Ideal long-term investments show consistent earnings and dividend growth despite various economic conditions. Dividend Aristocrats, with 25 years of dividend growth, endured crises like 9/11, the 2008 financial crisis, and COVID-19.
Despite the 2023 market surge, opportunities exist in undervalued long-term stocks, despite economic uncertainties and interest rates. Here are three top options for investors with a two decade long time horizon to consider at this stage in the economic cycle.
Berkshire Hathaway (BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), led by Warren Buffett, employs strategic investments and acquisitions for steady growth. Its insurance segment generates steady cash flow, fueling investments with a cost-effective source of funds. This approach positions the company to capitalize on profitable market opportunities, but also highlights the compounding power sticking with one’s winners provides over the very long-term.
Berkshire Hathaway’s publicly-traded portfolio includes many of the most prominent large-cap names in the market. In many ways, some investors view the company as an index fund of sorts, with concentrated exposure to certain companies and sectors.
Over the long-term, Buffett’s Berkshire Hathaway has managed to consistently outperform the market, with the company’s most recent 5-year gain of ~77%, surpassing the S&P 500’s 59% by a rather significant margin. Berkshire Hathaway’s substantial cash reserve of over $147 billion adds stability for uncertain times and potential value stock investments.
Berkshire Hathaway’s stock is trading near its peak after robust Q2 results, but this shouldn’t deter potential investors. With a 60 year history of consistent growth, its shares continue to appreciate steadily.
SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF (NYSEARCA:SPY) is perhaps the top exchange traded fund (ETF) in the world. This index fund effortlessly tracks the renowned S&P 500 Index, which includes 500 of the largest and most influential U.S. companies.
Despite a 2022 decline, the SPY ETF has risen nearly 8% year to date, poised for gains as interest rates become clearer. Over the past decade, it generated over 200% returns. It has been offering a strong dividend profile with almost 30 years of consecutive payments, surpassing the sector median of 2.5 years.
Historical data from Crestmont Research reveals 104 years of continuous positive returns for the SPDR ETF between 1900 and 2023. Analyzing 20-year rolling total returns, including dividends, reveal a consistent lack of negative years for long-term holders.
This supports the wisdom of investing in the straightforward S&P 500 index, a dependable option. The S&P 500 index was introduced in 1957, but Crestmont Research used analogous indexes to estimate returns from the early 1900s.
Restaurant Brands (QSR)
Fast food chains, have demonstrated resilience during the pandemic and maintain success due to consumer demand for convenient and dependable food choices during crises. Their broad international presence contributes to their market strength, catering to a diverse global consumer base.
Restaurant Brands (NYSE:QSR) is surging following a robust quarter, led by Burger King’s success. The company’s brand investments are yielding positive results amid changing consumer preferences. As the economy shifts, the demand for cost-effective fast food is anticipated to boost Restaurant Brands. A strong quarter and growth potential fuel investor confidence in its future outlook.
Restaurant Brands International is poised for a breakout, with shares near $100, a 60% increase from 2022 lows. Despite challenges, the company’s growth investments are yielding positive results, making QSR stock a strong buy with its 2.9% dividend yield.
On the date of publication, Chris MacDonald has a LONG position in BRK-B, QSR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.