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3 dividend stocks that should pay you the rest of your life



Dividends have a balance between high returns and sustainable dividends. Ultimately, it's generally more important to find stocks that can pay their dividends, and hopefully increase them, than to commit to high, short-lived returns, as they are covered by dividends, which are likely to be cut. If you want to add some good dividend names to your portfolio, these three Motley Fool employees think you want to look at biotechnology Gilead Sciences (NASDAQ: GILD) Telecommunications giant Verizon (NYSE: VZ) and Consumer Goods Specialist Procter & Gamble (NYSE: PG) .

Excellent Income Opportunity

George Budwell (Gilead Sciences): Gilead Sciences may not be the high-growth game it used to be earlier this decade, but biotechnology has become a major player in recent years. Income and value shares developed. The shares currently offer a return of 3.9% and are at a low point with 9.2 times the forecast for next year. This is a pretty attractive package for every blue chip biotechnology.

  a piggy bank with the word dividends above it

Source: Getty Images

Best of all, Gilead can continue to grow its dividend at a healthy pace for the foreseeable future. In addition to the $ 30.2 billion in cash and marketable debt outstanding at the end of last quarter, it is expected that both its mega-blockbuster HIV drug Biktarvy and the experimental anti-inflammatory drug Filgotinib will be admitted to be big winners for the company over the next decade.

Biktarvy, for example, will generate a whopping $ 7 billion in revenue by 2024, according to EvaluatePharma's report. Filgotinib will generate sales of $ 6.5 billion at the beginning of the next decade, depending on how the anti-inflammatory drug market eventually develops. Taken together, these two high-quality medicines should be able to deliver the kind of free cash flow needed to sustain and increase Gilead's dividend over the coming years.

Huge entry barriers protect this dividend

Brian Stoffel (Verizon): I own exactly zero shares because of their dividend. This makes sense because investing income does not fit my approach, over three decades, until I reach my golden years. In other words, if I retired tomorrow, I would definitely hire part of my portfolio in Verizon.

There are a few big reasons for this. First and foremost, the dividend has been a steady source of income for a long time. The company has not paid any dividend since its first dividend payment on March 20, 1984 – then known as Bell Atlantic. In addition, it has increased its dividend for 14 consecutive years.

Equally important, even if the company does not increase its dividend, it already achieves a return of 4.3%. This is a considerable repayment for an investment world where negative interest rates are spreading across Europe.

The company can afford this payout as it has generated $ 17 billion in free cash flow over the past year. Of this amount, around 59% was used to distribute the dividend. This is a very healthy relationship: it means that Verizon still has room to sustainably increase the dividend if business is doing well and should be able to continue the current payoff when business stagnates.

Perhaps most important, however, is Verizon's competitive position. There are high market entry barriers in telecommunications. It takes billions of dollars to build the infrastructure to connect the masses, and it's a heavily regulated industry. With the largest market share of mobile subscribers and the status as the first provider of 5G technology, Verizon is, in my opinion, a good choice for dividend investors.

A Proven Brand Manager

Reuben Gregg Brewer (Procter & Gamble): You know the names that the consumer goods giant Procter & Gamble sells, including the well-known Bounty, Tide and Crest brands (among others) , Most of his products are daily necessities, so they are bought in good times and bad. This provides P & G with a solid revenue base for dividend distribution. With a long-term debt of adequate 30% of the capital structure, there is no reason to worry about the company's balance sheet.

On this basis, P & G has built a more than six-decade annual dividend increase. There is no reason to doubt that investors can pay off year after year. But what is missing is probably the most important piece of the puzzle: P & G is a brand manager. This means that brands are bought and sold over time to ensure that the best possible portfolio of assets is available to investors.

 PG diagram

PG data from YCharts.

It is not always true, but over time it has developed quite well. The recent shift is a good example. In 2016, more than 40 cosmetic brands were sold to Coty (NYSE: COTY) . This allowed P & G to focus on the best beauty brands that have made solid achievements. In the meantime, Coty struggled to make the acquisition a success.

Overall, P & G is performing quite well today and equities have recovered strongly this year. It's not cheap, but the 2.5% return is higher than what you would get from the S & P 500 index. And you should be able to rely on the dividend being paid out and raised in the coming years. For investors with conservative earnings who want to diversify their portfolio a bit, it is still worthwhile to dive deeply.


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