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The S&P 500 is at an all-time high. However, not all stocks in the widely followed index are setting records. Quite a few S&P 500 stocks are nowhere close to their peaks.

That doesn't mean some of them aren't great picks, though. Here are three magnificent S&P 500 dividend stocks down 35% or more to buy and hold forever.

1. Occidental Petroleum

Shares of oil and gas producer Occidental Petroleum (NYSE: OXY) are roughly 47% below the high set in late 2022. The stock has ranked among the S&P 500's biggest losers this year.

But is Occidental a stock to buy and hold forever? Warren Buffett thinks so. He wrote to Berkshire Hathaway shareholders earlier this year that Oxy was one of a handful of select stocks that he planned to own "indefinitely."

Buffett knows how important U.S. oil production is to the country's security and economic strength. He also knows that Occidental Petroleum has "vast oil and gas holdings" in the U.S. and is a leader in carbon capture and storage (CCUS) technology.

Granted, Occidental Petroleum doesn't pay a jaw-dropping dividend. Its forward dividend yield is only 1.85%. However, this oil stock should deliver solid total returns over the long term, especially if its CCUS initiatives achieve their potential.

2. Pfizer

Pfizer (NYSE: PFE) reached its peak share price in late 2021 thanks to skyrocketing sales of its COVID-19 products. The big pharma stock has plunged almost 60% since then as those sales tanked. Pfizer also faces uncertainty with several top-selling products losing patent exclusivity over the next five years.

The steep decline has resulted in two positive side effects. First, Pfizer's forward dividend yield is now an ultra-high 6.5%. Second, the stock is cheap. Shares trade at a forward price-to-earnings ratio of only 8.6. By comparison, the average forward earnings multiple of the S&P 500 healthcare sector is 18.3.

Also, Pfizer's prospects aren't as dire as they might seem. The company has used its COVID-19 cash stockpile to make multiple acquisitions. These deals added drugs to Pfizer's lineup and candidates to its pipeline that should fuel growth over the next decade and beyond.

More importantly, Pfizer has the resources and expertise to continue investing shrewdly in internal research and development and acquisitions in the future. This drugmaker has survived and thrived since 1949. I predict Pfizer will remain a pharmaceutical winner for a long time to come.

3. United Parcel Service

United Parcel Service (NYSE: UPS) stock is around 46% below its high set in early 2022. Like Pfizer, the package delivery company benefited from the COVID-19 pandemic. Instead of selling vaccines and antiviral therapies, though, UPS delivered record numbers of packages as many people in the U.S. and other countries were stuck at home.

Shipment volumes have fallen in recent years as the effects of the pandemic have waned. UPS also faced the threat of a strike by the Teamsters Union in 2023. The strike was avoided when the company signed a five-year deal with increased expenses that were heavily front-loaded, weighing on UPS' earnings.

However, UPS could be poised to mount a solid rebound. The company has seen two consecutive quarters of shipment volume growth in the U.S. The brunt of the higher costs associated with the Teamsters contract has already been felt. UPS is also focusing on more profitable areas including healthcare logistics and meeting small- to medium-sized businesses' shipping needs.

Income investors should find UPS especially appealing. The company's forward dividend yield stands at 5.2%. UPS has increased its dividend for 15 consecutive years. I expect it will keep that streak going with another dividend hike in the near future.

Should you invest $1,000 in Occidental Petroleum right now?

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Keith Speights has positions in Berkshire Hathaway, Pfizer, and United Parcel Service. The Motley Fool has positions in and recommends Berkshire Hathaway and Pfizer. The Motley Fool recommends Occidental Petroleum and United Parcel Service. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.