2 Dividend Stocks You Can Buy and Hold Forever

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If you'd like to park your money in stocks and monitor them as little as possible, you need to choose them extra carefully. There's no guarantee that even today's most successful companies won't be struggling or even out of business in the decades to come.

Two dividend-paying companies that should continue to thrive well into the next century, enabling them to continue to hand investors market-beating long-term returns, are American Water Works and Johnson & Johnson.

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The heavyweight of the world's most essential industry 

American Water provides water and wastewater services to about 15 million people in 47 U.S. states and Ontario. It also has market-based businesses, which include providing services to military bases and supplying water to natural gas companies working in the Appalachian Basin.

American Water is a quintessential buy-and-hold stock. It provides a product (fresh water) and a service (wastewater treatment) that will never become outdated or less popular. You also don't need to be concerned that the distribution method for providing fresh water will change. There's no other conceivable efficient method of distributing such a physically heavy product to homes and businesses than through the extensive piping infrastructure that's in place throughout much of the United States.

Why American Water over its peers? The company has a big advantage when it comes to acquisitions -- and there are many potential acquisition candidates. The U.S. water utility is very fragmented, and many municipalities are finding it too expensive to maintain their systems. American Water's industry-leading size provides it with more resources than its peers to scoop up some of these systems. And its considerably wider geographic footprint provides it with a larger pool of potential acquisition candidates, as it's more efficient for water utilities to expand near where they already operate.

While the stock's dividend yield is a modest 2.05%, the company has raised it every year since it went public, with double-digit increases over the past several years. Analysts project that American Water will grow earnings per share (EPS) at an average annual rate of 7.03% over the next five years, exceeding its average EPS growth rate of 5.91% over the past five years.

A global diversified healthcare powerhouse

Johnson & Johnson is a household name thanks to its broad array of consumer products -- such as Band-Aid adhesives and Advil over-the-counter painkillers -- that have been staples in most households in much of the developed world for generations. It might fly under some folks' radars that the company's empire also includes the fifth largest pharmaceuticals business and the most complete medical-devices business in the world.

Investors don't need to be concerned that the products J&J provides will go out of style. Its pharmaceutical and medical-device businesses provide products and services that many people literally couldn't live without, while many of its consumer products help make our lives healthier or more comfortable. The company's moat isn't as mighty as that of American Water, whose core regulated business is a legal monopoly, but it's still very strong. J&J's powerful brand strength helps it successfully compete in its consumer-products business, while regulatory hurdles and the company's extensive partnership network help limit serious competition for its other two businesses.

The pharmaceuticals business is largely powering J&J's growth, a phenomenon that looks poised to continue. Last year, the company announced a plan to bring to market 10 novel drugs by 2019 that could each become blockbusters, or drugs that generate at least $1 billion in annual sales. Analysts project that Johnson & Johnson will grow EPS at an average annual rate of 6.32% over the next five years.

Couple its potential to continue to outperform the market over the long term with its healthy and well-supported 2.57% dividend yield, and J&J stock could be just what the (financial) doctor ordered.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.