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3 Dividend Growth Stocks With Yields Above 3% That You Can Buy and Hold for the Next Decade

Motley Fool - Tue Apr 9, 3:21AM CDT

If you're building a stream of dividend income to fuel your retirement dreams, it helps to fill your portfolio with businesses that can keep growing through a wide range of economic conditions. Healthcare expenses are generally unavoidable, which makes it a great sector to look for stocks with steadily rising dividend payouts.

AbbVie(NYSE: ABBV), Bristol Myers Squibb(NYSE: BMY), and Johnson & Johnson(NYSE: JNJ) are all pharmaceutical industry giants that offer dividend yields above 3% at recent prices. Consistent development of new medicines has allowed all three companies to raise their quarterly dividend payouts at least once per year for over a decade.

Individual investor looking for stocks to buy.

Image source: Getty Images.

Read on to see why investors can reasonably expect at least another decade of growth from these high-yield dividend stocks.

AbbVie

AbbVie's raised its dividend payout a whopping 288% since the pharmaceutical giant spun off from Abbott Laboratories in 2013. At recent prices, the stock offers a 3.6% dividend yield. That's miles above the average stock in the benchmark S&P 500 index, which offers a paltry 1.4% yield at the moment.

AbbVie's dividend yield is relatively high because the market is concerned about sinking sales of its top-selling product, Humira. The anti-inflammation drug lost patent-protected U.S. market exclusivity in 2023, and sales are collapsing. U.S. Humira revenue fell 35% to $12.2 billion last year.

This is a good stock for income-seeking investors to buy now and hold for the long run because the company did a great job reinvesting profits from Humira into new growth drivers. Skyrizi, a psoriasis treatment, and Rinvoq, an arthritis treatment, first earned approval from the Food and Drug Administration (FDA) in 2019.

Rinvoq and Skyrizi produced a combined $11.7 billion in sales last year. Management expects combined sales of the pair to exceed $27 billion in 2027 and AbbVie has a tendency to underpromise and overdeliver.

Bristol Myers Squibb

Bristol Myers Squibb is another pharma giant that offers an above-average dividend yield of 4.7% and a good chance for steady raises. The company has increased its quarterly payout every year since 2009.

This pharma giant has a lot of moving pieces. Sales of Revlimid, a blockbuster multiple myeloma drug, fell 39% last year to $6.1 billion in response to generic competition. Eliquis, a blood thinner with sales that reached $12.2 billion last year, was this pharma giant's top revenue stream, and it could lose patent-protected exclusivity in the U.S. market in 2026.

At $9 billion in sales last year, Opdivo, a cancer immunotherapy, is Bristol Myers Squibb's second-largest revenue stream, and it could lose exclusivity in 2028.

Despite some daunting patent cliffs ahead, Bristol Myers Squibb looks like a great dividend stock to buy and hold. The company's lineup of relatively new products appears capable of offsetting upcoming losses from Revlimid, Eliquis, and Opdivo. The company's new product portfolio contains 10 drugs that grew combined sales by 77% last year. The pharma giant also boasts 12 clinical-stage programs in late-stage development.

Johnson & Johnson

Johnson & Johnson is a pharma giant that also has a large medical technology business. The healthcare conglomerate recently spun off its consumer goods business into a company named Kenvue, but that didn't stop it from maintaining a 61-year dividend-raising streak.

The medical device industry can be extremely competitive, but J&J keeps acquiring technologies that allow for wide profit margins. In 2022, the company acquired Abiomed for about $16.6 billion. Abiomed makes Impella, the only brand of minimally invasive heart pumps approved by the FDA for use in surgical procedures.

J&J's lineup of proprietary cardiovascular intervention technology could soon get another big boost. The company recently made Shockwave Medical a $13.1 billion buyout offer.

At recent prices, J&J stock offers a 3.1% yield that you can reasonably expect to grow for more than a decade. Adding some shares to a portfolio to hold over the long run looks like a smart move.

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Cory Renauer has positions in Shockwave Medical. The Motley Fool has positions in and recommends Abbott Laboratories, Bristol Myers Squibb, Kenvue, and Shockwave Medical. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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