Best 3 Dividend stocks are a means for long-term investors to grow their wealth through capital appreciation and regular income. The best companies do more than deliver a high yield. They generate predictable cash flow, keep a reasonable level of debt and raise dividends for shareholders without hurting the business under it.

The following dividend stocks to buy and hold for long-term growth have historically run durable businesses and returned cash to shareholders. But no investment should be literally held forever without review. Investors should consider current valuations, financial results, dividend safety and personal risk tolerance before buying.

Coca-Cola Provides Defensive Dividend Strength

Coca-Cola has built one of the world’s largest beverage businesses, backed by familiar brands and an extensive distribution network.

It sells its products in many countries and in categories such as sparkling drinks, water, sports beverages, coffee, juice and others. Such diversification assists the company in generating relatively stable revenues under different economic environments.

Another key benefit is Coca-Cola’s pricing power. Strong brands find it easier to push up prices when the cost of packaging, transport, sugar or labour rises.

Procter and Gamble Meets Everyday Demand

Procter & Gamble has a broad portfolio of household and personal-care brands that consumers use daily.

Its business includes products such as grooming, fabric care, cleaning, baby care, feminine care and personal health. They are necessities and in a downturn demand generally doesn’t disappear, providing the company with a defensive position.

P&G has the advantage of global scale, retailer relationships, advertising prowess and years of consumer trust. Its benefits can make it hard for smaller rivals to challenge its leading brands.

The company has a history of returning significant cash to shareholders through dividends and share repurchases. It relies on continued sales growth, cost control and healthy free cash flow to keep making those payments.

Investors also have to keep an eye on currency movements, commodity costs, private-label competition and the price paid for the stock.

Johnson and Johnson Connects Health and Income

Pharmaceutical products and medical technology are one way to get exposure to healthcare with Johnson & Johnson.

Healthcare demand can be relatively inelastic because patients still need treatments and medical procedures regardless of the overall economy. The company’s size, research capability and international presence provide a number of possible sources of long-term growth.

Its pharmaceutical business can generate good profits when key treatments gain market share. Ageing populations may benefit medical technology, with greater access to healthcare and innovation in surgical procedures.

Johnson & Johnson also has a long and impressive history of dividend increases. But investors will have to weigh patent expirations, regulatory decisions, litigation exposure, research spending and the success of new products.

Good history is no warranty of future business risk.

It is more important that a dividend be safe than that it be high

Sometimes a very high dividend yield signals trouble ahead for investors.

For the long-term investor, the question is whether a company can comfortably fund its dividend from recurring cash flow. Key factors include the payout ratio, free cash flow, debt payments, earnings stability and how the company has performed in recessions.

A more moderate but steady increase in dividends may produce superior long-term results than an above-average increase that is later reduced.

Sources

• Coca-Cola Investor Relations – Latest Financial Reports, Dividend Announcements and Business Updates
• Procter & Gamble Investor Relations – Earnings results, cash-flow information, and shareholder returns.
• Johnson & Johnson Investor Relations – Dividend, medical technology and pharmaceutical info.
• US Securities and Exchange Commission – Official company filings and financial disclosures
• Nasdaq – Dividend histories and market information.