Visa and Novartis have strong dividend track records and attractive long-term outlooks.
Meta Platforms initiated a dividend two years ago, adding appeal to its already strong growth prospects.
Dividend investing isn't inherently superior to other styles, as each has its own aims and goals. However, there is something to be said about dividend stocks: Over the long run, they outperform their non-dividend-paying peers by a mile. That's why every long-term investor should consider adding at least a couple of dividend payers to their portfolios, even if they are more focused on high-growth stocks.
With that in mind, let's consider three dividend stocks to buy this year and stick with for good: Visa (NYSE: V), Novartis (NYSE: NVS), and Meta Platforms (NASDAQ: META).
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Visa, a favorite investment of Warren Buffett, has many qualities of a forever stock.
First, Visa's business model is fairly simple to understand. The company processes credit and debit card transactions through its network and charges a fee for each. True, the details can get complicated and involve a vast infrastructure, including data centers and a proprietary network, that support an enormous volume of transactions. But at the most basic level, anyone can grasp what Visa does.
Second, the financial services specialist has a strong competitive moat from two sources, including its brand name -- one of the most recognizable in the industry -- and deep network effects. It's hard to fathom merchants not accepting Visa as a form of payment in any market where the company's branded cards are ubiquitous. That would be like refusing business from consumers. The more Visa cards in circulation, the more attractive it becomes to merchants.
Third, Visa has attractive growth prospects, even if it may not always appear that way. Credit and debit cards have become the norm for many people. However, there are still trillions of dollars worth of cash and check transactions every year. And that's before we account for the growth of the e-commerce market, which will create a rising demand for digital payment methods.
Finally, Visa is a terrific dividend stock. The company's forward yield may not be that impressive at 0.8%, but it has increased its dividend by 379% during the past decade. These are all good reasons Visa is worth holding on to for a long time.
Novartis has an excellent dividend streak, having increased its payouts annually for 28 years straight. That already tells us something about the company, even without looking closely at the details. Only a corporation with a consistent and reliable business can pull off something like that.
That certainly describes this pharmaceutical giant. Novartis has a vast portfolio of medicines across multiple therapeutic areas, with more than 10 products generating annual sales exceeding $1 billion. It also routinely launches new medicines, which allows it to mitigate revenue losses due to patent expirations and generic (or biosimilar) competition.
Novartis' sales will occasionally move in the wrong direction, but the company always recovers. It is an innovative leader in a defensive industry and it tends to navigate downturns and recessions more effectively than most others. Even when it is unable to develop new therapies in-house, Novartis has the means to license promising candidates from smaller companies or acquire them outright.
What does the future hold for Novartis? The drugmaker is well positioned to benefit over the long run as healthcare spending increases due to several factors, including an aging population. In the meantime, given its excellent dividend program and forward yield of 2.8%, investors can expect regular dividend increases for a long time.
Meta Platforms is a terrific growth stock to hold for a long time, and one that recently started paying dividends.
Let's start with the tech giant's growth prospects. One of Meta's core strengths is its vast ecosystem of more than 3.5 billion daily active users across its websites and apps.
And it's not just the number of people who use its services. Meta Platforms uses extensive data on user habits and preferences to help companies craft targeted and highly effective ads. That's why it is a leading player in the digital ads market and generates consistent revenue and profits.
Meta Platforms is also doubling down on artificial intelligence (AI). It has used AI-powered algorithms to enhance engagement on Facebook and Instagram, while also leveraging the technology to streamline the ad preparation and launch process for businesses. Everyone wins.
Further, Meta Platforms benefits from both network effects and switching costs within its websites and apps. Its ecosystem should remain intact and grant it significant monetization opportunities over the long run. That's why it looks like an excellent growth stock to stick with.
Then there is the dividend, which Meta Platforms first initiated in 2024. It may not be a great dividend stock yet, with a yield of just 0.3%, but over time, it could become one, given its consistently increasing earnings and cash flow.
So, Meta Platforms has a lot to offer both growth-oriented investors and dividend seekers. The stock appears to be a solid option for long-term holding.
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Prosper Junior Bakiny has positions in Meta Platforms and Visa. The Motley Fool has positions in and recommends Meta Platforms and Visa. The Motley Fool has a disclosure policy.