5 Dividend Stocks to Buy With $2,000 and Hold Forever

Key Points

• Dividend-paying stocks can provide a steady source of passive income while offering potential capital appreciation over time.

• Companies that raise their dividend payout over time demonstrate financial stability and a commitment to returning value to shareholders.

• Those with a long history of dividend payments tend to have sound businesses with strong competitive advantages.

• 10 stocks we like better than Chubb ›

Investing in the stock market is an excellent way to build long-term wealth. However, given the numerous approaches you could take, navigating the world of investing can feel overwhelming. If you're seeking passive income from your investments, one way to achieve this is through dividend investing.

Dividend payers display financial prudence and a commitment to returning capital to shareholders. They also operate businesses that thrive over time and can deliver rising stock prices in addition to income -- two factors that help investors grow their nest eggs.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

If that appeals to you, and you have $2,000 in cash you're looking to put to work, here are five dividend-paying stocks to consider adding to your portfolio today.

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Chubb

Chubb (NYSE: CB) caught investors' attention about a year ago when Berkshire Hathaway CEO Warren Buffett added the insurer to the conglomerate's massive investment portfolio.

Adding Chubb seemed like a no-brainer move for Buffett. That's because it operates as one of the largest insurance companies, with a global scale covering a wide range of risks. Buffett isn't shy about insurance companies; Berkshire Hathaway owns several. What makes insurance an appealing business is the cash flow it generates and the ability to achieve positive growth over time with sound underwriting practices.

Chubb operates across both commercial and personal lines, serving high-net-worth individuals and insuring against complex corporate risks. Its conservative approach to risk, coupled with a broad international footprint, has enabled it to weather economic cycles well.

With a 32-year track record of increasing its dividend payout, Chubb is a solid choice for dividend investors.

Aflac

Aflac (NYSE: AFL) is an insurer with a history of steady dividend payouts for 42 consecutive years. The company gets stability from its primary business of selling life insurance and supplemental health insurance policies to customers in the United States and Japan. Its strength lies in its niche focus on supplemental policies, complemented by a strong network of brokers and employers offering its services.

Aflac's long history of dividend raises hasn't been without challenges. In the 2010s, the insurer had to deal with historically low interest rates. This affected its investment portfolio returns and put pressure on some of its fixed-benefit policies and liabilities, compressing margins. It was also affected by the pandemic, but has since seen a decline in claims costs as conditions improved.

Despite this, Aflac has a long history of increasing its dividend payment. That's a testament to its disciplined capital management and sound business practices, making it another solid dividend stock to consider owning today.

Brown & Brown

Brown & Brown (NYSE: BRO) operates in the insurance brokerage sector, another segment of the insurance industry that can provide a steady source of returns.

As an insurance broker, Brown & Brown earns fees and commissions by connecting clients with insurance carriers. It differs from insurers because it doesn't take on underwriting risk or pay claims. This model provides recurring, stable revenues tied to policy renewals, without exposure to unpredictable loss events.

Brown & Brown has a strong national network of brokers, which it has built over decades through strategic acquisitions and organic growth. Its fee-based structure, with recurring revenues tied to policy renewals, is a significant reason why it has increased its dividend payout for 31 consecutive years.

While its dividend yield of 0.66% is modest compared with traditional income stocks, the company appeals to long-term investors seeking steady compounding along with stability and some passive income to boot.

S&P Global

S&P Global (NYSE: SPGI) plays a pivotal role in global financial markets. As one of the top credit rating agencies, S&P Global holds a dominant 50% share of the U.S. credit ratings market, giving it a significant competitive advantage due to the difficulty of new entrants breaking into the credit ratings business.

The company also offers index products, with the S&P 500 index (owned in a joint venture with CME Group) as its most recognizable index. It also has an analytics and data business that provides insights to asset managers, banks, and corporations, generating a steady source of revenue.

The company also boasts an exceptional dividend record, with nearly 53 consecutive years of increases, earning it the status of a Dividend King. While its yield is modest at 0.84%, its business model generates high-margin, recurring revenues and is expected to continue delivering long-term value for investors.

T. Rowe Price

T. Rowe Price (NASDAQ: TROW) is one of the largest active asset managers in the U.S., with over $1.5 trillion in assets under management. As an asset manager, T. Rowe Price's business benefits from a steady stream of income it earns for managing its trove of assets.

T. Rowe Price has faced increased competition from BlackRock, which offers a vast array of passively managed funds for investors to choose from. However, the past few years have proven to be a challenging environment for investors, with the traditional 60/40 portfolio underperforming.

It's possible that this era in investing could benefit from active management strategies. With a few mega-caps dominating indices, passive strategies risk overconcentration. Active managers can sidestep that by trimming overheated names, rotating into undervalued sectors, and exploiting greater stock dispersion. In today's volatile market, that flexibility could give them an edge.

The company has also demonstrated an impressive dividend record, with more than 39 consecutive years of dividend increases. With a dividend yield of 4.9%, T. Rowe Price offers an attractive blend of income and growth.

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Courtney Carlsen has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, S&P Global, and T. Rowe Price Group. The Motley Fool recommends BlackRock and CME Group. The Motley Fool has a disclosure policy.