Portugal was already established as a kingdom well before Spain existed. There were many wars crucial to Portugal independence that happened against the catholic kingdoms that would be of Spain and even muslim powers in Iberia but for the answer I will focus on the Kingdom of Spain from around the 1500 onwards. On the previous topic I will only say that kings of Leon and Castile had claims and tried to annex Portugal multiple times but never managed to win a decisive victories and even suffered some serious defeats like the Battle of Sao Mamede and the Battle of Aljubarrota.

The spanish crown focus was to bring the end the reconquista and by the time it was over Portugal was about to hit it's peak. It had already taken the first steps to create a overseas colonial empire, was getting rich with trade with the east, had powerful navy and was also allied with England. It was not just some neighbour state waiting to be conquered but a considerable power with it's own cultural identity. By then it was already known there was land overseas that could be exploited at less effort than expensive wars in Europe. The Treaty of Tordesilas between Portugal and Spain divided the world to avoid conflicts as both powers expanded their colonial empire so neither side had desire of fighting for land.

In a strange twist of events the young portuguese king Sebastião I disapeared in Morroco dunning the Battle of Alcacer Quibir. With no other legal heir the crown went to the Spanish king, Filipe II of Spain (Filipe I of Portugal). Portugal was ruled by the same kings as those that ruled Spain from 1580 for the next 60 years. So in a way Portugal was conquered by Spain, not just by military means or permanently.

Eventually Portugal would have a independence war and win and even keep most of their colonial empire but for both Portugal and Spain were in for a slow decline. The United Kingdom, Portugal ally, was getting more powerful. This old Luso-British aliance was solid and kept Portugal shielded from direct agression in exchange for aligning their agenda with the British. For this, French and Spanish forces invaded Portugal in the context of the Napoleonic Wars but United Kingdom honored the alliance and pretty much rescued their ally. It was more of a French invasion than Spanish but the point is Portugal had powerful allies that did not allow it to be invaded and occupied. The other point is that the portuguese royal family fled to Brazil, at that time part of Portugal, so even mainland Portugal was occupied at this time the rest of the empire would still exist for Spain to deal with. It was not as simple as invading the Portugal because it was close Spain.

From the 20th century onwards is less than "hundreds of years ago" but briefly Portugal and Spain tried to hold to their colonial empire as long as they could as they went through periods of policial instablity, too busy to fight each other. Even when both powers were were led by autoritatian regimes it never led to armed conflict, possibly because Spain was devastated by the civil war and Portugal regime while autoritarian was isolationist and focused on the ultramarine empire.

Hopefully some of this will help, or at least give some tips for research and to help to make a more precise question.

Hey there,

Just to let you know, your question is fine, and we're letting it stand. However, you should be aware that questions framed as 'Why didn't X do Y' relatively often don't get an answer that meets our standards (in our experience as moderators). There are a few reasons for this. Firstly, it often can be difficult to prove the counterfactual: historians know much more about what happened than what might have happened. Secondly, 'why didn't X do Y' questions are sometimes phrased in an ahistorical way. It's worth remembering that people in the past couldn't see into the future, and they generally didn't have all the information we now have about their situations; things that look obvious now didn't necessarily look that way at the time.

If you end up not getting a response after a day or two, consider asking a new question focusing instead on why what happened did happen (rather than why what didn't happen didn't happen) - this kind of question is more likely to get a response in our experience. Hope this helps!