The 2 Best Dividend Stocks to Buy Now and Hold Forever

S&P 500 is down 3.1% YTD through March 13 amid U.S.-Israel/Iran conflict; the piece recommends defensive dividend Kings as capitally resilient holdings. Colgate-Palmolive raised its quarterly payout $0.01 to $0.53 (63rd consecutive annual increase), yields ~2.4%, generated $3.6B FCF and paid $1.8B in dividends. American States Water has increased dividends 71 years, raised its quarterly payout to $0.504 (+8.3% last July), yields ~2.7% with a ~58% payout ratio—presenting reliable, income-focused exposure for long-term portfolios.

Analysis

The current geopolitical risk premium is driving a rotation toward cash-yielding, low-volatility equities, which mechanically benefits regulated utilities and staple-packaged goods through lower implied vol and tighter financing windows for higher-beta names. That said, this is not a pure flight-to-safety trade — rising real rates and persistent input-cost shocks create cross-currents: utility valuations trade like long-duration assets (sensitive to 10y moves) while consumer staples suffer margin compression if commodity or FX pressures force either price increases or margin surrender to defend volumes.

Second-order winners include utility vendors and metering/SCADA suppliers that benefit from accelerated infrastructure spend and rate-case backed capex; losers include commodity-exposed packaging suppliers and private-label challengers that accelerate share gains if staples push pricing too hard. Over a 3–12 month horizon, the biggest reverser would be a material repricing of interest rates (+75–100bp) or a sharp, policy-led easing in risk premia that sends investors back into cyclicals, compressing the defensive premium that currently supports these dividend stories.

From a risk-management perspective, climate and regulatory tail risks are underappreciated: a single severe California wildfire/drought episode can force capex and cost recoveries to re-open rate cases or add liabilities, reversing outperformance in weeks. On a multi-year basis, secular shifts in channel mix (DTC, subscription oral-care) represent latent upside for brands that invest, but capex allocation and buyback discipline will determine whether dividends remain sustainably covered vs earnings shocks.

Key Decisions for Investors

• Long AWR equity with a protective put: Buy AWR on a <=5% pullback or on any spike in S&P volatility (target entry within next 1–4 weeks). Hedge with a 6–9 month 5% OTM put to cap downside. R/R: expect total return ~8–12% if rates stabilize and regulatory momentum continues; downside limited to put cost plus ~10% equity move.
• Income overlay on CL: Acquire CL stock and sell 1–3 month covered calls ~4–6% OTM, rolling monthly for 3–6 months to harvest elevated option premia during geopolitical risk. R/R: boosts cash yield by mid-single-digit annualized while retaining upside to a modest re-rating; main risk is being called away on short-term rallies and forgoing larger capital gains.
• Dollar-neutral pair (defensive arb): Long AWR / Short DUK sized to equal dollar exposure for a 6–12 month horizon to isolate regulatory/stability vs merchant/thermal exposure. R/R: trade targets 4–8% outperformance if volatility-driven flows persist or if power-merchant margins deteriorate; risk is a sector-wide move (rates shock) that hurts both legs.
• Long-duration CL upside with defined risk: Buy a 12–18 month call debit spread on CL (near-term LEAP call bought, higher strike sold) to capture brand re-pricing from e‑commerce/portfolio optimization while capping premium paid. R/R: asymmetric upside if CL executes DTC/EM price mix improvement; max loss = premium paid.