2 Monster Dividend Stocks to Buy Now and Hold for Decades

If you're buying dividend stocks for the long haul, a big yield isn't enough. You want companies that can keep paying, and preferably increasing, those dividends for decades. NextEra Energy (NYSE: NEE) and Realty Income (NYSE: O) have already shown they can do exactly that. So let's jump right in.

NextEra Energy

NextEra Energy gives you something most utilities can't: exposure to both a massive regulated utility and one of the country's largest renewable energy businesses. The company owns Florida Power & Light, which provides electricity to roughly 12 million people and is the largest electric utility in the United States. It also owns NextEra Energy Resources, a major developer of wind, solar, and battery storage projects.

In Q2, the company added 3.6 gigawatts of renewable and battery-storage projects to its backlog. That brought the total backlog to roughly 35.1 gigawatts. That's a lot of generating capacity waiting to be built. Meanwhile, electricity demand is rising as data centers, artificial intelligence, manufacturing, and electrification place greater strain on the grid. And NextEra is perfectly positioned to capitalize on that growth for well beyond the next decade.

Management currently expects adjusted earnings per share to grow at least 8% annually through 2032, and it's targeting the same growth rate from 2032 through 2035. Then there's the dividend.

NextEra raised its quarterly dividend 10% this year to $0.6232 per share, or roughly $2.49 annually. Management expects roughly 6% annual dividend growth from year-end 2026 through 2028. It currently clocks in at around 3%. That's what makes NextEra particularly attractive if you have decades rather than months to work with.

Indeed, the current yield isn't enormous. But if the company keeps increasing its payout while earnings compound, the income generated from shares purchased today could look very different 10 or 20 years from now.

Realty Income

Realty Income offers almost the opposite proposition. Instead of a lower starting yield with faster growth, investors get a yield of roughly 5% and a dividend paid every single month.

The real estate investment trust owns thousands of properties leased to businesses under long-term agreements. Its tenants typically cover many property expenses, including taxes, maintenance, and insurance. That creates a relatively predictable stream of rental income. And Realty Income has turned that rent into dividends for decades.

The company has paid monthly dividends throughout its history as a public company and has steadily increased the payout along the way. Its annualized dividend has climbed from $0.90 per share in 1994 to roughly $3.26 today. That's more than 3.5 times its original payout. And the business continues to grow, too.

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Realty Income expects adjusted funds from operations (AFFO) of more than $4 per share this year. AFFO is one of the most useful measures of cash-generating performance for a REIT because traditional earnings can be distorted by non-cash real estate depreciation.

Realty Income has also expanded beyond its traditional U.S. retail portfolio into Europe and additional property types, giving the company a much larger universe of potential investments. However, there are some risks.

Higher interest rates can increase borrowing costs and make acquisitions less profitable. Economic weakness can also put pressure on weaker tenants. But Realty Income has already navigated recessions, financial crises, a pandemic, and multiple interest rate cycles while continuing to deliver monthly dividends.

Two very different ways to build dividend income

NextEra Energy and Realty Income aren't interchangeable. And that's precisely why I like owning them together.

NextEra gives you exposure to rising electricity demand, renewable energy, battery storage, and a regulated Florida utility, along with the potential for meaningful dividend growth. Realty Income provides a much higher starting yield and monthly income backed by a massive portfolio of rent-producing properties.

Neither stock needs explosive growth to work. You just buy them, reinvest the dividends, and give the businesses 20 or 30 years to compound. That's how seemingly boring dividend stocks can quietly become some of the most valuable holdings in a portfolio.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy and Realty Income. The Motley Fool has a disclosure policy.