One of the most satisfying accomplishments for both new and seasoned investors is to find a stock that you can buy and hold forever. Often, these investments are top dividend stocks that can provide a healthy income and growth for decades.
Fortunately, there are several of these great dividend stocks you can buy and hold forever on the market. Here’s a look at two of them to consider for your portfolio.
A defensive stock with a great dividend
Investors looking for top dividend stocks you can buy and hold forever should seriously consider Fortis (TSX:FTS). The utility stock is a defensive gem that should be on the shortlist of every investor.
Part of the reason for that is because of the lucrative business model that Fortis adheres to. In short, the company generates a recurring source of revenue that is backed by long-term regulated contracts. That recurring revenue stream is both stable and growing. Furthermore, it allows Fortis to invest in growth initiatives and pay a very generous dividend.
As of the time of writing, that dividend boasts a yield of 4.37%. This means that investors who allocate $25,000 to purchase Fortis will generate an income of just over $1,100. And that’s not even the best part.
Fortis has provided annual upticks to that dividend for an incredible 50 consecutive years. This makes the utility one of just two Dividend Kings on the market in Canada. Oh, and Fortis has no plans to stop that practice. The company recently announced plans for annual dividend growth of 4-6% through 2028.
Part of that five-year capital plan, which carries a whopping $25 billion price tag, also calls for increased growth to continue driving additional dividend increases.
Given the 5% discount on the stock over the trailing 12-month period, it’s hard not to consider Fortis as a dividend stock to buy and hold forever.
Bank on this stock to provide dividends for another century
It’s hard to list stocks you can buy and hold forever without mentioning one of Canada’s big banks. Bank of Montreal (TSX:BMO) is definitely one of the must-have stocks for investors to consider.
BMO is the oldest of the big banks and has been paying out dividends to shareholders for nearly two centuries. Today, that yield works out to an impressive 5.13%. Using that same $25,000 example above, an investment in BMO will generate an income of just over $1,280.
And like Fortis, BMO provides investors with a generous annual bump to that dividend.
Turning to growth, BMO is in a unique position among its peers. Earlier this year, the bank completed the acquisition of California-based Bank of the West. The deal exposed BMO to a larger swath of the U.S. market, extending its presence to 32 state markets. It also added hundreds of new branches to its network and billions in deposits.
In short, it catapulted BMO into position as one of the larger banks in the lucrative U.S. market. And that’s in addition to BMO’s established presence in the domestic Canadian market.
Oh, and let’s not forget that Canadian banks have historically fared better during times of volatility than their U.S.-based peers. As of the time of writing, BMO is trading down over 7% year to date, making it a fine discounted option to consider for your portfolio.
The best part of buy and hold forever is this
No investment, no matter how defensive it appears, is completely immune to market volatility. But there are some investments, like BMO and Fortis, that can minimize much of that risk.
Additionally, there’s another important point for prospective investors who aren’t ready to draw on that income. Reinvesting those dividends allows your investment to grow on autopilot until needed.
In my opinion, one or both of these stocks should be a core holding in any larger, well-diversified portfolio.
Buy them, hold them, and watch your future income grow.
