3 Dividend King Stocks to Buy With $500 and Hold Forever

Buy and hold forever is a popular expression. Admittedly, forever is a long time. Few stocks possess the growth opportunities, competitive advantages, or the ability to evolve with a changing world to warrant permanent residency in a portfolio. That's why the expression is more about buying high-quality businesses with no planned exit strategy. Ideally, you buy a world-class company, and the stock rewards you with steady returns over generations.

Famous investor Warren Buffett has held some stocks in Berkshire Hathaway's portfolio for decades. That's the goal. But if things don't go as planned, you sell. So, which stocks might deserve such a serious commitment?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

The Dividend Kings are an excellent starting point. This exclusive club comprises companies that have paid and raised dividends for at least 50 consecutive years. This remarkable accomplishment is a testament to the quality and longevity of their business models and cultures. Here are three industrial Dividend Kings poised to generate steady wealth over decades of consistent performance and growing dividends.

For just $500, you can own them all. Consider buying and holding them forever.

1. Emerson Electric

Automation company Emerson Electric (NYSE: EMR) began manufacturing electric motors and fans in the late 1800s. Today, it sells automation hardware, software, and smart devices, aiming to capitalize on growth trends such as automation and digital transformation, energy efficiency, decarbonization, and the near-shoring of manufacturing to developed countries like the United States. The company has spent most of the past five years aggressively retooling its business model for these trends with several acquisitions and divestitures. Yet, the constant for Emerson has been its dividend. Management has paid and raised the dividend for a whopping 67 consecutive years.

Emerson is looking forward to years of growth ahead. Management is guiding for 4% to 7% annualized organic revenue growth and double-digit earnings growth over the long term. Emerson is an industrial business that will experience ups and downs as the economy fluctuates. Management's goals are through the economic cycle, meaning they are averages.

When times are tough, the dividends should continue pouring in. Emerson's dividend payout ratio is still quite comfortable at 35% of this year's earnings estimates. The company has plenty of financial breathing room to protect and grow the payout, especially if Emerson achieves its growth targets. The stock won't make you rich overnight, but decades of solid growth could snowball into needle-moving returns.

2. Illinois Tool Works

Conglomerates like Illinois Tool Works (NYSE: ITW) don't manufacture goods or services under their name. Instead, they are excellent capital allocators that buy and manage independent businesses and brands. Their profits accumulate on the parent company's bottom line. Illinois Tool Works manages a portfolio of businesses across seven segments:

• Automotive origional equipment manufacturing (OEM).
• Construction products.
• Food equipment.
• Polymers and fluids.
• Specialty products.
• Test, measurement, and electronics.
• Welding.

Because Illinois Tool Works is so diversified, it tends to withstand economic downturns. If one business is struggling, another often does well to offset that. It has enabled management to grow its dividend for 53 consecutive years. The dividend is still in good financial health; it consumes just over half (58%) of this year's estimated earnings.

If there's a knock on Illinois Tool Works, it could be that it's so diversified that it lacks the growth some other companies might offer. Analysts estimate the company will grow earnings by an average of 5% to 6% annually over the next three to five years. However, that's a small time frame when you hold a stock forever. Management could sell assets or shuffle its businesses to aid growth. Until then, Illinois Tool Works is still a high-floor stock you can sleep well at night while owning.

3. Genuine Parts

Automotive and industrial parts distributor Genuine Parts (NYSE: GPC) supplies vehicle and industrial components through a global network of stores and distribution centers. Its largest market is the United States where it sells through over 6,000 National Automotive Parts Association (NAPA) automotive stores. Genuine Parts also has smaller retail operations in Europe, Canada, Australia, and Asia. Under the Motion Industries name, it has steadily expanded beyond the automotive industry to serve broader industrial markets, representing approximately 38% of the business today.

Genuine Parts has a steady business model that has thrived as consumers hold onto their vehicles longer, leading to increased demand for repairs and maintenance. Eventually, electric cars with fewer moving parts could pressure the automotive market. However, investors probably don't have to worry about that anytime soon. The company does approximately $23 billion in annual revenue versus a total (automotive and industrial) addressable market worth an estimated $350 billion.

Decades of steady growth make Genuine Parts an excellent dividend stock. With 68 straight annual increases, it has one of the longest streaks among the Dividend Kings. Additionally, Genuine Parts only spends about half its earnings on dividends, so investors shouldn't doubt its ability to pay shareholders. Given its long-term estimated-earnings growth rate of 7%, Genuine Parts should continue chugging along as it has for generations.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $348,579!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,554!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $540,990!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 21, 2025

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Emerson Electric. The Motley Fool recommends Genuine Parts and Illinois Tool Works. The Motley Fool has a disclosure policy.