15 Best Stocks to Buy and Hold Forever
Stocks to Buy and Hold Forever: You can find lots of stocks that are good for a trade.
Momentum stocks that are in vogue or soaring biotechs are classic examples. But our old friend Warren Buffett advocates for picking just a handful of companies and sticking with them.
Buy-and-hold investing isn’t just about sitting around and collecting dividends.
That’s not to cast any aspersions on dividends. Far from it. Regular and rising payouts are often the key to beating the market over long periods of time. Just have a look at the best stocks in Standard & Poor’s 500-stock index over the past half-century.
But when we’re looking at shorter time frames, such as, say, a single decade, strong and sustainable earnings growth is a critical factor too.
Companies with key advantages in growing industries – or that have a long history of adapting to changing times – have a better chance of outperformance in the decade ahead.
It also doesn’t hurt to find yourself in rapidly evolving sectors that continually spawn new ways to drive revenue growth.
Hundreds of thousands of people search for terms like “stocks to buy today” or “best stocks to buy” or “top stocks to holf forever” every single month.
The appeal is understandable, but most of the articles that pop up are ones quickly written by freelancers that often don’t even invest in the stocks they pitch.
They’re just writing for one-time clicks and pageviews rather than doing serious research to provide value and establish long-term relationships with their readers.
By the age of 30, you should already have nearly a decade’s worth of retirement savings under your belt. If you don’t, you’re not alone.
A recent GoBankingRates survey showed that nearly half of the millennials questioned had no retirement savings at all.
15 Best Stocks To Buy and Hold
Below is the list Best Long Term Stocks to Buy:
Disney is a well-diversified media and entertainment conglomerate with a strong portfolio that includes radio stations, movie studios, TV channels, theme parks, and now online streaming.
The company has continually expanded its offerings, growing via acquisitions and by entering new markets.
Disney has increased sales from $55.1 billion in fiscal 2017 to $69.6 billion in 2019. According to Wall Street estimates, sales are expected to touch $92.1 billion in 2022, indicating a compound annual growth rate of 9.8%.
Due to its robust top-line growth, Disney stock is trading at an expensive multiple. While the stock’s market-cap-to-sales ratio stands at a reasonable 3.3, its forward price-to-earnings multiple of 23.4 is high considering an estimated earnings decline in fiscal 2020.
Disney stock has a forward dividend yield of 1.22%, and with a payout ratio of 28%, it has room to increase dividend payments. In the past 12 months, the stock has returned 30% compared with S&P 500 returns of 26%.
Disney is a solid company with a great deal of cash behind it. That means that even in the worst-case scenario, the firm has the money to spend on building out a streaming service from scratch and weather any storms that loom over the media space in the future.
AT&T has enjoyed growth in its wireless service revenue every quarter for the past year. Its first-quarter wireless service revenue of $14 billion was a 2.5% year-over-year increase, and represents a third of the company’s $42.8 billion in total revenue.
Another strength is AT&T’s expanding 5G wireless network. The company anticipates 5G coverage nationwide by the summer.
Customers who want to access the 5G network will require device upgrades (bringing new revenue to the company) since many of today’s devices don’t support 5G.
It also ended the first quarter with approximately $10 billion in cash and free cash flow of $3.9 billion. AT&T stated it expects to continue meeting its debt obligations despite the pandemic’s impact on revenue.
Moreover, AT&T’s WarnerMedia segment introduces a new streaming service for its HBO television network, called HBO Max, on May 27. HBO brought in revenue of $1.5 billion in the first quarter.
Once the broader economy recovers, WarnerMedia can recoup its lost advertising and theatrical revenue. In 2019, WarnerMedia accounted for 18% of the company’s operating revenue, so its recovery will provide a significant lift to AT&T’s income
If your intended timeframe really is “forever” though, a tough couple of years is nothing … particularly considering you’re collecting a healthy dividend yield on your position’s current value.
More than that though, this is a telco name with a lot of clout, and a little more than $50 billion in the bank.
Brookfield Asset Management is one of the world’s largest investors and operators of real assets — office buildings, utilities, gas pipelines, renewable power, retail centers, and other business services.
The company has $365 billion of assets under management, which have doubled over the last five years and may double again over the next five.
The company’s modus operandi is to attract money from institutional investors and use that money to buy real assets, like the ones mentioned above, at value prices.
Management seeks to generate a return between 12% and 15% over time on its investments, and over the last 20 years, it has more than delivered on that pledge with an annualized return of 17% as of Feb. 13.
An investment of $1,000 in the stock made 15 years ago would be worth $8,325 today, including dividends.
One reason Brookfield Asset Management is such a strong forever stock is that management targets acquisitions that are long-life and high-quality, meaning the assets generate steady cash flows and provide an essential service to society that will likely keep these businesses around for decades.
They hold the controlling stake in four publicly traded partnerships:
- Brookfield Property Partners (BPY)
- Brookfield Renewable Partners (BEP)
- Brookfield Infrastructure Partners (BIP)
- Brookfield Business Partners (BBU)
As a private equity firm, they make money in three main ways.
First, they invest their own capital into a variety of real assets. Second, they collect money from institutional investors, invest that money on behalf of them into a variety of real assets, and collect performance fees from that capital. Third, they founded and hold large stakes in the above-mentioned publicly traded partnerships, from which they collect cash distributions, management fees, and performance fees called Incentive Distribution Rights (IDRs).
On August 2, 2018, Apple became the first U.S. company to have a market capitalization of $1 trillion. As of December 31, 2019, Apple was the largest holding in the Berkshire Hathaway portfolio, with a value of almost $72 billion.
Apple held a 49% share of the U.S. smartphone market in the fourth quarter of 2019 and also led in the tablet industry, with a market share of 36.5%.And on February 13, 2020, Apple continued its payment of a 77 cent quarterly dividend.
Arguably the biggest point of excitement for Apple shareholders nowadays can be clearly seen in the company’s latest earnings report. The Services segment posted record quarterly revenue of $13.34 billion, up 16% from a year ago.
Services, which includes many of Apple’s hit software offerings like iTunes and the App Store, is a higher-margin part of the business, meaning more profits drop down from the top- to the bottom-line.
The newest member of the Services segment is Apple TV Plus – the company’s streaming service – which enjoyed a successful quarter thanks to the large number of people confined to their homes and turning on their television to distract themselves.
Apple is a great company. It’s one of the world’s biggest cash cows, and even in the midst of a global pandemic, AAPL continues to churn out profits for its investors. This company will be around for a long time, and this fact alone gives Apple shares value.
Another player in the streaming space worth considering one of the best long-term stocks to buy is Netflix.
If you missed the boat on NFLX back in 2015 when shares were trading below $50, it might be a hard pill to swallow, but NFLX is still an excellent long-term bet despite the fact that its share price is over $300 today.
NFLX has the growth potential to do so as well. The company has proven that it has a good grasp on the population’s ever-changing tastes, and although it has been expensive, Netflix’s original content has been a huge draw for subscribers. While the U.S. market has been saturated, NFLX has only just begun its international expansion, leaving a long growth runway for the next few years.
Over the past two years, Netflix has been preparing for a major push overseas, and those efforts are due to pay off over the next decade. GHB Insights’ head of technology research Daniel Ives said he sees Netflix international expansion opening a potential market of 700 million subscribers in the next 2 years.
So, although the streaming space is certainly getting more crowded, NFLX appears to have created a winning formula that makes it one of the best long-term stocks to buy and hold on to.
Enbridge Incorporated (ENB)
One of Enbridge’s main strengths is that its pipeline and storage infrastructure forms a key link between the oil patch and vital U.S. energy markets. The company is responsible for transporting a quarter of all petroleum liquids in North America as well as a fifth of the continent’s natural gas.
A critical shortage of pipeline exit capacity means that demand for Enbridge’s infrastructure remains strong, regardless of reduced output from the oil sands because of Alberta’s production cuts.
For this reason, Enbridge’s earnings growth is virtually guaranteed, especially when it is considered that it has a $19 billion portfolio of projects under development, including the Line 3 Replacement Program.
The importance of the Line 3 Replacement is underscored by the government of Alberta’s commitment to wind down the mandatory production cuts once it enters services, which is expected to occur during the second half of 2020.
Enbridge has one of the highest credit ratings in the midstream industry, but took on a lot of debt when they acquired Spectra Energy a couple years ago.
Enbridge has since reduced its debt/EBITDA ratio from 7.0x down to about 4.5x in a short period of time by selling non-core assets, which puts them back near the lower range of oil/gas infrastructure companies.
With about a 6% current dividend yield, a dividend payout ratio below 65% of distributable cash flow, and solid dividend growth expected going forward, Enbridge offers a high likelihood of strong overall returns for the next decade.
There’s no denying Alphabet’s dominance in the tech industry.
The company has the most widely used mobile operating system in the world, its online suite of services is used by individuals and corporations alike, and the company is on a never-ending quest to tackle big problems it thinks it can fix.
For example, Alphabet’s self-driving vehicle company, Waymo, has already launched a commercial autonomous vehicle ridesharing service and is already forging partnerships that could lead to eventually licensing its technology to create safer vehicles. This bet on self-driving cars could eventually pay off, as the driverless car market is expected to be worth $7 trillion by 2050.
Alphabet now has arguably the strongest balance sheet of any company in the world, with over $120 billion in cash-equivalents and just a token $4 billion in debt. In addition, they are still growing earnings and EBITDA at 15%+ per year.
With over $120 billion in cash-equivalents and virtually no debt, Alphabet sets the standard for what constitutes a fortress balance sheet.
With their cash hoard and a modest issuance of debt, they could easily buy most of the companies in the world outside of the top 25 largest ones. Or, if they face an impact to their profitability, their cash hoard can fund their operations for quite a long time.
Appreciated or not, Alphabet is a profit and revenue growth machine that has earned its spot on a list of “forever” stocks to buy. It may not always beat estimates, but it does always increase its numbers.
Johnson & Johnson (JNJ)
The first dividend stock you can buy and never worry about selling is, perhaps, the safest name in the entire healthcare sector, Johnson & Johnson.
Less than two weeks ago, J&J’s board voted to increase the company’s dividend for the 58th consecutive year, pushing its yield up to 2.7%.
It should also be noted that J&J is riding a 36-year streak of adjusted operating earnings growth and is one of only two publicly traded companies with a higher credit rating than the U.S. federal government.
Johnson & Johnson’s three operating segments each bring something to the table that’s critical to its success. Consumer health products, for instance, is the slowest-growing of all three segments but offers the most consistent cash flow and pricing power.
Medical devices is a recent slow-grower but offers, perhaps, the most surefire long-run growth opportunity for an aging global population.
Finally, pharmaceuticals provide the bulk of J&J’s margins and growth, but unfortunately, brand-name drugs have a finite period of exclusivity. Together, these three segments make for a virtually unstoppable healthcare conglomerate.
Over a long period, dividends reinvested in J&J stock will enable you to accumulate a larger number of shares, which can be worth a substantial amount if those shares appreciate. And in the 10 years ended on April 2, 2020, the stock’s split-adjusted return (not including reinvested cash dividends) was 96.36%.
Procter & Gamble (PG)
Procter & Gamble Company (NYSE:PG) is one of the few solid dividend-paying stocks which you may want to hold forever and get a decent dividend check each quarter.
Procter & Gamble stock is among those “dividend aristocrats” and consumer defensive players which successfully rose through the market volatility created by some massive sell-offs, including one we saw in June, when investors exited equity markets following Britain’s vote to exit from the European Union.
But companies producing your everyday consumables, such as toothpaste, shaving products, and detergent, aren’t the ones which get media attention.
They don’t get financial press, especially when technology companies are making the big headlines and selling investors their next big ideas.
For income investors, the biggest concern should be when making a long-term investment decision is the company’s ability to generate free cash flows and its dividend payment history.
Procter & Gamble’s products are sold in 180 counties with over $65.0 billion in annual sales. The company has been in the business for 178 years and rewards investors in Procter & Gamble stock with 60 consecutive increases in dividend.
Increased competition is definitely something to keep in mind when considering PG, but the firm’s strong financial position means it has the leeway to refocus its strategy and continue thriving in difficult conditions.
3M shareholders aren’t strangers to prolonged periods of tepid performance. The stock made no net progress whatsoever from late 2003 to late 2012.
But it still was a worthwhile holding during that time. How? 3M’s quarterly dividend grew from 33 cents per share at the beginning of that timeframe to 59 cents by the end, and it was never suspended or cut. Better yet, 3M earned more than it dished out during that period; it could afford its payments.
3M is an income-driving machine, even when it’s not a growth name.
It offers everything from office supplies to healthcare products to the power transformers you see perched on top of power-line poles.
It’s a wild mix that seems to work for 3M though, giving the company something to sell regardless of the economic environment.
The clincher: 3M has managed to pay and increase its dividend every year going all the way back to 1977.
The next several years should be above-average ones, if the company’s forecasters are on target and its leaders are on their game.
3M expects per-share profit growth of between 8% and 11% for the next five years on organic local-currency sales growth of between 3% and 5%. That’s huge for an income-oriented company of this size and age.
This Chicago-based business concentrates on fluid management, industrial products, and manufacturing support systems. That’s not exactly the stuff of riveting dinner party banter.
However, Dover, like J&J, is a dividend powerhouse and has also increased its annual cash dividend every year since at least 1973.
In 20019, Dover paid dividends totaling $1.94, and on March 16, 2020, it paid a quarterly dividend of 49 cents.
Dover has increased its dividend for 62 years in a row and presently has a yield of 2.0%, which is average.Dover’s three-year forward CAGR of 11% is good and will give you growth with the increased earnings from a worldwide economy growing going forward.
Dover’s total return was in-line with the DOW average for my 53-month test at 47.90% which is not great, but the steady increase each year for 62 makes up for it.
Dover has a long tradition of making successful acquisitions in diverse end markets.
In 2019, the company acquired three businesses for a total consideration of $216.4 million. The company made these acquisitions to complement and expand upon the existing operations within the Fueling Solutions and Pumps & Process Solutions segments.
This January, Dover completed the acquisition of Systech International.
The buyout supports Dover’s marking and coding portfolio, and expands software and service revenues within Markem-Imaje business. The deal is expected to be accretive to the first-year adjusted EPS.
Since being scathed by the ecommerce takeover a few years ago, WMT stock has made an impressive recovery and although the firm is still facing some headwinds, it’s a solid stock to buy.
Judging by the company’s improving e-commerce sales, it looks like Walmart is on the right track to competing against the likes of Amazon.
Walmart is investing aggressively in technology, including the use of robots to manage inventory at stores. Additionally, there are significant upgrades underway in supply chain logistics to accommodate the wave of customers who are ordering online.
These investments are not cheap. Walmart is spending $1.2 billion to upgrade one facility in China for omnichannel capabilities. And it plans to upgrade 10 distribution centers in China over the next 10 to 20 years — doing the math suggests this is potentially a $10 billion to $20 billion commitment — which shows that it has its eye on the long game.
Most importantly, Walmart is continuing to win in grocery delivery, which has been a crucial driver of e-commerce growth for the Arkansas-based retailer. It is on pace to have more than 3,100 stores offering free grocery pickup and 1,600 offering same-day delivery by the end of the year.
The company is keeping its foot on the gas pedal with plans to expand grocery delivery with an unlimited and in-home service this year, which should keep its momentum going in this important area.
Walmart continues to focus on providing its customers with value-enhancing services, such as on-site health clinics.
During COVID-19, Walmart has hired 200,000 new employees to handle sales from increased demand. The most important thing about that is the demonstration of how customers view the company and who they have confidence in and choose to service their needs.
Amazon.com is the second-largest retailer in the world by revenue, behind only Walmart; its 2019 net sales totaled $280.5 billion.But like its rival Microsoft, Amazon is increasingly relying on its cloud computing business, called Amazon Web Services, to drive revenue and profit gains.
The stock’s average annual return from 2015 to 2019 was 47.23%. And it was the second company to reach a $1 trillion market capitalization, on Sept. 4, 2018.
On top of that, AMZN is spreading its wings in a wide variety of industries including grocery and logistics and there are even rumors that the firm is working to make its way into the healthcare space as well.
Growth will naturally take breaks as the company finds a new niche to mine.
The AMZN team is a proven innovator and they will put their extra margins to good use. Soon enough, we’ll learn about their next successful venture and it will kickstart growth once more. There is a good chance it will be the advertising segment as they nurture new markets there.
It’s hard to imagine AMZN’s market cap getting much larger, but 30-somethings would be remiss not to consider Amazon stock to juice up their gains over the next five or 10 years.
Berkshire Hathaway (BRK.A, BRK.B)
It would be impossible to talk about the best long-term stocks without including Berkshire Hathaway Inc.
Buffett is now 89 years old. His right-hand man at Berkshire, Charlie Munger, is 95. Berkshire may be around forever, but Buffett and Munger won’t be – at least, we assume not. (Buffett has certainly defied the odds before!)
Luckily for Berkshire investors, the company’s business model is strong.
Its core insurance businesses – including GEICO – churn out a reliable and large stream of cash. Management uses that cash to invest in other businesses, sometimes through buying shares of their stock and sometimes through buying the companies outright.
Berkshire’s holdings are incredibly diverse. Among its fully owned companies are Dairy Queen, Fruit of the Loom, and railroad BNSF. Its stock holdings include dozens of heavy hitters like Apple, American Express, and Kraft Heinz.
Berkshire stock is a great stabilizer that will round out your portfolio and mitigate against major market events making it one of the best long-term stocks 30-something crowd.
Brookfield Asset Management controls multiple MLPs, each with a different focus. While all of them are worth a look, I’m picking Brookfield Infrastructure for a forever portfolio thanks in part to the diversity of its holdings, but also because it’s uniquely “recession-proof.”
According to management, only about 5% of the partnership’s earnings come from recession-sensitive assets. The vast majority of Brookfield Infrastructure’s holdings – representing about 95% of its cash flow – are either governed by contracts or regulatory frameworks, making them incredibly stable.
In April 2019, Microsoft became the third company to achieve a market capitalization of more than $1 trillion, and co-founder Bill Gates is perennially among the world’s wealthiest people.
Under the direction of Chief Executive Officer Satya Nadella, who had been in charge of the company’s cloud infrastructure and services business, Microsoft has been becoming less reliant on its Office software suite and Windows operating system for revenue.
In the second quarter of fiscal year 2020, which ended on December 31, 2019, the company’s revenue from server products and cloud services rose 30%. Revenue from its Azure cloud services alone grew 62%.
Like Thermo Fisher, Microsoft is a versatile company, one that can roll with adversity. It doesn’t shy away from social responsibility, either.
It’s recently partnered with the Centers for Disease Control and Prevention (CDC) to create a chatbot that will help people self-assess themselves for COVID-19 and whether they need to go to a hospital.
There’s a fear that there will be a shortage of hospital beds due to the fast-spreading coronavirus pandemic, and any way to lessen the need for beds will help hospitals weather the storm.
While the world faces instability, Microsoft remains a strong brand, and it’s likely to stay that way for a long time. The tech company’s profit margin was more than 30% in fiscal 2019. And in each of the past 10 years, at least 13% of the company’s revenue has trickled down to the bottom line. Microsoft’s a top brand in the tech industry. It was a great buy decades ago, and it will continue being a strong investment for the foreseeable future.
It also pays investors a dividend that today yields 1.4% per year. The company hiked its payouts in September, marking the 10th straight year it’s done so.