2 Top Dividend Stocks to Buy for a Lifetime of Passive Income

Down roughly 20% from its highs earlier in the year, the Nasdaq Composite continues to hover around bear market territory.

While uncertainty remains in the market, this sell-off may be a perfect opportunity to add to promising technology stocks whose bright futures transcend the short-term fears facing the market right now.

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Let's look at two dividend-paying stocks that offer this promising outlook over the long term and could prove to be shrewd investments amid the ongoing turbulence.

ASML quietly powers the semiconductor industry

It is almost impossible to keep up with the rate of innovation in the rapidly expanding artificial intelligence (AI) industry. Whether it's a new version of a large language model, more advanced generative video capabilities, or savvier chatbots, something new happens every day.

Powered by these generative AI advancements, McKinsey estimates that the technology could add roughly $9 trillion to worldwide gross domestic product by 2030.

One company poised to reap the rewards from this generative AI boom is lithography leader ASML Holding (NASDAQ: ASML). Lithography is the mind-bending process of using ultraviolet light to etch infinitesimal patterns onto silicon wafers, which go into today's most powerful semiconductor chips.

ASML is a leader in the more mature deep ultraviolet (DUV) lithography niche, but it has a virtual monopoly on the cutting-edge extreme ultraviolet (EUV) lithography space. Thanks to its leadership position in the lithography industry, ASML quietly powers the tech behemoths known as the "Magnificent Seven," which are responsible for many of the up-and-coming AI technologies.

Indirectly supplying these massive corporations, ASML should see the long-term demand for its best-in-class lithography continue to increase as AI becomes increasingly prevalent, utilizing the most advanced chips possible.

However, due to the cyclical nature of the semiconductor industry and its supply chain, the company's share price has dropped 42% from its 52-week highs, with geopolitical events also adding a layer of uncertainty.

Now trading at just 26 times free cash flow (FCF) following this drop, ASML's valuation remains well below its 10-year average of 38. With management guiding for 15% sales growth at the midpoint in 2025 -- and for revenue to grow between 50% and 100% by 2030 -- the company could quickly outgrow this valuation if AI takes off as expected.

Due to the cyclicality of the chip industry and the lumpy nature of the equipment sales that ASML makes, management prefers to make variable quarterly dividend payments that fluctuate with profitability. Despite the varying sizes of these payments, ASML has increased its dividend by 153% over the past decade, while making larger-than-normal payments in 2019 and 2022.

ASML Dividend data by YCharts

Even with this increase, the company currently only uses 27% of its cash flows to fund its 1.1% dividend yield. This leaves plenty of additional funding available for future increases, making ASML a top dividend stock to consider for a lifetime of passive income, especially with the generative AI megatrend propelling its operations forward.

Motorola's public safety ecosystem is recession-resilient

Whereas ASML is an interesting cyclical investment with its stock near 52-week lows, Motorola Solutions (NYSE: MSI) is a steady-Eddie investment with a history of beating the market. Motorola is a leader in the public safety industry and operates with three primary product categories:

• Land Mobile Radio (LMR) Communications (75% of sales): This "always on" communication equipment is essential infrastructure for public safety departments and enterprises. These products are mission-critical and often used during natural disasters or emergencies, when local cell towers may be overwhelmed or destroyed. Motorola supports 13,000 LMR networks globally and is the far-and-away leader in this niche.
• Video Security and Access Control (18% of sales): Motorola has over 5 million fixed cameras installed globally, and 90% of these cameras feature embedded AI, helping humans detect adverse events more quickly. Motorola is also the "PepsiCo" to Axon Enterprise's "Coca-Cola" in the body camera industry.
• Command Center (7% of sales): Motorola's software solutions are used by 3,600 of the 6,000 911 dispatch centers in the United States.

While the mission-critical nature of Motorola's products is enough to catch my attention in a potential bear market, the company's prowess as a serial acquirer adds another layer of excitement to a potential investment. Acquiring 29 companies over the last decade, Motorola consistently reinforces its leadership position in public safety.

Currently sporting a cash return on invested capital of 30%, the company has an excellent track record of generating outsize cash flows from the debt and equity it uses to fund its acquisitions. Best yet, if management can't find a buyout target, it spends its ample FCF buying back shares. Since 2011, Motorola's share count has decreased by 51%, significantly boosting shareholder value.

Despite spending heavily on acquisitions and stock buybacks, Motorola hasn't neglected its dividend. The company has grown its payouts for 12 straight years and increased its dividend by 12% annually over the last five years.

Currently yielding 1%, Motorola's dividend uses only 31% of the company's FCF and has plenty of room to continue increasing for decades to come.

Though Motorola trades at a slight premium to the market with a price-to-FCF (P/FCF) ratio of 34, its essential products (50% of which are recurring sales) and shareholder-friendly cash returns make it a safe haven in today's turbulent market.

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Josh Kohn-Lindquist has positions in ASML, Axon Enterprise, and Coca-Cola. The Motley Fool has positions in and recommends ASML and Axon Enterprise. The Motley Fool has a disclosure policy.