3 Magnificent S&P 500 Dividend Stocks Down 27%, 28%, and 29% to Buy and Hold Forever

Finding attractive dividend stocks you can hold isn’t too difficult. Finding dividend stocks you can comfortably buy and hold forever is a different story. For your truly long-term holdings, you’ll want companies that are not only leading names with staying power, but that also operate in resilient markets — a rarer set of criteria.

Of course, if such a stock is on sale at the time you’re ready to take the plunge, so much the better. Buying a ticker when it’s discounted will ultimately raise the net returns on your invested dollars.

These three magnificent S&P 500 (^GSPC -0.38%) stocks are down right now for reasons that aren’t likely to last. In fact, they’re all already rising from their recently made cyclical lows.

1. Verizon Communications

As the biggest name in the wireless telecom business (at least within the U.S.), Verizon Communications (VZ 0.02%) needs no introduction. It also has no obvious competitive advantage other than its slightly larger size than its two chief rivals. Cell phone service has largely become commodified these days.

There are a couple of less obvious details about the company, however, that are worth highlighting.

First, while the U.S. mobile phone market is almost fully saturated (Pew reports that 98% of U.S. adults own a cellphone), Verizon also manages an institution-oriented business that offers corporate intra-connectivity services, private 5G networks, and edge computing, as well as industry-specific solutions like utility smart-grid management tools and connected automobile solutions. Although this business currently accounts for only about one-fourth of Verizon’s revenue, it’s a path to more growth than could be achieved via its mobile phone service alone. For instance, market research outfit IDC predicts that worldwide spending on edge computing technologies will grow at an annualized pace of 14% through 2028.

And the other key reason this telecom giant is a superior long-term dividend payer is its massive fiber-optic network.

When Verizon first began spending billions of dollars on the expansion of its fiber-optic platform many years ago, investors balked at the cost. Now they’re seeing the value of the investment that’s laid down nearly 57,000 miles of fiber just since 2020. The International Energy Administration says the number of internet users has doubled since 2010, while the amount of mobile digital data they’re creating and consuming is set to quadruple by 2028. All of that digital data requires wired networks with the capacity to handle it all. These, of course, must be fiber-optic networks.

Verizon is still never going to be a high-growth company. It is a steady-growth company, though, and has raised its dividends every year for the past 18 years. Management isn’t likely to let that streak come to an end anytime soon, either — if ever — given how dependent we’ve become on our mobile phones.

Thanks to the stock’s 28% pullback from its 2019 peak, new investors will be stepping in while the dividend yield stands at 6.3%.

2. Realty Income

Realty Income‘s (O 0.99%) projected yield of 5.5% isn’t quite as strong as Verizon’s, but it’s still well above the S&P 500‘s current yield of 1.3%. It also boasts a more impressive track record of payout hikes, with the stock’s annual dividend payout growing at least once per year for the past 30 years. In fact, its monthly — yes, monthly — dividend has been raised every quarter for the past 108 quarters.

How has this company managed to keep that streak going during a stretch that has included several particularly turbulent periods for the economy?

Realty Income is a real estate investment trust (REIT): It owns a bunch of rent-bearing properties, and must pass along the bulk of any profits it makes from them to shareholders every year. Some REITs’ portfolios largely consist of apartment complexes; others focus on office buildings, shopping malls, or even warehouses and logistics infrastructure. Even by REIT standards, however, Realty Income is relatively unusual. It predominantly owns strip malls and big box store locations. Its top tenants include Dollar General, Dollar Tree, 7-Eleven, Walmart, and Tesco, although no single company accounts for more than 3.3% of its rent payment flow.

At first glance, retail might look like a risky focus. E-commerce continues to chip away at brick-and-mortar’s share of consumer spending. Stores — and even entire store chains — are still closing in droves. Coresight Research suggests nearly 6,200 U.S. storefronts have been shuttered so far this year, nearing 2020’s record.

Realty Income is largely sidestepping this headwind though, by virtue of serving the retail market’s biggest players — chains that have the financial and marketing wherewithal to keep their stores open even when their peers are struggling.

That’s what Realty Income’s occupancy rate indicates anyway. Despite the retail industry’s challenges, as of the end of September, 98.7% of its properties were occupied by rent-paying tenants, easily topping the average S&P 500 REIT’s rate of 94.2%. Even in pandemic-crimped 2020, Realty Income’s occupancy rate only slipped to 97.9%.

3. Bristol-Myers Squibb

Finally, add Bristol-Myers Squibb (BMY 0.90%) to your list of forever dividend stocks to buy while its shares are still down 27% from their late 2022 peak. You’ll be plugging in while the dividend yield is a healthy 4.1%.

Most investors will know that Bristol-Myers Squibb is a pharmaceutical company. Most of those same investors, however, might be hard-pressed to name a single drug it makes. It’s just not a splashy kind of developer, mostly staying out of the thick of the initial COVID-19 vaccine race, for instance, even though it’s fully capable of making vaccines. No single drug accounts for more than one-fourth of its business, while most of the treatments in its portfolio provide less than 10% of its top line.

That strategy of remaining focused on its core strengths and strategic acquisitions, however, is precisely the reason Bristol-Myers Squibb is such a great dividend investment. Slow-and-steady wins the race.

Not everyone necessarily agrees with this bullish argument all the time. One of the chief reasons Bristol-Myers Squibb shares were such poor performers in 2023 was that the company booked lackluster revenue growth, particularly from its best-selling oncology drug Revlimid (sales of which have been declining since its recent loss of patent exclusivity). The company also shelled out $12 billion for Karuna Therapeutics, $5 billion for Mirati, and $4 billion for RayzeBio earlier this year in an effort to reload its portfolio and pipeline. Investing in growth may be a solid strategy, but investors were rattled by the sheer collective size of those outlays.

Lost in the noise and worry, however, is that Bristol-Myers has a strong track record when employing this particular strategy. Some of its strongest sellers, such as Revlimid and its fellow cancer-fighter Opdivo, were brought into the fold by acquisitions after they had proven their potential in some indications, while its current largest bread-winner — blood thinner Eliquis — was the result of a joint-development partnership with Pfizer. This is the norm for this company, and it works.

That doesn’t mean the pharmaceutical company’s top and bottom lines don’t ebb and flow. They do. It just means Bristol-Myers Squibb is doing the same things that have allowed it to raise its dividend for 15 consecutive years now. It’s likely to do everything in its power to keep this streak alive without risking its ability to do the same in the future.