I’ll start with global drinks giant Diageo (DEO), one of my very favorite long-term holdings.
Diageo meets all of our criteria. DEO is the leading premium spirits company in the world, its products are as close to technology proof as you’re going to get, its liquor brands span across all tastes and preferences, its business is robust enough to survive economic shocks, and Diageo is a Dividend Achiever par excellence.
I once, tongue in cheek, argued that Diageo was the ultimate 12- to 18-year play in reference to its premium scotch brands.
You see, anyone can start an exclusive new vodka brand given a sufficient pool of capital. Consider the example of Grey Goose. American billionaire Sidney Frank created the brand in 1997 and sold it to Bacardi just seven years later for a quick $2 billion.
However, had he opted instead to create a new scotch brand, he would not have lived long enough to enjoy its success. When the late Mr. Frank passed away in 2006, his first batch of scotch still would have needed another five years or more of aging to be taken seriously.
Diageo’s dominance of scotch via Johnnie Walker and its other brands is a competitive advantage that won’t be disappearing any time soon. DEO also gives you access to the consumers of tomorrow; the company currently gets 42% of its sales from emerging markets, and it will soon get more than half.
Diageo stock currently pays a dividend of 2.7%. I recommend you buy Diageo, instruct your broker to reinvest the dividends, and hold on to it — forever.