2 Warren Buffett Dividend Stocks to Buy and Hold Forever

Investing in dividend stocks is a great strategy for several reasons. Dividend-paying companies tend to be more resilient than their non-paying peers, and the regular payouts can smooth out losses, especially during a bear market, something many investors fear may be on the horizon.

It's no surprise, then, that buying shares in excellent income companies is part of Warren Buffett's strategy -- he's not considered the greatest investor of all time for no reason. Many stocks in Berkshire Hathaway's portfolio offer regular payouts. Let's consider two that are worth holding on to forever: Apple (NASDAQ: AAPL) and Visa (NYSE: V).

1. Apple

Besides Berkshire Hathaway, Apple is the stock people most often associate with Buffett nowadays. The iPhone maker has been the largest holding in the Oracle of Omaha's portfolio for years. Buffett once called Apple the best business in the world -- high praise for any company.

Several things make Apple a fantastic company, one of which is its economic moat, something Buffett requires in his investments. Apple's moat comes from several sources, including its brand name.

The tech giant has built loyalty with its base of customers, some of whom would consider it a major step down to switch from Apple to Android. Apple's ecosystem also benefits from high switching costs. Customers hoping to jump ship will have to transfer a wealth of data while losing access to the many ways its devices interact with one another to simplify many tasks.

Meanwhile, Apple continues to generate substantial revenue, profits, and cash flow.

AAPL Revenue (Quarterly) data by YCharts.

Though its top-line growth isn't as impressive as it once was, management has several growth avenues it could exploit in the long run. More than 2 billion of its devices are in circulation, allowing it to conjure up various monetization schemes. The company also has more than a billion paid subscriptions in its ecosystem.

While iPhone sales still make up the lion's share of its top line, Apple has slowly been building up its services segment -- it's been its fastest-growing unit for some time. That likely won't stop soon. Services grant the company multiple long-term growth opportunities.

Management is also making moves in artificial intelligence (AI). It has included the technology in some of its latest devices and will continue to seek innovative ways to improve its ecosystem through AI.

So, Apple still has excellent long-term prospects even with a market cap above $3 trillion. And the company's dividend program makes the stock even more attractive. Its forward yield is only 0.5% (compared to the S&P 500's average of 1.3%), but the tech leader has increased its payout by 92.3% in the past decade.

With a highly conservative cash payout ratio of 14%, he company can afford significant dividend hikes without issues. Apple and its dividends look safe to rely on in the long term.

2. Visa

Visa is the leading payment network in the world. There are more than 4 billion credit or debit cards in circulation that bear its logo, and they're accepted as a payment method by more than 150 million businesses.

Visa does not issue the cards itself -- that's the job of issuing banks. The company merely helps process card payments through its network. It charges a fee for every transaction, of which there are millions daily. The company's moat comes from the network effect. The more consumers own Visa-branded cards, the more it makes sense for companies to accept them as a payment method. This powerful dynamic is why it has few direct competitors and has continued to generate growing revenue, profits, and free cash flow.

V Revenue (Quarterly) data by YCharts.

Here's another reason for Visa's success: People have increasingly ditched cash and checks in favor of credit and debit cards. They are far more convenient to carry -- one can hold tens of thousands of dollars in their pocket through the magic of debit cards. With cash, that's not possible.

And if your cash is stolen, nothing stops the thief from using it. That's not the case for cards, which can be locked with a few clicks of a button on a smartphone these days.

The cash displacement trend is still alive, providing a lucrative long-term tailwind for Visa. There are still trillions worth of cash and check transactions worldwide, especially outside the U.S. So, the stock is far from having peaked.

Regarding its dividends, management increased payouts by an impressive 391.7% in the past 10 years. Its forward yield of 0.7% isn't that impressive, either, but Visa's cash payout ratio of 22.6% shows it has ample room to increase its dividends. It is a great company for growth and income-seekers to hold on to for good.

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*Stock Advisor returns as of April 1, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Visa. The Motley Fool has a disclosure policy.