3 Dividend Stocks to Buy Now for 20 Years of Income Growth

Dividends can be an important source of income for investors. Consider that Warren Buffett earns more than $4 billion a year in dividend payments from his vast stock holdings, including more than $500 million from his position in Coca-Cola (NYSE:KO) alone, and you get an idea of the ways in which dividend stocks can add up and help investors build wealth.

And not all dividend stocks are the same. Some companies hardly pay any dividend, while others are extremely generous in an effort to attract and retain shareholders. While the average dividend yield among U.S. publicly traded companies is less than 2%, there are some companies that pay double or even triple that amount. The key is to know where to look to find lucrative dividend payments.

Here are three dividend stocks to buy now for 20 years of income growth.

AbbVie (ABBV)

AbbVie (NYSE:ABBV) is a leading pharmaceutical company based in Chicago that is perhaps best known for its blockbuster medication Humira that is primarily used to treat arthritis and is the world’s bestselling prescription drug with annual sales in 2021 of $20.7 billion.

ABBV stock has been a top performer over the past five years, gaining 114% to trade at $149.42 per share. Even this year, the stock is up 10% compared to a 14% decline in the S&P 500 index. The share price gains alone would be reason to buy AbbVie stock. But, as an added bonus, the company pays a stellar quarterly dividend to shareholders.

AbbVie boats a 3.8% dividend yield, which is good for a quarterly payout of $1.41 a share. That’s a strong payout given that the average dividend yield among companies listed in the S&P 500 index is just 1.37%. Plus, AbbVie is a “Dividend King,” having raised its quarterly payout for 50 consecutive years, including when the company was part of medical-device firm Abbott Laboratories (NYSE:ABT). The combination of strong sales, stock gains, and dividend payments makes ABBV stock a definite buy.

Kinder Morgan (KMI)

Houston, Texas-based Kinder Morgan (NYSE:KMI) builds and operates oil and natural gas pipelines. As might be expected, business is booming for the company this year with prices for both oil and natural gas at multiyear highs.

Year to date, KMI stock is up 23% but remains affordable at just $19.50 a share. While this year’s gains are impressive given the downturn in the broader market, what is truly eye catching about this company is its dividend payment, which is among the highest of any publicly traded company.

Currently, Kinder Morgan offers shareholders a dividend yield of 5.5%, which equals a quarterly payout of 27.75 cents a share. Even among energy stocks that are known for having above average dividends, Kinder Morgan’s payment stands out. The company expects to distribute $2.5 billion in dividends this year, which is equal to about 56% of its 2021 free cash flow.

Another reason to like KMI stock is the company’s positive earnings. In its most recent print, Kinder Morgan reported earnings per share of 32 cents, beating analyst expectations for 29 cents.

International Business Machines (IBM)

You wouldn’t buy IBM (NYSE:IBM) stock for its performance. At $140.30, shares of Big Blue are 5% lower today than they were five years ago. A decade ago, the stock was trading near $200. While the shares have underperformed for a long time, the company has tried to compensate for the lackluster results, and hold investor interest, through a robust dividend that currently yields 4.7%, which is good for a quarterly disbursement of $1.65 a share.

Investors looking for a steady stream of passive income might want to consider taking a position in IBM stock. The Armonk, New York-based company recently raised its dividend by 13%, marking 26 consecutive years that it has hiked its quarterly payout.

And while IBM stock has lagged the market, there is hope on the horizon after the company spun off its legacy information technology consulting business and turned its focus instead to more profitable enterprises such as cloud computing and artificial intelligence.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.