Secure Decades of Passive Income: The 3 Best Dividend Stocks to Buy Now

Investing in dividend stocks offers investors the opportunity to generate steady passive income. In addition to regular income, high-quality dividend stocks also have the potential for long-term growth. To achieve a combination of income and growth, investors should focus on companies committed to increasing dividends that also have the financial strength to weather market uncertainty.

Given these factors, EOG Resources (EOG), AbbVie (ABBV), and Dover Corp (DOV) are three standout options for investors looking to secure decades of passive income. These companies have consistently paid and increased their dividends, and their growing profit base supports future payouts.

Let’s take a closer look at why these stocks are a great choice if you want to generate passive income for decades.

Dividend Stock #1: EOG Resources

EOG Resources (EOG) is a leading oil (CLU24) and natural gas (NGQ24) exploration and production company. It has earned a reputation as a reliable income company thanks to its solid history of increasing its dividend through economic and commodity cycles. For example, the energy company has paid and increased its dividend for 26 consecutive years. Additionally, EOG has never suspended or reduced its dividend.

A key aspect of EOG’s shareholder value proposition is its commitment to returning a significant portion of its annual free cash flow—around 70%—to shareholders. In 2023 alone, EOG paid $3.4 billion in dividends. The company increased its dividend by 10% for 2024, offering a quarterly dividend of $0.91 per share. This represents a yield of 2.86%.

EOG’s dividends are supported by a high-quality asset portfolio, low-cost structure, diversified multi-basin asset base and a strong balance sheet. These factors enable EOG to generate solid cash flow to cover dividends and sustain payments. In addition, EOG’s strategic infrastructure investments and effective capital reinvestment plan position the company to improve margins and generate solid cash flow in the years ahead.

Of the 27 analysts covering EOG, 14 have a “Strong Buy” rating, while the remaining 13 suggest a “Hold.” The average price target for EOG is $144.96, indicating a potential upside of around 16% from the current price.

Dividend Stock #2: AbbVie

AbbVie (ABBV) is a leading biopharmaceutical company developing advanced therapies in critical areas such as oncology, neurology, immunology and ophthalmology.

AbbVie stock is up 21% over the past year, slightly outperforming the S&P 500 ($SPX). What’s more, with a CAGR of over 28% over the past five years, the stock has delivered an impressive overall capital gain of around 247%.

In addition to its excellent capital gains, AbbVie has consistently increased shareholder value through higher dividend payouts. It is included in the S&P Dividend Aristocrats Index, which includes SPX component stocks with a history of dividend increases of at least 25 consecutive years. Since 2013, AbbVie has increased its quarterly dividend by 285%.

AbbVie’s success is built on a robust research and development (R&D) engine. Over the past decade, the company has developed multiple blockbuster therapies, generating multibillion-dollar revenues. AbbVie currently has approximately 90 compounds, devices or indications in various stages of development, providing a solid foundation for future growth.

In addition, AbbVie’s focus on strategic acquisitions is likely to increase its presence in the oncology and neuroscience segments. These accretive acquisitions are expected to support its financials in the long term and drive future dividend payments.

Despite AbbVie’s strong long-term prospects, the company faces headwinds from biosimilar competition, which has kept several analysts from backing the stock. Of the 22 analysts covering ABBV stock, 13 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and seven rate it a “Hold.”

The average price target of these analysts is $184.05, which is roughly in line with ABBV’s current price. Additionally, the stock offers a decent dividend yield of 3.35%.

Dividend Stock #3: Dover Corp

Dover (DOV) is a leading manufacturer of industrial products with exposure to multiple sectors. It also offers support services. This diversified portfolio positions Dover well to capitalize on a variety of growing end markets, driving consistent organic sales and earnings growth. In addition, the company generates solid free cash flow, which supports its commitment to returning significant capital to shareholders.

Over the past five years, Dover’s organic sales have grown at a CAGR of 4%. During the same period, adjusted earnings per share (EPS) have grown at a CAGR of 12%, demonstrating the company’s strong earnings power. This financial strength has allowed Dover to increase dividends for 68 consecutive years.

In addition to higher dividend payouts, Dover shares have delivered significant capital gains for investors. They have gained around 28% over the past year and have delivered a remarkable 100% return over the past five years.

Dover’s strategic focus on transforming its portfolio through acquisitions, divestitures and investments in growth platforms is expected to generate revenue. Additionally, the company’s initiatives to improve its sales mix, achieve productivity savings, implement strategic pricing and reduce costs are likely to enhance its EPS and cash flow, supporting further dividend growth.

Of the 12 analysts covering Dover shares, eight recommend a “strong buy” and four suggest a “hold.”

Analysts have a 12-month average price target of $194.83, implying upside potential of about 4.5% from the current trading price. At these levels, Dover shares offer a dividend yield of 1.1%.

On the date of publication, Sneha Nahata did not hold (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please refer to Barchart’s Disclosure Policy here.