Does the market’s recent volatility have you down in the dumps? You’re not alone. It’s times like these that make you want to be a little less active and a little more passive with your investments, sidestepping all the stress of trying to stay one step ahead of stocks.
With that as the backdrop, here’s a closer look at the 10 best stocks to buy and hold forever.
That’s not to say none of these names will bob up and down with the market’s overall tide. It is to say, however, these names are companies you can be fairly assured will be around for a long, long time, growing their business — and their bottom lines — in perpetuity.
In no particular order, here are 10 of the best stocks to buy and hold forever.
10 Best Stocks to Buy and Hold Forever: AT&T (T)
Technologies can come and go. Services can become obsolete. But one thing that has never gone out of style since is the need for humans to communicate with one another. That’s why telecom name AT&T (T) is virtually assured a solid future for as long as it wants to remain on top.
Yes, there are other players out there looking to topple AT&T. Verizon (VZ) is one of them, but hardly the only one. So why is T stocks the best of the telecom stocks to buy? It’s the biggest, for one. That size also means it has garnered a sizable warchest. AT&T currently has $6.2 billion in the bank, and can access another $12.4 billion in short-term assets. That money can become new revenue-bearing assets with relative ease.
AT&T has also made it clear it’s willing to partner with previously-strange-bedfellows. Case in point? It’s now teamed up with DirecTV, and has already done a great job of cross-selling.
10 Best Stocks to Buy and Hold Forever: Alphabet (GOOGL, GOOG)
In the same sense that telecom is never going to go away, searching the internet is going to be around for a long, long time. And while Google may not be the dominant name in the eastern hemisphere, Alphabet (GOOGL, GOOG) is the undisputed king of search in the western world.
As of the end of Q3-2015, Google controlled 64% of the United States’ search market share, and its name has essentially become synonymous with the exploration of what’s available on the web.
Make no mistake, however. Alphabet knows there is a limit to how much revenue search can offer (even if that limit is still miles above), and is well into multiple efforts to become a life engine rather than a just search engine.
For instance, it continues to expand its own high-speed internet service, and is still cultivating its 2014 acquisition of Nest not just to stake a claim in the Internet of Things arena, but to define it.
10 Best Stocks to Buy and Hold Forever: PepsiCo (PEP)
In light of the nation’s, and the world’s, growing preference for healthier drink options than sugary soda, it would be easy to dismiss PepsiCo (PEP) as a relic that will never be relevant again. That’s what PepsiCo was, though, and not what PepsiCo is today.
PepsiCo is now the name behind products like Aquafina water, Tazo and Starbucks bottled or canned drinks, and Dole foods, just to name a few. It wouldn’t be wrong to look at the company as something of a sector-based mutual fund in and of itself.
But why is PEP stock truly worthy of a spot on a list of stocks to buy and hold forever? If nothing else, the dividend. PepsiCo has been freakishly reliable not just about paying its dividend for the past few decades, but raising it as well.
Buyers stepping in now will enjoy a 2.9% dividend yield on their investment.
10 Best Stocks to Buy and Hold Forever: MasterCard (MA)
Indeed, one could argue the advent of digital wallets like Apple Pay or Samsung Pay are funneling more business towards credit card companies simply because they increasingly make cash obsolete.
But between Visa and MasterCard, which is the better bet? Both are fine companies, but MA stock is arguably the stronger play. For whatever reason, MasterCard is accepted in significantly more places than Visa cards are.
10 Best Stocks to Buy and Hold Forever: The Walt Disney Company (DIS)
Yes, The Walt Disney Company (DIS) has a problem with ESPN — not enough people are watching it. It’s very un-Disney-like for the entertainment company to operate any venture without it being a smashing success. For that reason alone, DIS stock is understandably questionable as one of 10 stocks to buy and hold in perpetuity.
The counter-argument: While Disney may be slow and unsure with its fix for ESPN, the past and present doesn’t necessarily mean that’s the way the future will be. This is one of the premier entertainment outfits in the world. It can fix its sports programming network, even if that means shrinking it to something that makes more fiscal sense.
In the meantime, The Walt Disney Company has proven more than once it knows how to successfully operate resort hotels, manage theme parks, and make incredible movies. Case in point? Star Wars: Episode VII — The Force Awakens is, by many measures, the most successful movie ever (particularly when factoring in all the product licensing it inspired).
10 Best Stocks to Buy and Hold Forever: The Travelers Companies (TRV)
While the industry is often a little too closely linked to the success of the stock market, as long as people own stuff, they’ll wantto insure it. That’s why The Travelers Companies (TRV) — a property and casualty insurer — can look forward to a least some sort of demand forever more.
That being said, while the quality of the company’s business ebbs and flows like any other insurer, even a recent headwind hasn’t changed the rating agencies’ view of the company’s stability and future. For instance, insurance rating outfit A.M. Best recently noted of The Travelers Companies:
“A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of ‘a+’ of Travelers Insurance Company Limited (TICL) (United Kingdom). The outlook for both ratings is stable. TICL maintains strong risk-adjusted capitalisation with a sufficient cushion to absorb higher than expected losses. Shareholders’ funds are expected to fall by around 2% in 2015 from the GBP 504 million reported at year-end 2014.”
A.M Best went on to say:
“TICL’s underwriting record is weak as demonstrated by the 5-year average combined ratio of 115%. A combined ratio of 113% in 2014 was an improvement on a particularly weak 2013 level of 137%. Further improvement is projected over 2015 and 2016 as remedial underwriting and pricing actions take full effect, though the combined ratio is expected to remain over 100%.”
These comments suggest the insurer is past the thick of a headwind, and on the verge of better performance.
10 Best Stocks to Buy and Hold Forever: Johnson & Johnson (JNJ)
Ever heard of Rogaine, Neutrogena, and Aveeno? How about Band-Aid or Bengay? Do the names Listerine, Tylenol, and Visine ring a bell? Incredibly enough, they’re all products made by Johnson & Johnson (JNJ), and those are just some of the brand names of the company’s off-the-shelf consumer goods.
The company also has a small army of prescription drugs, and multiple medical devices. Not unlike PepsiCo, it wouldn’t be crazy to view JNJ stock as a healthcare mutual fund in and of itself.
Also like PepsiCo, JNJ stock pays a healthy dividend of 2.9%, and the company has paid — and raised — that dividend with stunning reliability each year for the past few decades.
10 Best Stocks to Buy and Hold Forever: Duke Energy (DUK)
Speaking of consistent (and consistently growing) dividends, no list of the best stocks to buy and hold would be complete without at least one utility name — people may cancel cable television when times get tight, but nobody cancels their electricity. That puts Duke Energy (DUK) in a sweet spot.
Duke Energy is the country’s biggest utility company, powering homes and business all through the eastern third of the United States (and several in Latin American markets, too). While it operates old-school plants that burn coal and natural gas, it’s also developing green energy solutions like solar and wind power plants.
It “works” because Duke is one of the few utility players with enough size and scale to start and operate such a diverse base of power sources. That fiscal muscle is likely going to keep Duke Energy on top for a long time.
10 Best Stocks to Buy and Hold Forever: 3M (MMM)
Johnson & Johnson and PepsiCo aren’t the only mini-mutual funds an investor can choose from. 3M (MMM) is similarly diversified in the industrial and supply space, producing everything from Post-it notes and medical coding software to road reflectors and picture-hanging hardware, just to name a few. 3M always has something to sell to somebody, regardless of the economic environment.
Where MMM stocks really starts to shine, however, is with its dividend.
While PepsiCo, Duke Energy, Johnson & Johnson and a couple of other names on this list of best stocks to buy for the long haul have an impressive payout track record, none have the track record of dividend growth that 3M can boast. The company has steadily ramped up its quarterly dividend from 23.5 cents per share in early 1996 to $1.11 per quarter as of the next payout, and the company has more than doubled its payout in just the past six years.
In other words, 3M has recently gotten very, very serious about sharing the wealth.
10 Best Stocks to Buy and Hold Forever: Wells Fargo (WFC)
Last but not least, no list of best stocks to buy and hold forever would be complete without a representative from the financial sector. Wells Fargo (WFC) is the best all around way to make that play.
It’s more of a subjective than objective premise, but Wells Fargo has emerged as one of the big banks least-scathed by the subprime crisis from 2008. More objectively, it’s far more diversified than any other banking entity … and does well in each of its lines of business.
That being said, Morningstar analyst Jim Sinegal may have underscored the strength of WFC stock best when he explained “We estimate that more than one-third of the bank’s deposits come from markets in which Wells Fargo is the pre-eminent player, and more than two-thirds are gathered in markets in which the company ranks among the top three.”
With dominance like that, WFC stock becomes something of a no-brainer buy.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.