New Investors: 3 Dividend Stocks to Buy and Hold Forever

New and passive investors should have these three dividend stocks on their watchlists right now, as the stocks appear to be good for holding.

| More on:
analyze data

Image source: Getty Images

One top benefit of owning dividend stocks is that investors get to earn periodic income without having to lift a finger. It’s especially reassuring to earn passive income from dividend stocks that have a solid track record of stable, growing earnings and dividends.

Here are three dividend stocks that are worthy of buying and holding forever — particularly if you bought them at good valuations. They’re perfect for investors who are just starting investing.

Fortis stock

Fortis (TSX:FTS)(NYSE:FTS) stock is a top stock for investors seeking to sleep well at night. Fortis provides regulated electric and natural gas utility services that are needed in good and bad economies. Therefore, it’s an essential business.

As a regulated utility, it has reported very stable and steadily increasing earnings over the long term. Consequently, Fortis stock has one of the longest streaks of dividend increases among TSX stocks. Specifically, the dividend stock has raised its payout for 48 consecutive years.

Although now is not the best time to buy the stock, it provides a decent yield of 3.6% that makes it worthy of holding for passive income. Fortis stock’s 10-year dividend-growth rate is 5.9%. Over the next few years, it should be able to increase its dividend by about 5-6% per year.

To get better value for your new money, aim to buy the defensive dividend stock at a yield of at least 4%.

TELUS stock

TELUS (TSX:T)(NYSE:TU) is another popular sleep-well-at-night dividend stock. Like Fortis, TELUS generates stable earnings and cash flow over the long run. As one of the Big Three Canadian telecoms, it provides internet and mobile phone plans that are sticky.

TELUS is a top dividend stock with a respectable dividend-growth streak of 18 consecutive years. Its five-year dividend-growth rate is 6.7%.

The dividend stock has done very well over the last year by rising 25%. It’s still a good hold for a solid dividend yield of 4%. Aim to buy on dips to get better value and boost your initial yield and total returns potential. A 4.5% yield looks like a good target, which suggests a maximum buy price of $29.06 based on its current payout.

T Dividend Yield Chart

T Dividend Yield data by YCharts

TD Bank stock

Other than Fortis and TELUS, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock also makes an excellent core holding in a long-term dividend portfolio. The big Canadian bank stock has paid many decades of dividends. Its 10-year dividend-growth rate is 9.2%.

In normal years, TD stock shouldn’t have a problem increasing its dividend by about 7%. However, during recessions or highly uncertain economic times, as a safety precaution, the regulator will prevent TD stock (and other federally regulated financial institutions) from increasing their dividends.

TD stock dipped recently due to a $13.4 billion acquisition. But the bank stock still appears to be fully valued. So, it remains a good hold for passive income. At the recent quotation of over $101 per share, it offers a nice yield of 3.5%. For new money, though, I would wait for a better entry point — perhaps during a market correction.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends FORTIS INC and TELUS CORPORATION. Fool contributor Kay Ng has no position in any of the stocks mentioned.

More on Stocks for Beginners

Hand writing Time for Action concept with red marker on transparent wipe board.
Stocks for Beginners

Buy the Dip: 2 Insanely Cheap Growth Stocks to Buy Today!

Many Canadian growth stocks are looking insanely cheap today. Here are two stocks that have long histories of making investors…

Read more »

clock time
Stocks for Beginners

3 Stocks to Start Investing Today

Looking for a set of stocks to start investing today? Here are some great options that offer growth and income…

Read more »

Chalk outline of two arrows pointing in opposite directions
Stocks for Beginners

How to Save Thousands Per Year With Your RRSP

If you can hit your RRSP contribution limit each year, you could save thousands in taxes that could help boost…

Read more »

Portrait of woman having fun in the street.
Stocks for Beginners

New Investors: 3 Dividend Stocks to Buy Soon

Are there too many stocks to choose from? New investors can start their research in these solid dividend stocks!

Read more »

edit Sale sign, value, discount
Stocks for Beginners

5 Amazing Stocks That Are on Sale Today

After the recent stock market correction, tonnes of top-quality stocks are on sale today. Here are five amazing stocks to…

Read more »

stock analysis
Stocks for Beginners

2 Simple Strategies That Canadian Investors Can Use to Start Investing in Stocks

Here are two of the simplest and best investing strategies for Canadians to start investing in stocks today.

Read more »

Target. Stand out from the crowd
Stocks for Beginners

Top 2 Dividend Stocks for Beginners

Dividend stocks like BCE (TSX:BCE)(NYSE:BCE) are ideal for beginners.

Read more »

Stocks for Beginners

Starting an Investment Portfolio? Buy These 3 Stocks!

Interested in getting a start in the stock market? Buy these three stocks today!

Read more »