3 Magnificent S&P 500 Dividend Stocks Down as Much as 60% to Buy and Hold Forever

Key Points

• Drugmaker Pfizer has struggled since the easing of the COVID-19 pandemic, but its pipeline is incredibly promising.

• Accenture isn’t a household name, but there’s a good chance you or someone living in your household regularly encounters its work.

• Despite clean alternative energy sources, the world is going to remain reliant on oil and gas outfit Occidental Petroleum for a long, long time.

• 10 stocks we like better than Pfizer ›

Need investment income? Dividend stocks are an obvious option to consider. If you're looking for one you can comfortably buy and hold forever, however, the matter becomes a bit more complicated. "Forever" is a long time, after all -- the underlying company needs to be one you're confident can continue performing well into an unforeseeable future. Not every organization is built with this sort of staying power.

There are some magnificent options out there worthy enough to consider.

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Here's a rundown of three such names that are part of the S&P 500 and are currently trading at a discount. Any (or all) of these dividend stocks would be at home in nearly any income investor's portfolio.

Image source: Getty Images.

1. Pfizer

The past three years have been tough ones for pharmaceutical giant Pfizer (NYSE: PFE), and by extension, its shareholders. The stock trades down nearly 60% from its late-2021 high, peaking shortly before the massive demand for its COVID-19 infection treatment Paxlovid, as well as its COVID-19 vaccine Comirnaty, co-created with BioNTech, peaked as well. With nothing in its portfolio to offset this waning revenue, the company's top line has dwindled from 2022's record high of a little more than $100 billion to what will be something around $63 billion this fiscal year.

It's not like Pfizer hasn't been busy during this stretch, though. It's just going to need some more time to monetize what it's been developing with the windfall profits seen during and because of the coronavirus pandemic ... drugs like Elrexfio (elranatamab) and Vepdegestrant (PF-07810382).

The former is an already-approved BCMA-targeted antibody for multiple myeloma, but Pfizer says its current testing could quintuple the size of its potential market between 2026 and 2030. The latter -- Vepdegestrant -- is an HER2-antibody drug conjugate (or ADC) aimed at breast cancer that's being co-developed with Arvinas. The FDA "fast-tracked" this treatment back in early 2024 due to its strong efficacy in early-stage trials, and as of last month is now reviewing its application for a final, ultimate approval; the fast-track designation is an encouraging sign.

And that's just two drugs. All told, Pfizer says there are at least eight oncology drugs in its current pipeline that could each be producing over $1 billion in annual revenue by 2030 (although some of them could be producing considerably more).

That's also just cancer drugs. All told, the company's got 108 different clinical trials underway right now, 28 of which are currently in phase 3 testing and could be approved in the relatively near future.

The point is, the revenue that supports this stock's continued dividend payments is coming. The ticker's weakness of late is largely a gift to income-minded investors, by virtue of pumping up the forward-looking yield to 7%.

2. Accenture

Accenture (NYSE: ACN) may be the biggest, most important company you've never heard of. The $150 billion outfit provides a range of technical and support services to organizations looking to grow, improve their operating efficiency, adopt new technologies, or even just develop a new business strategy.

Ride-hailing outfit Uber tapped Accenture to help streamline its on-car advertising operation, for instance, while Microsoft enlisted Accenture to overhaul its data center infrastructure business's supply chain, ultimately doubling its capacity. The NFL, home appliance manufacturer Bosch, and utility company Duke Energy are also among Accenture's more than 9,000 customers that contributed to the company's 2024 revenue of $65 billion.

That's not the crux of the bullish argument, though. Accenture is worth owning for the long haul because it's an amazingly reliable profit producer, having remained out of the red in every single quarter since going public back in 2001.

And during this stretch, the company's net annualized profits improved from less than $1 billion to roughly $8 billion per year now. The dividend's grown accordingly as well, of course, since it began paying them in 2005.

There's no reason to believe the future is going to look much different than the past, either. Accenture just solves too many complicated problems for too many organizations.

Now, the yield's not great, currently standing at right around 2.5% on a forward-looking basis. Given the reliability and sheer pace of its dividend growth, though, this stock's 37% pullback from its January high makes it a great income pick for investors who are truly looking for a "forever" dividend-paying investment.

3. Occidental Petroleum

Finally, add energy outfit Occidental Petroleum (NYSE: OXY) to your dividend-paying holdings while the stock still trades down 37% from its 2022 high.

It's probably a surprising suggestion to most income investors, given the advent of cleaner alternative energy sources. The fact is, however, the world is still stunningly reliant on fossil fuels.

The United States Energy Information Administration reports that as of 2023, more than 70% of the nation's energy production still came from oil and natural gas, with another 9% coming from coal. Renewables, conversely, only account for less than 10% of the country's total power production ... numbers that roughly apply outside the U.S. as well.

While alternative energy sources are expected to meet most of the world's growth in demand for electricity, Occidental rival ExxonMobil predicts that crude oil and natural gas will still be the planet's biggest sources of energy production even as far down the road as 2050. This bodes well for Occidental Petroleum, which is a very cost-effective producer of both.

There's a kicker, however, that makes Occidental a particularly compelling stock pick. That is, it's figured out how to (literally) suck carbon dioxide out of ambient air, and then even use this captured carbon dioxide for industrial purposes like improving the output of oil wells, making cement, and more. It's still a relatively small business, but it's got tremendous potential.

Imarc Group believes the worldwide direct air capture industry is poised to grow by more than 60% per year through 2033, jibing with an outlook from Polaris Market Research. Of course, the more success that its direct air capture initiative achieves, the longer Occidental's oil and gas business can thrive as well.

Like Accenture, Occidental Petroleum's forward-looking yield of 2.1% isn't exactly thrilling. It doesn't increase every year, either. Its payment is well supported by reliable profits, however, and that's not apt to change at any point in the foreseeable future.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc, Microsoft, Pfizer, and Uber Technologies. The Motley Fool recommends BioNTech Se, Duke Energy, and Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.