The market has been all about tariffs this year. Last year, it was about the Fed and the election. Before that, it was artificial intelligence. Before that, it was inflation and interest rates. After the tariffs, it will be something else.
That’s the stock market. It’s one thing after another. A constant barrage of headlines dictates the current investing fashion. Some people are slaves to fashion and change strategy to follow the latest trend. But that rarely works for more than a short time.
Fortunately, there is something that works throughout the ever-changing seasons of the market. There is a method of stock investing that transcends temporary market gyrations to provide lasting and meaningful investment returns. That method is investing in dividend stocks.
I know. I sound like your grandfather. But the old man was on to something. For several good reasons, stocks that pay dividends have vastly outperformed those that don’t over time. That’s even been true throughout the technological revolution that has featured mostly non-dividend-paying stocks.
Dividends roll in no matter what the market is doing or what’s going on in the world. Dividend income has accounted for a substantial portion of S&P 500 total returns over time. But even more than the income, it’s the companies. Dividends are an ideal way to screen companies and stocks.
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Only the most secure and established businesses generate excess cash consistently. A history of maintaining and growing a dividend payout is proof that a company can walk the walk. Buying a reliable dividend stock is like finding a tenant with a long job history and a superior credit rating. You don’t have to pore through the financials of a company. The dividend tells you what you need to know.
Trading in and out of stocks is a strategy fraught with risk. It is incredibly difficult to win consistently and meaningfully build significant wealth over time that way. Holding quality dividend stocks is a much better strategy with a far superior track record.
But the headlines won’t tell you that. And this has been a news-driven market. If you listened to the financial press, you would have been scared out of the market a long time ago. And it would never be safe to get back in. But headlines and financial articles are designed to generate clicks, not provide prudent investment advice.
There is never a shortage of voices claiming that stock investing is treacherous. Yet the market has consistently delivered anyway. The last ten years featured three presidential elections, a global pandemic, a recession, a bear market, and the worst inflation in more than forty years. But through all the tumult of the last ten years, the S&P 500 returned 238%.
Just a simple investment in the market index would have turned $100,000 into $338,000 while naysayers yelled in your ear. There are great times ahead as well. The best way to ensure you benefit is with dividends. Dividends are the key to success beyond the occasional lucky trade.
Here are two of the very best dividend stocks on the market that are poised to thrive in the years to come.
2 Dividend Stocks Poised to Thrive in the Years to Come
Enterprise Product Partners L.P. (EPD)
Yield: 6.8%
Years of Dividend Increases: 28
Enterprise Product Partners is one of the largest midstream energy companies and Master Limited Partnerships in the country, with a vast portfolio of service assets connected to the heart of American Energy Production. It is connected to every major U.S. shale basin and 90% of American refiners east of the Rockies and offers export facilities in the Gulf of America.
As a midstream energy partnership, Enterprise is not reliant on volatile commodity prices because they generate about 80% of revenue from fees for storing, processing, and transporting oil and gas. They collect tolls on the U.S. energy highway at a time when production is likely to increase substantially.
EPD has performed very well over the last several years. Over the past three calendar years (2022, 2023, and 2024), EPD returned 78% with distributions reinvested compared to a return of just 28% for the S&P 500 over the same period. The MLP provided triple the market returns with just a fraction of the volatility. EPD has a beta of just .65, meaning it is a third less volatile than the overall market.
The future is shaping up to be even better. Not only is Enterprise expanding capacity at significant levels. It’s expanding in the highest growth area of the energy market, natural gas liquids (NGLs). The partnership is building out gas and NGL processing facilities and pipelines from the booming Permian basin to boost capacity on routes to the Gulf Coast. It’s also expanding its export facilities.
The huge 6.8% yield is remarkably safe. It’s supported by one of the lowest payout ratios in the industry and has 1.7 times coverage with cash flow, also one of the best in the midstream energy space. The distribution has continued and grown during recessions and industry depressions. It should be rock solid in the years ahead.
The dynamics of the energy industry should also be highly favorable to midstream energy companies in the years ahead. The global energy industry has had many years of capital underinvestment that will continue to limit supply amid ever-rising global demand, especially for natural gas. The new administration is about “drill baby drill.” Oil and gas production should boom. The administration is also removing regulatory restrictions and highly encouraging more NGL exports.
The distributions will continue to flow in any kind of market. And the price has also proven resilient amidst inflation, rising interest rates, and a slowing economy.
AbbVie Inc. (ABBV)
Yield: 3.5%
Years of Dividend Increases: 53
AbbVie is a U.S.-based biopharmaceutical company formed in 2013 as a spinoff from Abbott Laboratories (ABT). AbbVie is a research-based pharmaceutical company that specializes in small-molecule drugs. It’s a cutting-edge company with a terrific pipeline.
AbbVie became an industry giant because of its mega-blockbuster drug Humira. It’s an autoimmune medication that became the world’s bestselling drug with annual sales of over $20 billion. But the tremendous success of that drug became a problem as Humira lost its patent overseas a few years ago, and it lost its U.S. patent in 2023.
Because of shrinking Humira sales, AbbVie posted lower year-over-year revenues in 2023 and the first half of 2024. But the company turned that corner. Humira accounted for 75% of revenue a few years ago. But new immunology drugs Skyrizi and Rinvoq grew sales 65% last quarter with revenue of $5.1 billion, which already replaces peak Humira revenues.
It’s worth noting a couple of things at this point. First, AbbVie is well-positioned ahead of a megatrend. The population is aging at warp speed. The main industry beneficiary of the aging population is healthcare. In 2012, total healthcare expenditures in the United States were $2.8 trillion. Since then, spending in the sector has increased about 80% and now accounts for a staggering 20% of total U.S. GDP. Spending is likely to continue to increase going forward.
Second, despite the steep patent cliff, the stock has still performed well. The patent cliff was well known by investors, yet ABBV has returned 145% over the last five years versus 101% for the S&P over the same period. That’s because even impatient investors realize that the company has stellar new drugs and a pipeline capable of overcoming Humira.
The company is officially moving past the Humira patent expiration that has held the stock back for years. Imagine how ABBV could perform without a patent cliff and with growing sales.
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