3 Dividend Stocks You Can Buy and Hold Forever

Against a backdrop of soaring growth stocks in an environment still dominated by chatter of SpaceX's initial public offering (IPO), it seems a little out of place to be discussing potential dividend stocks to buy. That's even more so the case given that the persistent bull market has pared dividend yields back by quite a bit lately; the S&P 500's average trailing dividend yield currently stands at a multidecade low of just above 1%.

If income is your primary investment goal, there's still every reason to look for such names. And fortunately, there are plenty of compelling ones with strong yields to consider. The S&P 500's overall average dividend yield is unusually low simply because the index's very biggest constituents like Nvidia and Apple pay very little in dividends, if they pay them at all.

To this end, here's a closer look at three dividend stocks you can comfortably buy right now with plans of holding onto them forever.

PepsiCo

There's no denying beverage behemoth Coca-Cola (NYSE: KO) outmatches smaller rival PepsiCo (NASDAQ: PEP) in several ways, including sales, name recognition, and yes, even popularity among income investors; the market appreciates Coca-Cola's 64-year streak of per-share payment growth. (That makes KO a Dividend King, a company that has increased its annual dividend for at least 50 consecutive years.)

There's an important detail that investors picking one of these companies over the other should consider. That is, while KO's forward-looking dividend yield is a solid 2.6%, PepsiCo's is considerably better at 4.1%.

But are Coca-Cola's pedigree and stature worth the trade-off? For that matter, isn't PepsiCo's yield so high right now precisely because the stock has underperformed since 2023 amid inflationary headwinds?

These are legitimate points to be sure. PepsiCo isn't exactly a slouch on the pedigree front. It's now upped its per-share payout for a similarly impressive 54 consecutive years often times at a pace faster than Coca-Cola. As for the stock's recent subpar performance, the underpinnings of that headwind are largely in the rearview mirror. Last quarter's organic revenue was up 2.6% year over year, reflecting a combination of product innovation and smarter pricing strategies. For instance, the company is more prominently featuring its Lay's potato chips made using healthier oils and now offers lower-sugar versions of its Gatorade sports drink.

None of these initiatives will produce earth-shattering results. All of them will -- and are -- yielding incremental improvements in its business and should continue doing so.

There's been little to no apparent impact on the stock yet, although it's arguable that much of PEP's weakness since early March just reflects greater interest in more aggressive growth stocks. As that interest cools, look for PEP to start performing again.

Enbridge

You undoubtedly know the military conflict in the Middle East has disrupted oil and gas supply chains, inflating prices of both. Although it's a superficial and instant profit boon for integrated explorers, drillers, and refiners like Chevron and Exxon-Mobil, in the long run it's also arguably damaging just because it incentivizes the use of less-volatile alternatives. It also sets the stage for a big profit dip once crude prices normalize again.

There's one aspect of the energy business that's largely unimpacted by soaring and tumbling prices of oil and gas -- the companies that simply deliver them from point A to point B, charging for their services like a tollbooth regardless of the price of the gas or oil transported through its distribution network.

Enbridge (NYSE: ENB) is one of these companies. It owns and operates over 18,000 miles of crude oil pipeline across North America and over 19,000 miles of natural gas pipelines. If you use gasoline or natural gas, there's a good chance you rely on Enbridge without even realizing it.

Image source: Getty Images.

Sure, there will come a time when the world finally weans itself from fossil fuels like crude oil, winding down Enbridge's pipeline business. That time is many, many years down the road though. The International Energy Administration doesn't expect the "peak oil" pivot to happen until 2050, with demand and consumption likely to keep rising until then.

To the extent the headwinds of alternative and renewable energy start blowing before then, Enbridge is developing wind farms, solar power facilities, geothermal assets, and battery-storage solutions. In the meantime, its gas and oil tollbooth business remains ideally suited to support dividend payments. You can plug into them while the stock's forward-looking dividend yield stands at just under 5%.

Brookfield Asset Management

Finally, add Brookfield Asset Management (NYSE: BAM) to your list of dividend stocks to buy and hold forever while you can step in at a solid yield of 4.4%.

As you might guess, Brookfield is an investment manager. You may even own some of the funds it manages, like Brookfield Infrastructure Partners, Brookfield Renewable Partners, or Brookfield Business Corporation. These instruments trade like stocks or exchange-traded funds (ETFs), but they actually have privately held stakes in several high-demand businesses, such as mobile phone towers, utility companies, solar power farms, and data centers. Brookfield Asset Management manages the managers of these focused investment pools, collecting a recurring quarterly fee for doing so.

At first blush, it looks a lot like any other asset manager (mutual funds and ETFs), and in many regards, it is. But it's also a standout in a couple of important ways.

One of those ways is selecting the areas where it decides to focus its time and resources. As noted, Brookfield is focusing on reliable growth opportunities rather than businesses with little to no meaningful upside.

The other way this prospect differs is that it bypasses the stock market and its occasionally steep valuations, which often lead to poor performance. Brookfield's divisions are built from the ground up on privately held stakes in cash cows that don't have such valuations to create volatility. This allows its managers to focus on developing quality businesses for the long haul without misguided, short-term interference even as they produce reliable cash flow.

The model works too and will likely continue working. The company doesn't mind setting high expectations from shareholders either; it's targeting average annual growth of between 15% and 20%, most of which will come in the form of dividends. To this end, BAM's quarterly dividend has grown 57% just since it started paying dividends in 2023.

James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Apple, Brookfield Asset Management, Chevron, Enbridge, and Nvidia. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.