Got $500? 3 Blue Chip Dividend Stocks to Buy and Hold Forever

Key Points

• AbbVie has continually innovated to stay ahead of the competition.

• Bristol Myers Squibb's business is going through changes, but it has a bright future ahead.

• Danaher's business model has proven capable of delivering substantial investment returns.

• 10 stocks we like better than AbbVie ›

Often, great investing boils down to holding on to great stocks. It can be as simple as that. The tricky part is that it isn't always easy to find companies you can buy and hold. The corporate landscape is ruthlessly competitive. Most companies don't succeed forever. Yet, there are some standouts, genuinely exceptional businesses that people often refer to as blue-chip stocks.

To find blue-chip companies, it helps to focus on evergreen industries. Consider healthcare, for instance, where people never stop needing care and medicine.

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You also don't need a substantial amount of money on hand to invest. Here are three prominent healthcare companies you can invest in for under $500, all-in. Consider buying and holding them forever.

Image source: Getty Images.

1. AbbVie

Many have scrutinized the drug industry, often for good reasons. However, medicine remains a core pillar of the broader healthcare sector, and that probably won't change anytime soon, if ever. AbbVie (NYSE: ABBV) is one of the world's prominent biopharmaceutical companies. It has a robust portfolio of drugs used to treat over 75 conditions, with core focuses in immunology, neuroscience, oncology, aesthetics, and eye care.

Buying and holding a drug company means it must continually innovate to stay on top and be worth the investment. AbbVie's former mega-blockbuster product, Humira, was among the world's top-selling drugs for years until its patent expired. AbbVie's newer blockbusters, Rinvoq and Skyrizi, have replaced Humira, a testament to AbbVie's ability to innovate and develop new winning products so as to keep it in growth mode.

Additionally, AbbVie is a Dividend King, having raised its dividend for 53 consecutive years (almost 40 of those years were while AbbVie was part of Abbott Laboratories). A growing dividend requires sustained business growth. AbbVie's dividend accomplishments have translated into both passive income and strong total investment returns. Analysts believe that AbbVie will grow earnings at a double-digit annualized rate over the long term, so its future continues to look bright.

2. Bristol Myers Squibb

Next up is Bristol Myers Squibb (NYSE: BMY), a peer of AbbVie, and another global biopharmaceutical company worth investing in and holding on to. Bristol Myers Squibb's roots go back to the early 1800s, evolving through generations of drug development and mergers over time. Today, the company specializes in developing treatments in oncology, cardiovascular, immunology, neuroscience, and hematology (blood disorders).

Similar to AbbVie with Humira, Bristol Myers Squibb is facing the dreaded patent cliff, where top drugs age out and lose patent protection. Over the past half-decade or so, Bristol Myers Squibb has spent somewhere in the vicinity of $100 billion on acquisitions, preparing for multiple top-selling drugs to lose sales once their patents expire.

Analysts forecast low-single-digit earnings growth for Bristol Myers Squibb over the short to medium term, but growth could accelerate as the company's pipeline continues to mature. Until then, investors can still get a safe and growing dividend. The stock yields 5.1% at its current price, and management has increased it for 18 years and counting.

3. Danaher

Companies like AbbVie and Bristol Myers Squibb don't create life-saving drugs out of thin air. They rely on life science companies for products and services that facilitate drug discovery and other innovations. Danaher (NYSE: DHR) is a global leader in this market. The company operates over a dozen subsidiaries that span three business segments: biotechnology, diagnostics, and life sciences. Over 80% of Danaher's revenue is recurring sales.

You might view Danaher as a master operator; it essentially manages several subsidiaries. The industry's diverse and fragmented nature creates opportunities for acquisitions. Danaher has acquired, spun off, and sold many businesses over the years. Its unifying factor is a companywide operating and continuous improvement model it calls the Danaher Business System, or DBS. This system has helped the company increase its profit margins and cash flow over time, and the stock has outperformed the broader market over the long term.

Danaher began aggressively raising its dividend just over a decade ago and has now increased its dividend for 10 consecutive years. The stock yields only 0.6%, but this is more about its future dividend growth potential. Analysts estimate Danaher will grow earnings by 9% to 10% annually over the coming years, and the dividend is still just 16% of 2025 earnings estimates. That sets investors up for solid capital gains and a dividend that should continue to rise for the foreseeable future.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Abbott Laboratories, Bristol Myers Squibb, and Danaher. The Motley Fool has a disclosure policy.