3 Dividend Stocks to Buy for a Lifetime of Passive Income

Dividend investing is a proven way to earn superior returns over long periods. That's because companies that can consistently pay -- and raise -- dividends tend to have strong underlying businesses, and reinvesting dividends unleashes the power of compounding, significantly boosting long-term returns. Of course, not just any corporation that happens to pay dividends is worth investing in. Let's consider three that are: Novartis (NYSE: NVS), Abbott Laboratories (NYSE: ABT), and Visa (NYSE: V). All three of these stocks have what it takes to sustain consistent payout growth over the long term. Let me explain.

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1. Novartis

At first glance, it looks like Novartis' business is struggling. In the second quarter, the company's net sales increased by just 3% year over year to $14.4 billion, while its adjusted earnings per share remained essentially flat at $2.40. However, a little bit of context helps. Novartis recently lost patent exclusivity for several products, including Entresto, a heart failure medicine. According to management, the company is going through the biggest patent expiry in its history. Novartis' financial results look rather strong considering, and the company owes that to several newer products that are helping push sales in the right direction. The list includes Kesimpta, a multiple sclerosis drug, and Fabhalta, a medicine for a rare blood disease called paroxysmal nocturnal hemoglobinuria, among others.

Novartis' ability to navigate patent cliffs the way it is doing speaks volumes about the strength of its underlying business, and the company also boasts a deep pipeline that will help it continuously develop and launch brand-new products. Novartis should perform well over the long run thanks to its innovative capabilities and the consistent demand for its products, regardless of economic conditions. Then, there is the dividend. Novartis has increased its payouts for 29 consecutive years and currently offers a forward yield of 3%, well above the S&P 500's average of 1.1%. Novartis is a great long-term option for income seekers.

2. Abbott Laboratories

Abbott Laboratories has faced slowing sales growth and regulatory problems in recent years. The stock has significantly lagged broader equities over the past half-decade. However, there is still a lot to like about the healthcare giant. Abbott's core medical device segment is performing well, largely thanks to its diabetes care business, which sells continuous glucose monitoring (CGM) systems. Abbott's FreeStyle Libre franchise is a leading family of CGMs indicated for diabetes patients, but the company has expanded beyond its core target market in recent years by launching over-the-counter CGM devices that even people without diabetes can use.

There is still a large available opportunity in CGM, and several of the company's other segments, including structural heart and heart failure -- where it markets some devices that are among the leaders in their niches -- also boast strong prospects. Further, Abbott Laboratories has improved its diagnostics unit, which hasn't performed well organically lately, thanks to an acquisition that has given it a stronger foothold in the cancer diagnostics market. Abbott should succeed in turning things around in the long run while keeping its dividend program intact. The company is a Dividend King, or a corporation with at least 50 consecutive annual payout increases. Abbott is highly unlikely to end that streak anytime soon.

3. Visa

Visa is facing legal problems. The U.S. Department of Justice is suing the company for alleged antitrust practices. Visa is also facing increased competition, including from buy-now-pay-later (BNPL) providers that allow customers to bypass traditional credit cards. However, Visa's business remains healthy, with revenue and earnings still growing at a good clip. Just as important, Visa can adapt to the changing landscape in its industry. For instance, the company has integrated BNPL capabilities into its ecosystem. One of Visa's greatest advantages is its vast network. The company boasts billions of cards in circulation. It also benefits from a network effect: The more customers there are with cards bearing its logo, the more attractive its ecosystem is to merchants.

That's why it's so hard to knock Visa off its pedestal, while it's not nearly as challenging for the company to reach a vast number of customers with new BNPL or other offerings. Visa also has a large untapped market that will only expand, especially as e-commerce -- where digital payment methods are necessary -- becomes increasingly popular. Lastly, Visa is an attractive dividend stock. The company has increased its payouts every year since it became a publicly traded company in 2008. Even with legal issues (antitrust lawsuits rarely have catastrophic consequences for companies as large as Visa) and competition, Visa could deliver superior long-term returns while consistently raising its dividends.

Prosper Junior Bakiny has positions in Visa. The Motley Fool has positions in and recommends Abbott Laboratories and Visa. The Motley Fool has a disclosure policy.