Want Decades Of Passive Income? 2 Stocks To Buy Now And Hold Forever.

When most of us think of investing in stocks, we think of the potential gains -- or unfortunately, in some cases, losses -- that might follow. A particular stock will rise or fall, and we'll benefit or lose. But, fortunately, a particular type of stock could make you a winner year after year, regardless of its performance or the performance of the stock market as a whole.

I'm talking about the dividend stock. These players offer you passive income, something that will limit your losses in difficult markets and further boost your gains during good times. And you don't even have to lift a finger to benefit from these regular payments. You just have to own shares of companies committed to rewarding shareholders this way.

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Even if a company offers a dividend now, though, how can you be sure that will continue? There's no way to know with 100% certainty what a company will do several years down the road. But it's reasonable to be confident in companies that have a long track record of dividend growth -- showing their commitment to these payments -- and solid free cash flow -- showing their ability to make these payments.

Let's check out two dividend stocks to buy now and hold forever.

1. Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is a Dividend King, meaning it's increased its dividend for more than 50 consecutive years. In fact, J&J actually has lifted its dividend for more than 60 years, and today pays an annual dividend of $4.96, representing a dividend yield of 3.3%. That's higher than the S&P 500 (SNPINDEX: ^GSPC) yield of 1.2%. And with free cash flow of $19 billion, the company has the financial strength to keep these payments going.

It's also worth owning J&J stock for its earnings potential moving forward. The company divested its consumer health unit in 2023, and now is focused exclusively on its pharmaceuticals and medtech businesses -- the units offering it the most potential for growth.

In the third-quarter earnings report, J&J reported more than 6% growth for each of these businesses, and total sales climbed more than 5%. The company's pharma business -- known as innovative medicine -- boasts 11 major brands that are growing in the double digits. And the business reported a second straight quarter of revenue topping $14 billion.

As for medtech, J&J is transitioning into the highest-growth markets, and acquisitions of Shockwave and Abiomed have helped make this happen. Thanks to these purchases, J&J now is category leader in four of the top cardiovascular intervention markets.

So J&J's track record of dividend growth and its exciting new revenue prospects following the consumer health exit make it a great stock to get in on right now.

2. Abbott Laboratories

Abbott Laboratories (NYSE: ABT), like J&J, has a proven track record of dividend growth and has a spot on the Dividend Kings list. The company pays an annual dividend of $2.36, representing a dividend yield of about 2%. And this is another player that, with free cash flow of $6.4 billion, has the ability to continue along this path.

"I've talked about the importance of the dividend and supporting that growing dividend, and we'll continue to do that," CEO Robert Ford said during the third-quarter earnings call. And Abbott's board recently approved a $7 billion buyback program, another move to reward shareholders.

Also, like J&J, Abbott makes a quality healthcare addition to your portfolio -- one that's built a solid earnings track record and has more to offer over the long term, too.

I particularly appreciate Abbott's diversified portfolio, including diagnostics, medical devices, nutrition, and established pharmaceuticals businesses. This range of businesses ensures a certain stability in the earnings picture over time -- if, during a particular period, one unit suffers, another unit may compensate.

This has been the case recently, in the third quarter. A drop in coronavirus testing demand weighed on diagnostics revenue, but gains in the medical device business helped Abbott's overall revenue advance more than 8%.

All this makes Abbott a fantastic buy for investors looking for a resilient company that's committed to sharing the rewards with stockholders.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $357,084!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,554!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $462,766!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.