The Holy Grail for long-term investors is finding the best forever stocks that offer stability and growth potential. These stocks, known for their resilience, innovation and proven track records, are often cornerstones in portfolios.
At their core, the best forever stocks are companies with established track records of consistent growth. They often operate in industries that are essential to everyday life. In addition, they have a strong moat — a competitive advantage that protects them from rivals. This moat could be due to brand strength, proprietary technology, or network effects that keep competitors at bay.
Financially, these companies tend to have robust balance sheets. What’s more, they can consistently generate profits. As a result, they have healthy cash flows and low debt levels. As a bonus, many of these stocks have a history of paying dividends, further enhancing their attractiveness to investors.
These seven best forever stocks have proven reliable investments regardless of market volatility or economic downturns. They are ideal for those with an eye on the long game.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a global leader in various technology markets. Its Windows operating system has been a dominant force in desktop PCs for years. According to Statista, it held a 69% market share as of July. Besides, its office productivity suite, Microsoft 365, which features tools like Outlook, Word and Excel, is universally accepted and drives considerable network effects.
While Windows and productivity tools have been the traditional bread and butter, the company has become a critical cloud service provider. Microsoft’s Azure cloud computing platform has experienced remarkable growth. The trend continues with sales increasing 26% in the latest quarter. Over the next decade, the shift to cloud-based services will contribute to its potential for long-term growth.
Regarding AI, the company will also benefit tremendously. It is a leader in providing the infrastructure necessary to develop and train AI models. Its Azure OpenAI Service is helping organizations build their generative AI applications.
Lastly, the company is becoming a key player in the gaming market. Xbox has been among the top gaming consoles. And the recent closing of the Activision Blizzard acquisition will only enhance its strength in the gaming market.
Procter & Gamble (PG)
Founded in 1837, Procter & Gamble (NYSE:PG) has weathered multiple economic downturns, global crises and changing consumer trends. Procter boasts a wide range of popular brands spanning various categories – from health and beauty to household cleaning. Some of these iconic brands include Tide, Crest, Gillette and Pampers.
The company’s operations are widely diversified and international sales make up about 53% of revenues. With its products sold in over 180 countries, P&G’s global presence allows it to tap into diverse markets and demographics. This international reach provides a buffer against regional economic downturns and geopolitical events.
Furthermore, most of the company’s products are in essential categories. Thus, consumers rarely abandon their daily use, even in a downturn. Its products’ brand strength and necessity make it one of the best forever stocks to buy.
Due to consistent demand for its products, the company has delivered stable and growing earnings. As a result, the company has rewarded shareholders by returning a significant portion of profits. Impressively, it has an amazing dividend record having raised its dividend for 67 consecutive years.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is a testament to what value-driven investing can achieve over the long run. Spearheaded by the legendary investor Warren Buffett, this company has become synonymous with long-term growth and value investing. Over the years, Berkshire has developed an investing culture that will support success for decades.
Looking at Berkshire’s business strength, the company is in an enviable position. Its subsidiaries span various industries, from insurance and railroads to utilities and manufacturing. Besides, it holds significant stakes in some of the best publicly traded companies like Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO) and Bank of America (NYSE:BAC).
Its insurance business is the largest revenue segment. It owns GEICO, the second largest auto insurer in the U.S. Geico, alongside other insurance and reinsurance subsidiaries, provide key competitive advantages. They generate significant premiums, which management uses as “float” to invest in companies with long-term potential. Key examples include investments in Coca-Cola in the early 1990s, BNSF in 2010, and Apple in recent years.
As of the end of Q2 2023, Berkshire had $147 billion in cash. This cash hoard is a testament to its financial strength. It also provides the firepower to do opportunistic deals accretive to earnings. Berkshire is an economic bellwether that will continue to generate shareholder returns.
Johnson & Johnson (JNJ)
As the largest pharmaceutical and MedTech device company in terms of revenues, Johnson & Johnson (NYSE:JNJ) deserve a place on your best forever stocks list. Due to heavy investments in research and development, the company has always maintained a robust drug pipeline.
It has one of the strongest oncology and immunology franchises. From prostate cancer treatments like Zytiga to blood cancer therapies like Darzalex, J&J boasts an array of oncology drugs. In immunology, it has solidified its place as a leader with blockbusters such as Stelara. Its blockbuster drugs are significant revenue drivers. For instance, in 2022 Darzalex and Stelara generated $7.9 and $9.7 billion in sales, respectively.
In addition, the company has a robust MedTech portfolio to complement its drugs. The surgery segment is the largest, providing solutions focusing on various procedures. Additionally, it sells various orthopedic solutions for hip, knee and spinal problems.
After the Kenvue (NYSE:KVUE) spinoff, the company’s balance sheet is in excellent shape. At the end of Q3 2023, it had $24 billion in cash and marketable securities. With the firm generating massive free cash flows, it is likely to continue its 61-year record of dividend increases.
Amazon (AMZN)
Founded as an online bookstore in the 1990s, Amazon (NASDAQ:AMZN) has grown into a global e-commerce giant. Today, it boasts an unmatched delivery infrastructure and an ever-growing Prime membership base. Worldwide prime users eclipsed the 200 million milestone in 2020.
Beyond retail, Amazon Web Services (AWS) has become a juggernaut in cloud computing. The segment is highly profitable and diversifies the company’s revenue streams. Besides, it positions the company at the heart of the digital age.
Amazon has entered into industries like entertainment with Amazon Studios, health with Amazon Pharmacy, and grocery by acquiring Whole Foods Market to enhance growth. Also, it’s expanding internationally to tap into emerging markets like India and to solidify its global dominance.
Due to its innovative culture, the retail giant has always been a pioneer in new markets. It pioneered cloud computing in the 2000s to solve its computing challenges. That spirit still runs in the company. Today, it is making some futuristic innovations and is one of the best forever stocks to buy.
From Kuiper, its satellite project, to futuristic retail experiences with Amazon Go, Amazon is searching for the next big thing. For investors seeking a blend of growth, innovation, and resilience, Amazon remains an enticing prospect for long-term portfolios.
PepsiCo (PEP)
When it comes to timeless brands that have weathered various economic climates, PepsiCo (NASDAQ:PEP) stands tall. The multinational food, snack, and beverage giant has been resilient and adapted for over a century. Its track record and brand strength make it a worthy selection for the best forever stocks list.
Beyond its flagship Pepsi beverage, the company boasts a diverse lineup of products. Its other top brands include Mountain Dew, Tropicana, Gatorade, Lay’s, Doritos, and Quaker, to name a few. The firm’s strength in snacks is growing and Frito-Lay is now its largest revenue segment.
Pepsi’s global scale also provides several competitive advantages that competitors can’t match. With operations spanning 180 countries, it taps into various consumer markets. The company can develop variations to fit consumer needs in these markets while leveraging its scale to lower costs.
For income-oriented investors, PepsiCo’s track record of delivering steady dividends is enticing. The company has not only paid but also regularly increased its dividend. As of this writing, it yields 3.2%, having increased its dividend for 51 consecutive years.
Sherwin-Williams (SHW)
Sherwin-Williams (NYSE:SHW), established in 1866, has been coloring the world for over a century and a half. It’s an iconic name in the paint and coatings industry.
The paint company has been a frontrunner in the paint industry, with a commanding presence in retail and professional sectors. Through its vast network of stores, it provides easy access for contractors and do-it-yourself customers.
The company owns recognized brands like Dutch Boy Krylon, Duraspar and Minwax, catering to various market segments. Over the years, Sherwin-Williams has made strategic acquisitions, such as the notable purchase of Valspar. These acquisitions have cemented its market leadership, increased its product range and expanded its global footprint.
Paint is a simple and repeat business since paints and coatings peel off. With this tailwind and new business from house construction, Sherwin-Williams is one of the best forever stocks to own. It has a long history of profitability and a robust balance sheet. To top it all, it has a consistent dividend record, having increased its dividend for 45 years.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
