3 Rock-Solid Income Machines to Hold for Decades

  • Invest in these three top long-term income stocks combining strong dividends with growth potential for secure, robust returns.
  • MetLife (MET): The insurer’s ability to adapt to higher interest rates bolsters its profitability, making it a top undervalued income stock.
  • Duke Energy (DUK): The utility stock’s status as a natural monopoly, combined with its strong profitability, underscores its long-term investment appeal.
  • Johnson & Johnson (JNJ): The healthcare stock’s diversified operations and consistent U.S. market growth highlight its resilience and investor return potential.
Long-Term Income Stocks - 3 Rock-Solid Income Machines to Hold for Decades

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Long-term income stocks are a magnet for investors looking for reliable income streams.

These stocks are backed by powerful underlying businesses, known for regular quarterly dividends and consistent payout bumps each year. Their attractiveness is linked to a potent mix of stability and potential for appreciation.

Despite a common misconception, investors can collect strong dividends while enjoying healthy capital gains. Moreover, as we look ahead, these evergreen income stock bets will continue to generate a gusher of cash flows, fueling investor portfolios with sizeable returns.

That said, we’ll explore three such stocks that effectively combine superb payouts with considerable upside potential. These long-term income stocks currently boast yields ranging from 3% to 5%, consistently increasing their dividends for at least a decade.

Moreover, these companies boast a robust foundation with fundamental strengths and substantial long-term growth potential. Furthermore, these investments offer both security and growth for forward-thinking investors.

MetLife (MET)

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MetLife (NYSE:MET) stands out as a giant in life insurance, serving a massive clientele of 90 million customers across 60 nations. Over the years, it has been one of the more attractive dividend value stocks in its niche, offering a solid 3% yield while trading 0.7 times forward sales estimates. Also, it boasts a commendable track record of raising payouts for roughly 12 years.

Furthermore, the firm’s financial muscle is bolstered by the heightened interest rate environment, allowing it to enhance its profitability margins. Moreover, the gains from higher interest rates have offset potential headwinds from the retirement and income solutions segment, where rate caps are set to expire. Its commercial real estate holdings are well-managed, spread across multiple areas, and have powerful interest coverage ratios that help marginalize risks. Hence, MetLife ensures stability and continues building its capital efficiency, making it a top undervalued income stock in its niche.

Duke Energy (DUK)

The logo for Duke Energy (DUK) is seen on a sign at one of the company's offices.
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Duke Energy (NYSE:DUK) is a powerhouse in the utility space, effectively benefiting from being a natural monopoly. As a critical power and resource services provider, Duke dominates its market and has a storied history in the industry. Moreover, given the significant barriers to entry in the sector, the competition is pretty scarce, adding to its leadership position.

Duke’s impressive operational metrics mirrored its robust market positioning. It includes consistent single-digit historical sales growth and a robust A-graded profitability profile. Its EBITDA and net income margins have averaged 45% and 11% over the past five years, respectively, underscoring its impressive financial positioning.

It hasn’t been the biggest wealth compounder, but its attractive dividend yield exemplifies Duke Energy’s investor appeal. Currently standing at 4.11%, this yield is complemented by a 12-year history of dividend growth. Hence, the firm’s steady dividend growth, enviable market position, and superb financial performance make DUK stock a compelling long-term bet.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.
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Johnson & Johnson (NYSE:JNJ) is a diversified giant in the healthcare space that continues to demonstrate its powerful positioning in the U.S. healthcare sector. With operations spanning pharmaceuticals, medical devices and consumer health products, JNJ has held its own despite the economic headwinds.

Its recent heartening results prove its position. JNJ reported $21.4 billion in sales during the first quarter (Q1), representing a 2.3% rise from the previous year. U.S. sales growth was the primary driver of the superb increases, outpacing global growth rates.

Adding to its bull case, JNJ announced another dividend hike in April, marking the 62nd consecutive year of dividend increases.  Also, JNJ stock trades at under 3.95 times forward sales, roughly 13.2% behind the sector median.

With a healthy yield of over 3.3%, JNJ presents a compelling investment opportunity for those looking to benefit from steady income amidst volatility in the healthcare space.

On the date of publication, Muslim Farooque 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.

On the date of publication, the responsible editor held a LONG position in JNJ.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.


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