2 Top Dividend Stocks to Buy and Hold Forever

Over the past 100 years, dividends have represented a whopping 31% of the S&P 500's total returns, making them a key part of any long-term investing strategy. That said, not every dividend payer is created equal; some stand out because of their strong fundamentals and track records.

Let's explore some reasons why Realty Income (NYSE: O) and Philip Morris International (NYSE: PM) fit the bill and could make outstanding investments to buy and hold for the long haul.

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Realty Income

Since its founding in 1965, Realty Income has made a name for itself as a top choice for investors who prioritize monthly income and a stable, diversified business model. The company's long track record of consistent dividend growth and expansive property portfolio has helped it stand out in the competitive real estate investment trust (REIT) sector.

REITs are a must-have for dividend-focused investors. This special class of company earns tax advantages for returning the vast majority of its profits to shareholders through a dividend. They allow regular people to tap into commercial real estate's excellent wealth-generating potential without having to go through the costs and complexities of buying and managing properties themselves.

While many REITs choose to specialize in acquiring properties that serve specific niches of the economy (like storage space, data centers, or casinos), Realty Income takes a broad retail-focused approach. Its real estate portfolio hosts everything from dollar stores and auto repair shops to casual dining. And while most of its clients are in the US, it has enjoyed a rapid expansion into Western Europe, with around 15% of annualized contractual rent now coming from the UK.

Diversified revenue streams help protect Realty Income from potential weakness in any specific retail sector. And the company's use of triple net leases also boosts safety by shifting many property-level operating costs like taxes, maintenance, and insurance to the renter. With a dividend yield of 5.86%, Realty Income's stock trounces the S&P 500's average yield of just 1.05%, making it an appealing buy.

Philip Morris International

With shares up 88% over the last five years, Philip Morris has been a big winner for dividend investors who also want market-beating capital appreciation. The company is navigating the challenges in the tobacco industry and setting itself up for long-term success with new products.

Historically speaking, tobacco has been a complicated sector for investors. On one hand, it has tended to offer explosive long-term returns and recession resistance. But these advantages are a double-edged sword because its core product, nicotine, is addictive and dangerous to consumers. Philip Morris has adapted to this challenge by quickly pivoting to reduced-risk and smoke-free tobacco products designed to offer a better safety profile than traditional cigarettes.

Net revenue jumped 10.4% year over year to $11.2 billion, driven by strength in the smoke-free business, which includes products like oral tobacco pouches and IQOS, a system designed to release nicotine through heating instead of burfning to release less harmful chemicals. These products now account for an impressive 42% of the company's net revenue, helping it reduce its reliance on traditional cigarettes.

With a dividend yield of 3.35%, Philip Morris is comfortably ahead of the S&P 500 average. The company has grown its payout for 17 years in a row and has what it takes to maintain its stellar track record.

Which stock is best for you?

Realty Income and Philip Morris would both make great additions to a balanced investment portfolio. But if you had to pick just one, Realty Income's bigger payout and arguably safer business model make it look like the better bet for those who prioritize stable income. Phillip Morris likely offers more long-term growth potential as it continues to roll out new products and transition away from traditional cigarettes.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.