For many investors it makes no sense to keep track of daily market movements. Their investment style is to buy quality stocks and then hold them forever.
Major investor Philip Fisher states in his book Common Stocks and Uncommon Profits that the best time to sell a stock is "almost never". Warren Buffett, the world's most successful value investor, is also well versed in the art of buying and holding.
If your goal is to build a solid cash flow for your retirement, it is a great idea to keep some "forever stocks" in your portfolio. You can tap into your dividend stocks for regular income when you need it. And if you don't need passive income, these cash flows can be used to reinvest and unlock the power of compounding.
Shares will forever pay dividends no matter what happens to the general economy. Their payouts survive peaks and troughs, wars, depressions and bubbles.
The products and services of these companies are so crucial that we cannot imagine a normal life without them. This quality has turned these companies into ATMs that never run out. Here are our top three picks in this category:
1. Coca Cola
Atlanta-based food and beverage giant Coca-Cola (NYSE 🙂 is an ideal asset forever to hold. While many companies regularly reward investors through payouts, you will rarely find a company that has been issuing dividend checks for over a century.
This impressive track record does not hide the fact that selling food and drink is a difficult business requiring constant innovation and fierce competition. Coke has proven in its 128 years of existence that its brand has tremendous strength to deal with this pressure.
Like many other consumer brands, Coca Cola is also hit by the COVID-19 pandemic as sales in amusement parks and theaters dried up after lockdowns. But the company remains strong and management is confident in its liquidity position.
At a time when health-conscious consumers are forgoing sugary drinks, the company is expanding its healthy offering. As part of its drive to grow beyond its eponymous brand and become a “total beverage company,” Coke is acquiring beverage start-ups to better resonate with health-conscious customers and find new growth areas. Recent investments include Honest Tea, Fairlife Dairy and Suja Life LLC.
Coca Cola 1 Year Review.
Shares of Coke traded at the close of $ 50.79 yesterday, returning 3.41% annually. That return may not look too exciting, but the company has a long track record of increasing its payout – for 56 consecutive years now. The quarterly dividend of $ 0.41 per share has more than doubled in the past five years.
2. Nike
Sportswear giant Nike (NYSE 🙂 is another great buy-and-hold candidate for long-term investors. The company is in a strong financial position and can weather the weakness caused by the COVID-19 pandemic.
Nike & # 39; s brand strength and business model resilience was evident in the successful execution of the company's e-commerce strategy during the pandemic, when most stores were closed. Chief Executive Officer John Donahoe told investors that the company's e-commerce business remains “in growth mode,” despite the demand shock from the coronavirus outbreak.
Analysts on the street have also advised customers to stick with their Nike assets, despite the setback during the pandemic that forced the giant to close its stores. The maker of Air Jordan sneakers is well positioned for long-term growth given its strong brand recognition and its ever-improving digital capabilities.
The trend toward digital should "continue to drive sales and operating margin expansion in the coming years," said Telsey Advisory analyst Cristina Fernandez.
Nike 1 Year Review.
Shares of Nike traded at the close of $ 118.59 yesterday, rebounding strongly from the March low of $ 60.58 in the post-pandemic market rally. If the stock weakens again in a wide sell-off, investors may find a good entry point to buy stocks. Nike pays a $ 0.245 dividend per share quarterly, for a current yield of 0.80%, which has been rising steadily since 2004.
3. Verizon Communications
Telecom utilities embody many qualities of an eternal possession. No matter which direction the economy is headed, the Internet and wireless connections are likely to be the last items consumers will cut off their must-have lists. This makes them valuable stocks for your retirement portfolio.
Verizon Communications (NYSE :), one of the largest telecom providers in the US, is an excellent example of this. The company has been steadily paying out and raising dividends for 30 years.
The quarterly dividend of $ 0.6275 per share is up more than 50% since Verizon's stock first traded in 2000, following the Bell Atlantic and GTE merger. The stock, which closed at $ 60.37 yesterday, offers a solid 4.14% annual return, which doesn't look bad when compared to the average return of just 1.7% offered by S&P 500 companies .
Verizon Communications 1-Year Chart.
At a time when the wireless industry is maturing and growth is difficult to achieve, technological breakthroughs are opening new growth areas. The next big thing for Verizon is the rollout of its 5G network.
The 5G wireless networks are critical to the success of a number of futuristic applications, including driverless cars, smart homes, and remote surgeries.
Bottom Line
It is always a good time to buy stocks like Coke and Verizon forever and keep them in your income portfolio. Companies with sustainable competitive advantages, powerful brands and deep-seated market positions continue to reward their shareholders with dividends. They are in a better position to get through an economic downturn and outperform in the long run.
