In bull markets, dividends can add to the gains from the stock while also purchasing additional shares. When prices decline, dividends can reduce the losses while being used to acquire more shares at a now lower price.

This is why dividend growth stocks can be bought and held for the long run. These 3 dividend growth stocks can be bought and held forever.

Becton, Dickinson & Co. (BDX)

Becton, Dickinson & Co. is a global leader in the medical supply industry. The company was founded in 1897 and has 75,000 employees across 190 countries.

The company generates about $20 billion in annual revenue, with approximately 43% of revenues coming from outside of the U.S.

BDX reported results for the fourth quarter and fiscal year 2024, which ended September 30th, 2024. For the quarter, revenue grew 6.9% to $5.44 billion, which was $57 million more than expected.

On a currency neutral basis, revenue improved 7.4%. Adjusted earnings-per-share of $3.81 compared favorably to $3.42in the prior year and was $0.04 ahead of estimates.

For the fiscal year, revenue grew 4.2% to $20.2 billion while adjusted earnings-per-share of $13.14 compared to $12.21 in the prior year.

BD provided an outlook for fiscal year 2025 as well. Revenue is projected to be in a range of $21.9 billion to $22.1 billion for the fiscal year, which represents ~9% growth year-over-year. Adjusted earnings-per-share is expected to be in a range of $14.25 to $14.60, representing growth of 9.8% from last fiscal year.

BD has now increased its dividend for 53 consecutive years. This makes the company a member of the Dividend Kings. The dividend has a compound annual growth rate of 5.2% over the last 10 years and 5.7% over the past five years, though the latest increase is well ahead of its medium- and long-term averages.

BD showed that it can perform well in less than ideal economic conditions during the last recession. The company’s key competitive advantage is that its products are in high demand as medical devices and other healthcare products are still sought out during a recession. 

People will seek medical care regardless of how the economy is performing. This ability to grow or maintain earnings in any economic climate makes BD a quality company and a safe stock. The company has also been aggressive about making acquisitions to add on to the core businesses.

Kimberly-Clark (KMB)

Kimberly-Clark is a global consumer products company that operates in 175 countries and sells disposable consumer goods, including paper towels, diapers, and tissues. It operates segments that each house many popular brands: the Personal Care Segment (Huggies, Pull-Ups, Kotex, Depend, Poise), the Consumer Tissue segment (Kleenex, Scott, Cottonelle, and Viva), and a professional segment. In all, KMB generates ~$21 billion in annual revenue.

Kimberly-Clark posted third quarter earnings on October 22nd, 2024, and results were mixed. The company saw the top line fall 4% year-on-year to $5 billion, and that missed estimates by $50 million. Adjusted earnings-per-share fared better, beating expectations by 12 cents at $1.83.

The company noted higher prices for personal care products. While that boosted profit margins on those products, it also drove consumers to lower-priced alternatives, which is why sales fell.

Management noted pricing increases were required in hyper-inflationary economies such as Argentina to help offset input and operating costs. Adjusted profit margins rose 90 basis points to 36.7%.

Management has publicly stated targets of mid-single-digit growth in adjusted earnings-per-share annually, -1% to +3% organic sales growth, and dividend growth in-line with earnings-per-share growth. The company’s cost saving programs have worked nicely up to this point, but we note that there will be a point when returns from these cost cuts diminish.

Kimberly-Clark’s competitive advantage is in its longstanding dominance with a variety of its brands, which are well known in the marketplace. It should also perform well during recessions as most of its products are consumable staples.

The company has managed to grow its earnings-per-share thanks to share repurchases and its cost reduction programs. With operating margins rising steadily over time, increasing profitability is working to offset somewhat weak revenue numbers. 

Kimberly-Clark’s management team has continuously extended this initiative, aiming for another $1.5 billion of cumulative savings over the three-year period. This will be a primary growth driver in the upcoming years, particularly as revenue growth topped out after 2020 results. We expect 4.5% annual earnings growth in the years to come, as we expect volumes to remain largely steady over time.

Target Corporation (TGT)

Target was founded in 1902 and now operates about 1,850 big box stores, which offer general merchandise and food, as well as serving as distribution points for the company’s e-commerce business.

Target posted second quarter earnings on August 21st, 2024, and results were quite strong, sending the stock jumping after the report. Adjusted earnings-per-share came to $2.57, which was 39 cents ahead of estimates. Revenue was up 2.7% year-over-year to $25.45 billion, which beat by $240 million.

Comparable sales were up 2% year-over-year, making up most of the total sales gain. Consensus was for a gain of 1.1%. Traffic was up 3% year-over-year with all six core merchandising categories seeing positive growth. Digital comparable sales were up 8.7%, once again driving growth.

Target has grown its dividend for more than five decades, making it a Dividend King. The company is investing heavily in its business in order to navigate through the changing landscape in the retail sector. The payout is now 47% of earnings for this year.

Target has grown its earnings-per-share at an average annual rate of about 8% during the last decade. Due to fierce competition and the failed attempt to expand to Canada, Target’s earnings-per-share remained almost flat from 2012 to 2017. However, turnaround efforts have borne fruit and as a result, Target has significantly improved its performance in recent years. The company has reduced its share count over time, although the past two years have seen essentially no change.

Overall, we expect 7% annualized growth from what should be a modest level for 2024 given margin issues that cropped up in recent quarters. In addition, sales growth remains an issue for Target. We see comparable sales growth as a challenge, offset by sizable margin expansion from low levels in 2023, and a potential tailwind from the buyback. Target’s digital efforts are also working extremely nicely.

Target has grown its dividend for more than five decades, making it a Dividend King. The company is investing heavily in its business in order to navigate through the changing landscape in the retail sector. The payout is now 52% of earnings for this year.