Here’s a fun fact for you: Of the 12 stocks that made up the original 1896 Dow Jones Industrial Average, only one — General Electric Company (NYSE:GE) — is still in the index. And even General Electric was briefly given the boot in the early 1900.
Now, granted, the Dow is now 120 years old, and a lot can happen in that amount of time. But it’s worth noting that the S&P 500 — which is less than 60 years old — only has 86 or the original 500 companies still in the index. That means that 83% of the companies have either gone bankrupt, merged or simply become too small or irrelevant to be included.
Some companies stand the test of time … but most don’t. Today, I’m going to recommend five stocks to buy for the next 50 years. These are the kinds of stocks you can buy for a secure retirement, because you know that, barring a zombie apocalypse, they’re still going to be around.
You’ll notice the list is devoid of any technology companies. There’s a reason for that. I have no confidence that today’s tech leaders — Facebook Inc (NASDAQ:FB), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Apple Inc. (NASDAQ:AAPL) — will even be in business 50 years from now, let alone going strong enough to have in your portfolio. You want stocks that are distinctly boring … boring but profitable!
Stocks to Buy for the Next 50 Years: General Electric (GE)
I’ll start with leading American industrial conglomerate General Electric Company (NYSE:GE). I figure that if General Electric has stood the test of time — it was, after all, one of the original Dow components 120 years ago — it will likely be going strong 50 years from now.
Eight years ago, I wouldn’t have included GE in this list of retirement stocks to buy. We were in the middle of the worst financial crisis in 100 years, and the company already had to go to Warren Buffett hat in hand to beg for money. GE Capital had gotten so large that the entire company looked more like a bank than an industrial concern.
Well, we’ve had some improvements on this front. Large swaths of GE’s financial empire have been either sold off or wound down. GE was just taken off the list of “systematically important financial institutions,” and the company is starting to look like a proper industrial giant again, being a leading producer of everything from aircraft engines to medical devices.
GE isn’t exceptionally cheap right now (few stocks are in this market), but if you’re looking at a 50-year time horizon, then buying at today’s prices is perfectly reasonable. GE stock pays a respectable 2.8% dividend. If you don’t need it today, I recommend you put it on automatic reinvestment and let the shares compound. You can accumulate a lot of shares in 50 years!
Stocks to Buy for the Next 50 Years: Realty Income (O)
If there was ever a “future-proof” stock, it would be conservative retail REIT Realty Income Corp (NYSE:O).
With anything related to retail, you have to be careful. With internet commerce encroaching on traditional brick-and-mortar retail more and more with every passing year, a lot of retail space will likely become obsolete at some point.
Well, I’m not too worried about Realty Income. Its core properties are the sort of high-traffic locations that are critical to daily life. There is a decent chance that your local Walgreens (NASDAQ:WBA) or CVS (NYSE:CVS) pharmacy rents their space from Realty Income.
Realty is one of the safest stocks you can buy. I would tell you that Realty Income is a lot like a bond, but the truth is it’s actually a lot better. Bond pay a fixed rate of interest twice per year. Realty Income pays its dividend monthly, lining up your income better with your expenses. Dividends also are taxed at a more favorable rate than bond interest. But most importantly, unlike a bond, Realty Income actually raises its dividend … and raises it often. O stock has raised its dividend for 75 consecutive quarters and counting.
I own a few shares of Realty Income that I bought years ago and have been reinvesting my dividends ever since. I will never sell them. I intend to pass them on to my kids … about 50 years from now.
Stocks to Buy for the Next 50 Years: Johnson & Johnson (JNJ)
Fifty years from now, unless Leonard McCoy’s medical tricorder from Star Trek becomes a reality, we’re still going to need Band-Aids. And I’m betting that Johnson & Johnson (NYSE:JNJ) is there to deliver them.
Johnson & Johnson is going to rank pretty high on any list of stocks to buy for the next 50 years. It meets all the criteria you would want to have in place. Most of its consumer and medical products are cheap and disposable … the sort of stuff you buy on a quick pharmacy run and just sort of take for granted.
Of course, JNJ is more than just Band-Aids — it has thriving medical devices and pharmaceutical businesses as well. But all of these businesses have one thing in common: None are particularly dependent on a strong economy. JNJ is one of the most defensive stocks out there, and one of only two AAA-rated companies left in America. And the other — Microsoft Corporation (NASDAQ:MSFT) — is under review and may not be AAA much longer.
Johnson & Johnson has raised its dividend for 54 consecutive years and counting. And I’m betting it will still be raising it 50 years from now.
Stocks to Buy for the Next 50 Years: Berkshire Hathaway (BRK.B)
Berkshire Hathway Inc. (NYSE:BRK.A, NYSE:BRK.B) might be a strange addition to a list of stocks to buy for the next 50 years. After all, Warren Buffett isn’t getting any younger, and he certainly won’t still be running the company 50 years from now … unless we cryogenically freeze him, clone him or somehow transfer his consciousness to a Terminator robot.
Alas, it’s unlikely that any of that will be an option in Mr. Buffett’s lifetime.
But long after the Oracle of Omaha has left us, the empire he built will be alive and well. His boneheaded purchase of International Business Machines Corp. (NYSE:IBM) notwithstanding, Buffett has almost always eschewed technology companies that are prone to disruption. The vast majority of Berkshire’s holdings are old-line, future-proof business like insurance and consumer staples. Berkshire also owns large interests in trains and utilities as well as quirkier businesses like Nebraska Furniture Mart and See’s Candies.
Nothing about Berkshire Hathaway is sexy. It’s as boring as Nebraska itself. And that is precisely why I consider it a stock to buy for the next 50 years.
Stocks to Buy for the Next 50 Years: Procter & Gamble (PG)
Another stock I’d consider pretty close to future-proof is Procter & Gamble Co (NYSE:PG).
Not all future-proof products end up being truly future-proof. For example, Gillette — the maker of razor blades that Procter & Gamble owns — had a fantastic thing going. Men would buy a razor and then be lifetime customers buying the expensive blades.
Well, then came hipster beards and the old-man chic trend of using an old-school safety razor (I’m guilty here … I own one myself). Suddenly, razor sales are less reliable than they used to be. But that’s the beauty of Procter & Gamble’s sprawling empire. PG owns 21 brands that each do over $1 billion in annual sales.
Procter & Gamble has raised its dividend for 60 years. And I’m betting that 50 years from now, it will still be raising its dividend every year.
Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas. As of this writing, he was long O.