend Stocks to Buy for Long-Term Growth

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When buying long-term dividend stocks, I would primarily look at three important factors. First, the amount of dividend payout and the dividend yield the blue-chip stock is delivering. Further, the visibility for capital gains to estimate the total returns from the stock in the long term.

I would also look at the company’s growth outlook. Large companies won’t offer a stellar growth trajectory. However, even consistent 5% to 10% growth will impact valuation and cash flows. Since we are focused on dividends, an upside in cash flows will provide clear dividend growth visibility.

Growth is important to consider because we live in an inflationary environment. Dividend-seeking investors must ensure the dividend stock portfolio provides continued upside in regular cash flows.

These dividend stocks for long-term growth are trading at attractive valuations.

Lockheed Martin (LMT)

A Lockheed Martin (LMT) C-130J Super Hercules of the United States Air Force performing at Aero India 2017.
Source: Joe Ravi / Shutterstock.com

Global defense spending increased for the eighth consecutive year in 2022 to $2.24 trillion. Even during the pandemic, defense spending increased. Considering the geopolitical scenario globally, it makes complete sense to invest in defense stocks for growth. Lockheed Martin (NYSE:LMT) stock is my top pick among long-term dividend stocks to buy.

It’s worth noting that LMT stock has remained sideways in the last 12 months. At a forward price-earnings ratio of 16.3, the stock looks poised for a breakout rally. Further, a dividend yield of 2.84% is attractive, and I expect healthy dividend growth.

My view is underscored by Lockheed’s strong order backlog of $156 billion. This provides clear cash flow visibility, and for the year, Lockheed has guided a free cash flow of $6.2 billion. With order intake remaining strong, I expect revenue growth to accelerate coupled with cash flow upside. This will ensure increased shareholder rewards in dividends and share repurchases.

Pfizer (PFE)

blue Pfizer logo on the windows of a corporate building PFR stock
Source: photobyphm / Shutterstock.com

Pfizer (NYSE:PFE) stock might have disappointed investors in the last 12 months. However, the sell-off is overdone, and PFE stock trades at a valuation gap. A dividend yield of 5.45% is also attractive, and I expect high total returns from the stock in the next few years.

With COVID-19 vaccine sales declining, the stock has corrected. There are also concerns related to the impact on growth as drugs go off-patent in the coming years. However, Pfizer is working on boosting growth through two strategies.

First, the company is investing heavily in research and development and already has a deep pipeline. Pfizer expects incremental revenue of $20 billion from new molecular entities by 2030.

Further, Pfizer has been exploring and aggressively pursuing acquisitions. The company expects new business development to contribute $25 billion in incremental revenue by 2030.

With sound financial flexibility, I am optimistic about PFE stock trending higher from oversold levels. At the same time, dividends are sustainable, and there is potential for growth as the company aggressively boosts revenues.

Apple (AAPL)

Apple logo on building
Source: pio3 / Shutterstock.com

Apple (NASDAQ:AAPL) stock has been a value creator over the years. I will not be surprised if Apple is the first to command a valuation of $10 trillion in the coming years. Currently, a dividend yield of 0.57% does not sound attractive. I am, however, optimistic about robust dividend growth until 2030.

From a financial perspective, Apple’s services revenue touched an all-time high in Q3 2023. This was driven by over one billion in paid subscriptions. Further, operating cash flow for the first nine months 2023 was $89 billion. Robust cash flow ensures that the company can invest heavily in research and development. At the same time, there is ample flexibility to increase dividends and allocation toward share repurchase.

The key growth catalyst is that Apple is at the forefront of innovation. Recently, the company set a target to invest $1 billion annually toward artificial intelligence products. There are speculations that Apple will launch its electric car in 2026 with a price tag under $100,000. With diversification-driven growth, the company will be well positioned to continue creating value.

On the date of publication, Faisal Humayun did not hold (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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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