2 Dividend Stocks to Buy for Decades of Passive Income

Key Points

• Healthcare giants AbbVie and Abbott Laboratories are both Dividend Kings.

• They should maintain their dividend growth habits for a long time to come.

• That's thanks to their solid businesses and promising product pipelines.

In 2013, AbbVie (NYSE: ABBV) became a publicly traded corporation after splitting from its former parent company, Abbott Laboratories (NYSE: ABT). Since then, both have produced strong returns and have been great picks for income-seeking investors, thanks to consistent payout hikes. That likely won't change soon.

These healthcare leaders should continue to perform well and reward shareholders with dividend increases for a long time. Read on to find out more.

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1. AbbVie

AbbVie is a pharmaceutical leader with a large portfolio of approved products, none more important than a duo of immunology medicines: Skyrizi and Rinvoq. In the first quarter, the company's revenue increased by 8.4% year over year to $13.3 billion, while its adjusted earnings per share came in at $2.46, 6.5% higher than the year-ago period. These results are all the more impressive considering AbbVie faced a major patent cliff just two years ago; however, it has since recovered, largely thanks to Skyrizi and Rinvoq.

The former generated $3.4 billion in sales during the period, representing a 70.5% year-over-year increase. Rinvoq's revenue came in at $1.7 billion, 57.2% higher than the year-ago period. Management predicts their combined annual sales will exceed $31 billion by 2027. Not only is that significantly higher than the $17.7 billion they racked up last year, it's also $4 billion higher than their previous guidance.

Skyrizi and Rinvoq are expected to drive top-line growth well into the 2030s. Although they will eventually lose patent protection, they demonstrate AbbVie's ability to navigate even the biggest patent cliffs, a quality that is essential for any pharmaceutical company to thrive over the long term. AbbVie has other products that help drive revenue growth, and, equally important, it has a deep pipeline that it routinely strengthens through acquisitions.

In March, the company announced a licensing deal with Denmark-based Gubra A/S for GUB014295, an investigational weight management therapy. AbbVie paid $350 million up front for this candidate, with potential milestones of $1.9 billion, not including royalties. AbbVie entered the fast-growing weight loss market with this move; GUB014295 might not pan out, but AbbVie's large pipeline, with approximately 90 products in development, should allow it to launch brand-new products frequently, navigate patent cliffs, and remain successful over the long run.

Now turning to the company's dividend, AbbVie has increased its payouts by 310% since 2013. And counting the time it spent under Abbott Laboratories' name, AbbVie is a Dividend King with 53 consecutive years of payout increases. These facts, from AbbVie's underlying business to the company's dividend track record, point to a company capable of sustaining a passive income program for a long time.

2. Abbott Laboratories

Abbott Laboratories is best known for its leadership in the medical device space, where it markets dozens of products across multiple therapeutic areas. The company also operates a diagnostic business and has a presence in the pharmaceutical and nutrition industries. Abbott Laboratories' operations are diversified, which can help it overcome challenges in specific segments. That's one of the company's strengths.

Here's another: Abbott Laboratories has been a leader in the highly regulated healthcare sector for decades. The company has built a solid reputation with physicians and consumers, all of whom are more likely to gravitate toward the brands they know and trust. In the medical device field, Abbott is a trusted brand. And thanks to its vast portfolio, it generates consistent revenue and earnings.

Abbott's biggest growth driver in recent years has been its diabetes care segment, led by its continuous glucose monitoring (CGM) franchise, the FreeStyle Libre. As the company noted, the FreeStyle Libre has become the most successful medical device in history in terms of dollar sales. That's no small feat. Yet there is still massive whitespace ahead, since only a small portion of the world's diabetics use CGM technology despite its advantages.

Abbott's work in this niche should provide a powerful long-term tailwind, but there will be many others. The company boasts other growth drivers, including its structural heart segment, where it markets a range of successful devices, such as its MitraClip device, a leader in its mitral valve repair niche. Beyond any single product, Abbott Laboratories has a proven track record as an innovator and should continue launching newer and better ones.

Lastly, Abbott is also a Dividend King, and over the past decade, it has increased its payouts by almost 146%. Abbott Laboratories' business is built to last. Investors who purchase the company's shares today can expect consistent dividend growth over the long term.

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