2 Dividend Growth Stocks to Buy and Hold Forever

When broader equities are volatile, it's tempting to focus on what's going to happen in the near term. That's why some investors resort to panic selling -- they anticipate that things will get even worse than they already are.

However, one of the formulas for better-than-average long-term returns is to stick with your holding even when the going gets rough, unless there is some fundamental change to a company's investment thesis. In fact, even when the near-term is somewhat uncertain, it's still worth it to invest in corporations that can perform well over many decades.

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Let's consider two examples in the healthcare sector: Amgen (NASDAQ: AMGN) and Novartis (NYSE: NVS). These drugmakers have a lot to offer long-term, income-oriented investors.

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1. Amgen

Amgen's organic revenue hasn't always grown as fast as Wall Street would have wanted over the past few years. One of the company's promising candidates to change that, investigational weight management product MariTide, did not post phase 2 data on par with what analysts and investors wanted either. Despite these short-term challenges, the company's prospects remain attractive.

Clinical setbacks are par for the course for biotech companies, that is, if MariTide results even count as a setback. The medicine produced a mean weight loss of approximately 20% after 52 weeks, with no plateau observed, and all this with convenient once-monthly dosing; the current leading anti-obesity medicines are administered weekly. Even with lower efficacy, MariTide could go on to attract a reasonable number of patients thanks to its friendlier dosing schedule.

In addition to this investigational medicine, Amgen boasts a comprehensive lineup of products across several therapeutic areas, including several that generate over $1 billion in annual sales. Despite top-line growth that doesn't always meet or exceed expectations, Amgen generates consistent revenue and profits.

The biotech leader also has several medicines in its arsenal that should help it drive decent growth for a while. Asthma treatment Tezspire has been making strides on the market and in the clinic. Tepezza remains the only medicine for thyroid eye disease approved by the U.S. Food and Drug Administration. There are several other key products in Amgen's portfolio.

More importantly, the company has a pipeline with dozens of investigational drugs that will allow it to overcome competition and patent cliffs over the long run.

Lastly, Amgen has a great dividend track record. It has raised its payouts every year since first initiating them in 2011. In the past decade, Amgen's dividend has increased by 201.3%. It offers a forward yield of 3.3%, well above the S&P 500's average of 1.3%. It is well worth it for income seekers to buy this stock and hold it for good.

2. Novartis

Novartis, another leading drugmaker, is facing a significant patent cliff this year. The company's heart failure medication, Entresto, is running out of exclusivity in the U.S. That's a big problem since Entresto was Novartis' top-selling medicine last year, generating $7.8 billion in revenue in 2024. Novartis will likely see its revenue decrease for a while, as pharmaceutical giants tend to do when encountering major patent cliffs.

However, Novartis should eventually overcome this obstacle. Several newer medicines will help smooth out Entresto-related losses. For instance, Pluvicto, a cancer medicine first approved in the U.S. in 2022, is making steady progress. It is already generating over $1 billion in annual sales and is still going strong. It should keep driving sales growth into the next decade.

Leqvio, a therapy to help reduce cholesterol that first hit the U.S. market in 2021, should also help. Some of Novartis' older drugs will maintain an upward sales trajectory for a while, too.

The Swiss drugmaker also has a deep pipeline, boasting a little over 100 programs across multiple therapeutic areas. Expect regular brand-new approvals and label expansions for the drugmaker. Lastly, Novartis has an impressive dividend track record. The company's forward yield tops 3.5%, and, importantly, it has increased its dividends for 28 consecutive years.

Novartis may not be attractive to growth-oriented investors, particularly as it navigates the Entresto patent cliff. However, the company has a robust business that generates consistent results, a deep pipeline to help mitigate patent-related challenges, and a history of rewarding shareholders with dividend hikes. Investors can safely add this stock to their "forever" dividend portfolio.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen. The Motley Fool has a disclosure policy.