Investing in dividend-paying stocks offers investors an opportunity to generate consistent passive income. In addition to regular income, high-quality dividend stocks also have the potential for long-term growth. To achieve the blend of income and growth, investors should focus on companies committed to growing their dividends that also have the financial strength to weather market uncertainties.
Considering these factors, EOG Resources (EOG), AbbVie (ABBV), and Dover Corp (DOV) are three standout options for investors to secure decades of passive income. These companies have consistently paid and increased their dividends, and they have a growing earnings base to support their future payouts.
Let's explore why these stocks are excellent choices to generate passive income for decades.
Dividend Stock #1: EOG Resources
EOG Resources (EOG) is a leading crude oil (CLU24) and natural gas (NGQ24) exploration and production company. It has earned the reputation of a dependable income stock due to its solid track record of growing its dividend across economic and commodity cycles. For example, this energy company has paid and increased its dividend for 26 consecutive years. Moreover, EOG has never suspended or reduced its dividends.
A key aspect of EOG’s shareholder value proposition is its commitment to returning a significant portion of its annual free cash flow — approximately 70% — to shareholders. In 2023 alone, EOG distributed $3.4 billion in dividends. The company increased its dividend by 10% for 2024, offering a quarterly dividend of $0.91 per share. This results in a forward yield of 2.86%.
EOG’s dividends are backed by its high-quality asset portfolio, low-cost structure, diversified multi-basin resource base, and robust balance sheet. These factors enable EOG to generate solid cash flows to cover its dividends and sustain its payouts. Moreover, EOG’s strategic infrastructure investment and efficient capital reinvestment plan position the company to improve margins and generate solid cash flows in the coming years.
Among the 27 analysts covering EOG, 14 have a “Strong Buy” recommendation, while the remaining 13 suggest a “Hold.” The average price target for EOG is $144.96, indicating a potential upside of roughly 16% from its current price.
Dividend Stock #2: AbbVie
AbbVie (ABBV) is a leading biopharmaceutical company that develops advanced therapies in critical areas such as oncology, neuroscience, immunology, and eye care.
Over the past year, AbbVie stock has surged 21%, narrowly outperforming the S&P 500 Index ($SPX). Moreover, with a CAGR of over 28% in the last five years, the stock has delivered an impressive overall capital gain of approximately 247%.
Beyond stellar capital gains, AbbVie has consistently enhanced its shareholder value through higher dividend payments. It is a part of the S&P Dividend Aristocrats Index, which includes SPX component stocks with a dividend growth history of at least 25 consecutive years. Since 2013, AbbVie has increased its quarterly dividend by 285%.
AbbVie’s success hinges upon its robust research and development (R&D) engine. Over the past decade, it has developed multiple blockbuster therapies, generating multi-billion dollar revenues. Currently, AbbVie’s pipeline includes 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 will likely expand 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 payouts.
Despite AbbVie's strong long-term prospects, it faces competitive headwinds from biosimilars, which keeps a few analysts from endorsing the stock. Among the 22 analysts covering ABBV stock, 13 recommend a “strong buy,” two suggest a “moderate buy,” and seven rate it as a “hold.”
These analysts' average price target is $184.05, which is approximately in line with ABBV's current price. Further, 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 provides support services. This diversified portfolio positions Dover well to tap into various growing end markets, driving consistent organic sales and earnings growth. Plus, the company generates robust free cash flow that supports its commitment to returning substantial capital to shareholders.
Over the past five years, Dover’s organic sales have grown at a CAGR of 4%. During the same period, its adjusted earnings per share (EPS) surged at a CAGR of 12%, showcasing the company's strong earnings power. This financial strength has enabled Dover to increase dividends for 68 consecutive years.
In addition to higher dividend payouts, Dover's stock has provided investors with significant capital gains. It appreciated by about 28% over the past year, and has delivered a remarkable 100% return over the last five years.
Dover’s strategic focus on reshaping its portfolio through acquisitions, divestitures, and investments in growth platforms is expected to drive revenue. Furthermore, the company's initiatives to improve its sales mix, achieve productivity savings, implement strategic pricing, and contain costs will likely enhance its EPS and cash flows, supporting continued dividend growth.
Of the 12 analysts covering Dover stock, eight recommend a “strong buy,” and four suggest a “Hold.”
The analysts have a 12-month average target price of $194.83, implying an upside potential of about 4.5% from its current trading price. At these levels, Dover stock offers a dividend yield of 1.1%.
On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
