Want to own the best stocks? It’s simple. Own the best businesses. You have to remember that stocks are slices of real businesses. And when I think of the best businesses, it’s also quite simple.

The best businesses are providing the world with the products and/or services it consistently demands. Consistent demand for what they sell leads to consistent profits. Not just that, the profits are consistently growing.

By the way, the best businesses in the world have another thing in common. They return a chunk of growing profits back to their shareholders, in the form of growing dividends.

Does any of this ring a bell? Of course. I’m talking about high-quality dividend growth stocks here.

High-quality dividend growth stocks are some of the best stocks in the world because they represent equity in some of the best businesses in the world.

As great as these stocks can be, in general, some are particularly wonderful.

In fact, I’d go so far as to say that some really high-quality dividend growth stocks could be considered “forever” stocks. These are businesses so spectacular, you should plan to own them forever once you’ve got them in your portfolio.

They’re industry leaders with nearly unlimited demand for what they sell. It’s highly likely that they’ll continue to grow their profits and dividends at high rates for decades to come.

And that should lead to compounding your passive dividend income and wealth at high rates for decades to come.

Today, I want to tell you about five high-quality “forever” dividend growth stocks. Ready? Let’s dig in.

The first dividend growth stock to consider owning forever is Apple (AAPL).

Apple is a multinational technology company with a market cap of $2.6 trillion.

If you want to own the best stocks, own the best businesses. It’s such simple and straightforward logic. But it’s not just a talking point. Warren Buffett, who’s arguably the greatest investor of all time, knows a thing or two about great businesses. After all, he’s invested in them, bought them outright, and even built one himself.

Guess what he’s said about Apple? He’s called it “probably the best business I know in the world”. He’s not just paying lip service, either. Through his conglomerate Berkshire Hathaway, Buffett has $139 billion invested in Apple. Speaking of Buffett, he’s been known for his affinity for dividends. And Apple doesn’t disappoint in this department.

Apple has increased its dividend for 11 consecutive years.

Despite Apple’s magnificence, the dividend growth track record is still somewhat short. Give them time. I’m highly confident that Apple will continue to increase its dividend annually and end up as a Dividend Aristocrat in about 14 years. The stock’s yield of 0.6% means this is not an income play. Instead, this is a long-term compounder.

Keep in mind, this is a stock that’s compounded at 28% annually over the last decade, which would have increased an investment 10 years ago by more than 10 times. The five-year DGR is 9.2%, which outpaces even the elevated inflation rate we’re currently experiencing. And with a payout ratio of just 15.0%, along with hundreds of billions of dollars in cash at its disposal, this dividend is one of the safest in the world.

This is a business you invest in, then plan on holding onto for the rest of your life.

This might be the world’s best business. It’s certainly the world’s largest. By market cap, at least. Is our future society going to be more or less dependent on technology? Rhetorical question. We already know the answer. Apple is providing the tech we demand today – smartphones, tablets, computers, etc. But they’re also investing in the tech we’ll demand tomorrow – AR, VR, AI, the metaverse, self-driving vehicles, etc.

It’s a classic forever dividend growth stock because tech will be with us forever – and increasingly so. I couldn’t imagine ever selling a single share of this business. When you get your hands on some Apple, don’t let go. Let this business compound your wealth and passive dividend income at high rates for the rest of your life.

The second forever dividend growth stock is American States Water (AWR).

American States Water is an American water and electricity utility company with a market cap of $3 billion.

Throughout the 20th century, oil was often referred to as liquid gold. While hydrocarbons are still important, I think water will be the liquid gold of this century. I’ve said that before. And I’m saying it again. Water is the most essential thing in the world. We quite literally cannot live without it.

And so companies involved in water – whether it’s infrastructure, delivery, storage, heating, filtering, etc. – will do well as a result of that exposure. This obviously includes American States Water, which is a water utility company. What separates this water utility from the rest is their spectacular dividend growth track record.

American States Water has increased its dividend for 67 consecutive years.

That’s the longest dividend growth track record in the world. It’s not just a Dividend King – a term reserved for stocks with 50 or more consecutive years of dividend increases – it’s a king among kings. 67 years is an entire lifetime for some people. Imagine a company growing its dividend for your whole life. That’s how reliable American States Water has been, and continues to be. As is the case with Apple, this stock’s yield of 1.9% won’t knock you dead.

The value here isn’t in a big dividend today. It’s about an incredibly reliable dividend being paid out from a business that provides people with something so essential to life, they can’t live without it. With a 10-year DGR of 9.8%, the dividend growth here has been pretty impressive. And the dividend is supported by a payout ratio of 60.6%, which indicates a dividend trajectory that is up and to the right.

What in the world could possibly be more forever than water?

I can’t think of anything that is more of a sure thing than water. We needed it 10,000 years ago. We’ll need it 10,000 years from now. There’s no replacement for it. Now, necessity is the mother of invention, so I’m sure that humanity’s ingenuity will come up with exciting new ways to overcome some of our future water challenges. However, you cannot invent a new water. That lack of obsolescence risk can help you to sleep well at night. This is the kind of business you buy a slice of, then tuck away for the next few decades of your life.

The third dividend growth stock you may want to consider owning forever is Johnson & Johnson  (JNJ).

Johnson & Johnson is a global healthcare conglomerate with a market cap of $464 billion.

If you want to consider investing in a business forever, you want a very, very high degree of certainty. Well, what could be more certain than healthcare? Our human bodies slowly deteriorate as we age. So there’s built-in demand for healthcare just in terms of us being human. Not only that, but humanity is growing larger and simultaneously older. So that’s more older human beings walking around, which naturally increases demand for healthcare.

Plus, we’re becoming wealthier, on average, across the globe. So more people can afford quality healthcare when they need it. As one of the world’s foremost healthcare companies, all of this plays right into the hands of Johnson & Johnson. It means growth across the business, which translates over to the dividend. Something that has already translated very well for decades.

This company has increased its dividend for 60 consecutive years.

That’s way longer than I’ve even been alive for. When I was born, Johnson & Johnson had already been increasing its dividend for more than two straight decades. That’s how legendary this company is with its dividend. The 10-year DGR is 6.4%, which is something they’ve been remarkably consistent with.

You can almost set your watch to Johnson & Johnson delivering a 6% to 7% dividend increase every April. The stock also offers a fairly appealing yield of 2.6%, which definitely beats what the market gives you. And with the payout ratio sitting at just 42.2%, based on midpoint guidance for this year’s adjusted EPS, the dividend is healthy.

This has been an exceptional business for decades. And I think it’ll remain an exceptional business for decades to come.

After all, what’s different about the world today compared to 60 years ago? Do we suddenly need less healthcare? Of course not. It’s actually quite the opposite, as I just touched on earlier. I’ve been a big fan of Johnson & Johnson since I first started investing 12 years ago. And I remain a big fan today. Like I’ve said before, Johnson & Johnson could rename the company Quality & Quality. Industry leading products, a AAA-rated balance sheet, 60 straight years of dividend increases, and excellent positioning in an industry experiencing secular growth.

This is the kind of business that if I owned it and suddenly fell into a coma for 30 years, I’d wake up with full confidence that the investment was worth substantially more money and spitting out substantially more dividend income. I wouldn’t hesitate to plan on owning this stock forever.

The fourth dividend growth stock to consider owning forever once bought is Microsoft (MSFT).

Microsoft is a multinational technology corporation with a market cap of $2.1 trillion.

I’ve had a question come up a lot. Which tech stock should you own – Apple or Microsoft? My answer? Both. They’re totally different business models that are both terrific. They can both complement each other within a portfolio. And they can both serve as extremely, extremely long-term investments – as in for the rest of your life. Speaking on Microsoft specifically, this company hits tech from different – yet equally lucrative – angles. Of course, they have Windows OS and computers.

But they’re also in gaming, networking, and – most importantly – cloud computing. The latter occurs through their Azure business. With companies of all kinds moving operations and data to the cloud, Azure’s growth, which is already incredible, is likely just getting started. Intelligent Cloud is Microsoft’s biggest business segment. It’s also their fastest growing. That means plenty of growth yet ahead for the entirety of Microsoft, as well as the dividend they pay to shareholders.

The tech company has increased its dividend for 20 consecutive years.

They’re well on their way to Dividend Aristocrat status, which I’m positive they’ll reach in five years. The 10-year DGR of 13% shows what a fast grower they are with the dividend. And that growth is why you’re here, as the stock’s low-ish yield of 0.9% isn’t going to get the bills paid on the day you buy the stock.

No, this isn’t some high-yield junk stock. This is a long-term compounder of world-class caliber. We’re talking a CAGR of over 27% for the stock over the last 10 years, which would have more than 10x’d your investment over that time frame. With the payout ratio sitting at only 25.9%, this is a very healthy and well-covered dividend.

If you want to successfully position yourself for the decades ahead, you have to be in cutting-edge technology.

Microsoft practically prints money. We’re talking more than $70 billion/year in net income. That’s more than the annual GDP of a lot of countries out there. The company has more than $100 billion in total cash on the balance sheet.  I couldn’t imagine any serious long-term dividend growth investor not being invested in Microsoft. It’s the same story with Microsoft as it is with Apple.

Tech will be with us forever – and increasingly so. And so you have to be invested in the leading tech companies forever. This is the kind of stock you buy with the intention of holding onto for the rest of your life, then maybe plan on passing it down to your kids and grandkids.

Last but not least, let’s talk about the forever dividend growth stock that is Procter & Gamble (PG).

Procter & Gamble is a multinational consumer goods corporation with a market cap of $374 billion.

This is a company that – figuratively speaking – keeps the world turning. They sell the basic products that billions of people need, demand, buy, and use every single day. I’m talking about products like razorblades, deodorant, soap, laundry detergent, toothpaste, shampoo, and tissue paper here. You know, the stuff we’d be hard-pressed to live without in a modern-day society.

Procter & Gamble has been so successful with this, they’ve built more than 20 different billion-dollar brands. Unless society suddenly stops using toothpaste and tissue paper tomorrow, I’m pretty confident that this company will continue to grow its revenue, profit, and dividend for many decades to come – just as they’ve been doing for decades already.

Procter & Gamble has increased its dividend for 66 consecutive years.

Boy, right behind American States Water in terms of the dividend growth track record. The fact that they’re just barely behind a company providing water – something human beings can’t live without – speaks on the critical, everyday importance of their products. The 10-year DGR is 5.2%. And the stock’s yield is at 2.3%. Neither is super impressive. But it’s not about mind-blowing yield or growth here. It’s about mind-blowing consistency and certainty.

Because if you’re buying into a business with the intention of holding forever, the last thing you want are countless sleepless nights. It’s not sustainable to worry about an investment for years of your life. With the payout ratio sitting at 63.6%, which is pretty much right in line with where it’s been at over the last decade, I don’t see anything to worry about when it comes to the dividend.

We will forever need this company’s products. And that’s why it’s a great company to invest in forever.

Procter & Gamble has been around for nearly 200 years. Do I think they’ll be around for another 200 years? You betcha. They haven’t lasted this long by accident. They’ve endured – no, prospered – for decades upon decades because they meet everyday demand with quality, branded goods.

This is a dynamic that is so fundamental to society, I can’t imagine anything changing it for the rest of my life. Procter & Gamble won’t make you rich overnight. Instead, it’s the kind of stock that can lull you to sleep while it just steadily grows your wealth and dividend income in a boring but beautiful way. If you’ve got this stock in your portfolio, strongly consider owning it forever.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.

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