2 Dividend Stocks to Buy and Never Sell

There are excellent reasons to invest in dividend stocks, including the fact that they typically outperform their non-dividend-paying peers in delivering strong market returns over long periods.

However, just because a company pays a dividend doesn't make it attractive in and of itself. Income seekers want stocks that can perform well and consistently raise their payouts over the long run. Although few have what it takes, two excellent candidates in this regard are Johnson & Johnson (NYSE: JNJ) and Merck (NYSE: MRK).

1. Johnson & Johnson

Johnson & Johnson has faced several issues in recent years. First, revenue growth hasn't been as impressive as the market would have liked. Second, the company is still facing thousands of lawsuits related to its talc-based products, but multiple judges have shot down its attempts at a settlement. Third, recent regulatory changes in the U.S. have enabled Medicare to negotiate lower prices for some of the drugs it spends the most on, and the first round of negotiations will feature three of J&J's medicines.

Image source: Getty Images.

Though these are real challenges, the flip side is that Johnson & Johnson has dealt with regulatory changes and lawsuits for decades, and has performed well throughout. Medicare didn't even exist when J&J was first created. The pharmaceutical giant's ability to generate consistent earnings should, eventually, grant it the flexibility to navigate regulatory changes.

Additionally, Johnson & Johnson maintains an excellent credit rating, despite the lawsuits, so it can fulfill its financial obligations. Furthermore, the company has implemented changes to its business that could ultimately lead to even stronger financial results and revenue growth. It spun off its lower-growth consumer health business, Kenvue, in 2023.

J&J is doubling down on innovative pharmaceuticals and medical devices. It has a deep pipeline of investigational medicines and is developing important new devices, including its robotic-assisted surgery machine, the Ottava system, which is expected to generate numerous revenue opportunities over the long term.

Johnson & Johnson is an impeccable dividend stock with a streak of 63 consecutive dividend raises. The company's long history of payout increases is another piece of evidence that points to the strength of its underlying business. That's why, despite the headwinds the stock faces, I have no intention of selling my shares.

2. Merck

Merck owns the world's best-selling drug, Keytruda, which is approved to treat many different cancers. However, the medicine will run into a patent cliff in the U.S. by 2028. In the meantime, it could face increased competition from other therapies still in development, including Summit Therapeutics' ivonescimab. That's why Merck stock hasn't performed well in the past year, but there's more to the story.

The drugmaker is developing a subcutaneous version of its crown jewel that will help extend its patent life. And although ivonescimab could be a worthy challenger, it isn't yet approved in the U.S., and it will take a considerable amount of time to earn approvals across most of Keytruda's indications.

Meanwhile, Merck continues to expand its already extensive pipeline. For example, it has made moves in the weight management market through a licensing agreement -- it acquired the rights to HS-10535, an investigational GLP-1 medicine, from Hansoh Pharmaceutical, a China-based company.

Merck's pipeline features several dozen programs, including some brand-new candidates. Its portfolio of approved medicines includes newer medicines like Winrevair, a treatment for pulmonary arterial hypertension. The company is also a leader in animal health, another business with strong long-term prospects, in part thanks to a continued rise in pet ownership.

In the long run, Merck should continue to deliver solid results, while rewarding its shareholders with dividend increases; it has raised its payout by almost 89% in the past decade. The stock is another strong pick for long-term, income-oriented investors.

Should you invest $1,000 in Johnson & Johnson right now?

Before you buy stock in Johnson & Johnson, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Johnson & Johnson wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $660,821!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $886,880!*

Now, it’s worth noting Stock Advisor’s total average return is 791% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool has positions in and recommends Kenvue, Merck, and Summit Therapeutics. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.