Best Dividend Stocks To Buy And Hold (2025)

Everyone likes recurring income, and when deciding what the best dividend stocks to buy and hold are, there are a few important things to watch out for. Remember, dividends were introduced as an incentive to keep your money in stocks rather than the bank, and can be used as a solo income investing strategy for recurring income, or as a nice addition to a growth-focused portfolio.

In 2025, dividend investing is no longer just for retirees; it's a key strategy for builders, side hustlers, FIRE advocates, and wealth-minded investors who want recurring and compounded income to be a feature of their portfolio. So, whether you are putting together and stacking your first $1,000 or designing a seven-figure dividend income stream, here’s your guide to the best dividend stocks to buy and to hold, MarketPlays-style: simple, strategic, and built for long-term impact.

What makes a dividend stock worth buying and holding?

Not all dividend stocks are worth holding long-term. Some dividend stocks might only be worth holding for a short period of time. A stock flashing an 8% yield might seem like a great buy, but that payout could be a mirage with underlying fundamentals that aren't pretty. So why is this considered a 'mirage'? It's because in many cases, a yield that high means the stock price has dropped, often because the company is struggling and there is something awry with its balance sheet. For example, if a legacy telecom firm sees its revenue decline year after year, its yield might rise simply because the stock has tanked. Without strong cash flow and a stable business, that dividend could get cut.

A good dividend yield isn't about chasing the highest number possible, even though that might sound tempting. You’re buying more than a stock; you're buying a company’s promise to return profits to shareholders regularly. That promise is only as reliable as the company’s financials, payout habits, and long-term outlook. That’s why blue-chip companies like PepsiCo, 3M, and McDonald’s are favorites among long-term investors; they’ve raised dividends for decades without blowing up their balance sheets.

Key metrics to evaluate when investing in dividends

When vetting a dividend stock, don’t stop at the yield. These are the core numbers that tell you whether a company can keep paying you, and keep growing those payments over time. Think of this as your dividend due diligence checklist:

Dividend Aristocrats vs high yielders

Not all dividend stocks serve the same purpose; in the upper echelons of the dividend society, you will find the Dividend Aristocrats. Dividend Aristocrats are companies in the S&P 500 that have increased their dividends every year for at least 25 years. These are stable, mature businesses like Coca-Cola, Johnson & Johnson, and Procter & Gamble. They might not offer jaw-dropping yields, but they’ve shown they can keep rewarding shareholders through recessions, pandemics, and market shocks.

That kind of consistency appeals to long-term investors who want income they can count on. These stocks tend to have strong balance sheets and predictable cash flows; slow and steady wins the race. Meanwhile, high-yielders go after attention with much bigger payouts, often 6%, 8%, or even more, but that comes with a catch. High yield can mean high risk, especially if the business model is under stress or the stock price has dropped hard.

When a high dividend is a red flag

A high yield might look like a gift, but it can also be a warning sign. Think of it like seeing a baller Aston Martin in a car lot, looking beautiful and spotless, but under the hood, there are all sorts of problems. If a stock is offering 9% or 10%, it’s worth asking why. You can compare it to yields in the government bond market. Countries that are in trouble debt-wise may sometimes have crazy high yields. (Think Greek debt crisis in 2010, and Argentina all the time). Often, the market has already priced in serious concerns. That could mean falling profits, too much debt, or an unsustainable payout that may get slashed. For example, some telecom or energy stocks have looked appealing with double-digit yields, only to disappoint when the dividend gets cut.

Best dividend stocks to buy and hold in 2025

Johnson & Johnson (JNJ)

Founded in 1886, Johnson & Johnson is one of the oldest and most diversified healthcare companies in the world. Its global reach spans pharmaceuticals, medical devices, and consumer health, a true staple in long-term portfolios.
Yield: ~3.1% Dividend History: 61 consecutive years of increases

Microsoft (MSFT)

Since its founding in 1975, Microsoft has grown from a personal computer software pioneer into a global leader in cloud computing, enterprise solutions, and artificial intelligence.
Yield: ~0.8% 5-Year Dividend Growth: Over 10% annually

Procter & Gamble (PG)

Launched in 1837, P&G is one of America’s original consumer goods powerhouses, with iconic brands that reach virtually every household around the globe.
Yield: ~2.5% Dividend History: 67 consecutive years of increases

Realty Income (O)

Founded in 1969, Realty Income is structured as a REIT and is known for its monthly dividend payments. Its portfolio includes over 13,000 properties across the U.S. and Europe.
Yield: ~5.5% Payout Schedule: Monthly

JPMorgan Chase (JPM)

With roots going back to 1799, JPMorgan is the result of over 1,200 institutions merging over centuries. Today, it’s the largest U.S. bank by assets and a leader in global finance.
Yield: ~2.9% Dividend Growth: Rebounding strongly since 2020

Brookfield Renewable Partners (BEP)

Part of the Brookfield Asset Management family, BEP was established in 1999 and has since become one of the world’s largest publicly traded renewable power platforms.
Yield: ~4.6%

Apple (AAPL)

Founded in 1976 in a California garage, Apple has become one of the most valuable companies on the planet, revolutionizing consumer technology through the iPhone, Mac, and its expanding services ecosystem.
Yield: ~0.5% (and rising)

Chevron (CVX)

Formed from the 1911 breakup of Standard Oil, Chevron is one of the oldest and most influential energy companies in the U.S., with global operations across oil, gas, and refining.
Yield: ~4.1% Dividend History: 36 years of increases

Dividend snapshot: Comparing top long-term picks

It’s one thing to love a stock; it’s another to see how it stacks up. This quick-glance table highlights key dividend metrics across our top picks, helping you visualize the balance between yield, consistency, and growth.

Reinvesting with DRIPs: How to turn small gains into awesome results

When looking ot buy and hold dividend-yielding stocks, it's important to see the macro picture of what those can do over the long term. Dividend Reinvestment Plans (DRIPs) let you automatically reinvest dividends into more shares of the same stock instead of taking the cash. For long-term investors, this removes the temptation to spend the money and helps put compounding on autopilot. Most DRIPs also avoid transaction fees, making it an efficient way to grow your position over time.

For example, let's say you own 100 shares of Procter & Gamble (PG). The stock pays a quarterly dividend of $0.80 per share, or $80 total. Instead of receiving the $80 in cash, the DRIP reinvests it directly into more PG stock. If PG is trading at $160, you’d automatically buy 0.5 additional shares. That extra half-share then earns dividends in the next quarter, helping your dividend income grow faster.

Here’s how that looks over a year, assuming the dividend and stock price stay constant for simplicity:

By the end of the year, you’ve gone from 100 to 102.02 shares, just from reinvesting your dividends. It might seem small, but over 10 or 20 years, especially with rising dividends and a growing share price, this snowballs. DRIPs quietly do the work of compounding while you stay invested.

 

Final thoughts: Dividends can do the heavy lifting, too

Dividends are awesome because they are stable, recurring, and predictable. Particularly when it comes to those aristocratic dividends, as those bourgeois dividends are some of the best-performing in history. Dividends used to be associated with ultra-conservative investors and retirees, but things have changed. As you can see above, by the power of re-investing dividends with DRIPS, a dividend and income-focused portfolio started now can culminate into an extremely powerful growth mechanism, that's not so capital-intensive. We love dividends at MarketPlays, and you should too. Stability, predictability, and recurring income are a dream for most investors, and with a solid portfolio of income-producing dividends, you might be able to realize that dream and then some. Sitting on a beach in Cabo, collecting dividends, re-investing those dividends, and retiring early is not a bad place to be!

 

FAQ

How often can companies cut dividends?

While some years may see dividend reductions, most high-quality dividend stocks have stable payout policies and only cut dividends in dire situations like deep recessions. Companies with long track records (e.g., 25+ years of increases) usually maintain discipline and only reduce payouts when earnings significantly drop. Still, it’s smart to monitor cash flow and payout ratios, even great companies aren’t immune to unforeseen macro shocks.

Are dividends taxed differently from capital gains?

Yes. Qualified dividends (from U.S. corporations and meeting holding period requirements) are taxed at long-term capital gains rates, usually lower than ordinary income tax. Non-qualified dividends, like those from REITs or some foreign firms, are taxed at your regular income tax rate. Using tax-advantaged accounts like Roth IRAs can help you avoid these taxes entirely.

Do dividend stocks outperform the wider market long-term?

Historically, dividend-paying stocks have delivered competitive or higher risk-adjusted returns compared to non-dividend payers, especially when reinvested. However, chasing the highest yield alone can underperform in certain periods. A balanced approach focusing on yield, growth history, and financial health usually beats yield-chasing alone.

Article Sources

• Investor.gov – Dividend definition & basics
• IRS – Tax Treatment of Dividends (Topic No. 404)
• SEC.gov – Equity Income Investing: Beyond Dividend Yield (PDF)
• Washington State DFI – Basics of Investing in Stocks

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