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Want Decades of Passive Income? 2 Top Dividend Stocks to Buy in 2025 and Hold Forever.
TAT&T(T) The Motley Fool·2025-02-08 15:45

Core Viewpoint - The article highlights two strong dividend stocks, Waste Management and AT&T, as potential sources of passive income for investors. Group 1: Waste Management - Waste Management (WM) is a leading supplier of waste management services in North America, making it a reliable dividend stock due to the consistent demand for garbage collection [2][3]. - The company operates a vast network of landfills and transfer stations across the U.S. and Canada, facing limited competition due to homeowner opposition and strict regulations [3]. - Waste management is considered recession-resistant, as the need for trash collection persists during economic downturns, while population and economic growth are expected to drive disposal volumes and earnings higher in the coming decade [4]. - WM's growth strategy includes acquisitions, exemplified by its 7.2billionpurchaseofStericycle,whichisanticipatedtoenhancecashflowgenerationinthefuture[5].−WMhasa22−yearhistoryofincreasingdividends,withacurrentyieldof1.57.2 billion purchase of Stericycle, which is anticipated to enhance cash flow generation in the future [5]. - WM has a 22-year history of increasing dividends, with a current yield of 1.5% [6]. Group 2: AT&T - AT&T is a telecommunications giant favored by dividend investors, currently offering a substantial yield of 4.5% [7]. - The company benefits from providing bundled wireless and broadband internet services, which appeals to consumers seeking simplicity and cost savings [8]. - In the fourth quarter, AT&T gained 482,000 postpaid phone subscribers and 307,000 fiber customers, marking its 20th consecutive quarter of adding at least 200,000 broadband accounts [9]. - These customer gains are expected to drive free cash flow to over 18 billion by 2027, up from approximately 16billionin2025,withplansfor16 billion in 2025, with plans for 40 billion in dividends and share repurchases over the next three years [10]. - AT&T aims to reduce debt using its cash flow, targeting net debt-to-adjusted earnings goals by the first half of 2025, which should lower financing costs and enhance profits [11]. - The stock is currently valued at less than 11 times its projected free cash flow in 2025, presenting a favorable investment opportunity [12].