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Do you want passive income for decades? 2 stocks to buy now and hold forever.

When most of us think about gains in the stock market, we see the stocks in our portfolios rising. And that’s definitely a big part of investing success. But over time, another element can significantly increase your profits: dividend payments. Dividend paying stocks provide a source of recurring income, boosting your portfolio regardless of the economic climate or stock market. And even if a particular stock is in the doldrums, these payments will limit your losses.

To get the most out of dividends, it is of course a good idea to choose companies with a proven track record, such as Dividend Kings. These are players who have increased their payments over the last 50 years. This commitment to rewarding shareholders is likely to continue, making them a safe bet if you’re looking for long-term dividend income.

The list of Dividend Kings is long, so you may be wondering where to start. Two healthcare stocks are doing particularly well thanks to their dividend strength, earnings numbers and future prospects. If you want decades of passive income, consider buying these two stocks now and holding them forever.

An investor smiles as he looks at stacks of paper money and coins in a jar.

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Table of Contents

1. Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is a healthcare giant; it sells pharmaceutical products in a wide range of therapeutic areas as part of its ‘innovative medicine’ business, and medical devices through its medical technology business. Last year, the company completed a spinoff of its well-known consumer health business, a company that sold products like Tylenol and Band-Aids; it was a wise move as this unity had weighed on growth.

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Today, J&J’s focus is on growth through innovation, with the goal of introducing more than 20 new treatments and 50 product extensions by 2030 – and this is just from the innovative medicines segment. In the field of medical technology, J&J aims to generate a third of its turnover from new products by 2027.

J&J is also growing through acquisitions, most recently purchasing Shockwave Medical to strengthen its position in the fast-growing field of cardiovascular interventions. The healthcare giant expects Shockwave will eventually become the medtech unit’s 13th platform to generate at least $1 billion in annual revenue.

All of this means that, dividend payments aside, J&J is an excellent stock to buy for potential earnings growth over time.

Now let’s look at the dividend. The company recently increased its quarterly dividend by 4.2%, marking its 62nd consecutive year of dividend increases. Based on the quarterly dividend figure, the company pays an annual dividend of $4.96 per share. Using the June 17 closing price, this reflects a future dividend yield of 3.4% – significantly higher than S&P500 return of 1.35%.

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So J&J could be a passive income-generating machine for you over time, making it a top pick to buy and hold.

2. Abbott Laboratories

Abbott Laboratories (NYSE: ABT) is another healthcare powerhouse that you can count on for earnings performance over time. The company has four business units: medical devices, diagnostics, established pharmaceuticals and nutrition. This diversification allows Abbott to capitalize on various market opportunities. For example, during earlier days of the pandemic, its diagnostics business helped the company become a giant in coronavirus testing. As weight loss medications become increasingly popular, Abbott’s nutrition company has introduced a brand to support people on their weight loss journey.

All four of Abbott’s business units have shown strength recently. Over the past quarter, medical device and established pharmaceutical sales increased by double digits, while diagnostics and nutrition sales increased by mid- to high-single digits. This helped Abbott report core business revenue growth – excluding COVID-19 test sales – of more than 10%, its fifth consecutive quarter of double-digit growth.

So it’s clear that you can count on Abbott’s strong earnings in the long run. And just like with J&J, you can also count on Abbott for passive income.

The company pays an annual dividend of $2.20 and based on the June 17 closing share price, this yields a yield of 2.1%. This is another example of a return that exceeds that of the S&P 500.

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And this means that an investment in Abbott can generate significant ongoing income for you over time, regardless of what the market does.

Should You Invest $1,000 in Johnson & Johnson Now?

Before you buy shares in Johnson & Johnson, consider the following:

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Adria Cimino has no positions in 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.

Do you want passive income for decades? 2 stocks to buy now and hold forever. was originally published by The Motley Fool

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