These are 5 rock-solid stocks you can buy and hold for life. The art of long-term investing has been undermined by the capacity for constant, real-time, easy access to the markets. Because people can so easily and inexpensively buy and sell stocks, they assume they should.
The prevalence of charting systems and market-based websites flush with constantly updated information has added to this sense by highlighting the roller coaster that is part and parcel of fluctuating prices in publicly traded securities. That creates the overwhelming sense that one must always be ready to sell before the next big downswing – a concept that has no doubt been further exacerbated by the massive bear markets we saw just eight years apart a little more than a decade ago.
However, according to the most successful investors of all time, the big returns are found by building exposure to the best companies in the world and holding them for the very long term. The companies that fit this description for the 21st century are very different from those that worked last century. But the principles of strong balance sheets, innovative corporate cultures, and a consistent capacity to establish market-leading positions in multiple high-growth industries will continue to win over the long run.
TOP 5 Stocks To Buy and Hold
Here are the five companies we see as best equipped to deliver those qualities over the coming decades to the dramatic benefit of their committed stakeholders.
Amazon.com, Inc. (NASDAQ:AMZN)
(NASDAQ:AMZN) is the first name on this list because the company is the most extraordinarily well-positioned name for the 21st century, already being established as best-of-breed in eCommerce, streaming entertainment, cloud services, and artificial intelligence.
If there is one company you could imagine becoming the only company in existence if the anti-trust laws were revoked, Amazon is clearly that name. It may not be great for the ideals of competitive capitalism, but it sure is great for its investors. Accumulating on any form of correction over time, dollar-cost-averaging into any bear markets over coming years, gaining shares by the bits and pieces and tucking them into the mattress – this is not going lose ground or disappear in your grandchildren’s lifetime.
The stock has been a perennial outperformer for years, and there’s no sign of that changing anytime soon. The company surpassed the trillion-dollar market cap level in Q3 2018.
The company doesn’t pay a dividend, but we think it’s just a matter of time. The company is taking in $20 – $35 billion in free cash flow each year, though everything is still going into growth across a number of industries. But the day is not far off that the excess cash will no longer be as useful for diversification and market penetration, and will start flowing directly into the pockets of shareholders.
Alphabet Inc (NASDAQ:GOOG)
(NASDAQ:GOOG) is the ultimate swiss-army-knife stock play for the future. The company is best understood as a world-class stable of the smartest and most talented computer scientists working like a machine for solving any sort of problem – old and new – with creative applications of software technology. The company’s campus in Mountain View is the most desired place of employment in Silicon Valley, sucking brainpower eagerly from around the world. The best of the best end up there, and get paid top dollar.
As a result, the stock has been one of the most consistent winners on the Street since it first started trading in August of 2004. And we wouldn’t expect that to change. The company already dominates search, advertising, streaming media, mobile networking, and navigation. We would expect it to come to dominate autonomous vehicle software and the future of civil engineering in due time.
Management is sitting on over $100 billion in cash despite constant investment in scalable growth. Like Amazon, shareholders probably won’t have to wait much longer before the dividend is put on the table.
Walmart Inc (NYSE:WMT)
(NYSE:WMT) has reshaped itself into the most successful diversified retailer on the planet, and there’s no one even close to being on the radar for taking that crown away. The company has developed into a leading eCommerce solution aside from being by far the biggest physical chain store retailer.
Because there are some things you can’t solve with eCommerce, and plenty of room for impulse shopping in a value pricing environment, the physical store concept will never go away entirely. But because most new retail start-ups and investors see the future in terms of avoiding brick and mortar, the physical retail store space is increasingly set to become a winner-take-all game, with Walmart positioned definitively at the top of the food chain.
Walmart is also a great yield play. As of 2020, it pays out a dividend of $0.54 per share on a quarterly basis. Since first declared, that dividend has been raised every single year without fail since starting at $0.05 per share annually in 1974, a period that includes a half dozen recessions and bear markets.
Microsoft Corporation (NASDAQ:MSFT)
(NASDAQ:MSFT) has proven itself to be a top executer in multiple industries, and is now the clear front-runner in the cloud computing space.
The company’s deft pivot from software product producer to cloud services provider over the past decade is bound to go down in history as one of the most successful ever navigated. And its dominant position in cloud services is likely to be defended successfully for decades to come given that it has constructed an ecosystem that reflexively supports itself and buys up anything that pops onto the radar as potentially competitive.
As with many of the mega-cap technology plays, the only real risk at this point is a dramatic change in anti-trust laws preventing them from maintaining market positioning by law. And that’s extremely unlikely given the relationship between Washington DC and money, along with the fact that most of these companies are actually functioning to bring prices of goods and services down as they consolidate commercial breadth and dominance.
Microsoft is one of the few top technology growth plays that pays a dividend. In fact, the quarterly dividend (which is at $0.51 per share in 2020) has been going out to shareholders since 2004. MSFT firmly stands on the TOP 5 Stocks to Buy and Hold for life.
Johnson & Johnson (NYSE:JNJ)
(NYSE:JNJ) continues the theme of established dominance. The company has the most successful and well-developed farm-league for new drug research on the planet (through its Janssen property) and dominates the consumer staples product landscape with a diverse stable of top-tier brands with non-cyclical demand curves.
It combines the stability and diversification of a Proctor and Gamble with the high-margin grand slam potential of a top biotechnology pipeline. And, in both cases, the ups and downs of the broad economy don’t impact the cash flowing in the door.
Johnson & Johnson is also a huge winner on the dividend front, paying out $0.90 per share on a quarterly basis as of 2020. While there are occasional legal issues that have arisen, the company always seems to emerge even stronger given its global reach and non-cyclical strategy. And it certainly doesn’t hurt that investors know they are sitting on over $17 billion in cash and cash equivalent securities in the coffers.
These are our TOP 5 Stocks to Buy and Hold for life. We will update the list if any major developments take place.