“Set it and forget it” are words many investors don’t want to hear. Even the most venerable brokerage houses are encouraging their clients to actively trade so they can beat the market. Buy and hold is a relic, they say. It doesn’t reflect the reality of today.
In other words, “this time it’s different”.
As the ongoing volatility in the market shows you, it’s not different. It’s not even close to being different. The simple fact is that many active traders lose money by being too aggressive and too active for their own good.
And while it’s true that the market won’t always be this choppy, and certain stocks may be a great buy in months to come, right now investors are looking for safe harbors. One of the safest ways to invest is to find stocks that you can feel comfortable holding on to even in the worst of times. Frequently that can be because the stocks offer an attractive dividend. But sometimes, it’s also because they are in a market that is always in demand.
But that doesn’t mean you have to limit yourself to defensive stocks. You can find some quality buy-and-hold stocks that offer some attractive growth prospects.
Quick Links
- AT&T
- Medtronic
- 3M
- Walmart
- Alphabet
- Apple
- Southern
- Johnson & Johnson
- Colgate-Palmolive
- Republic Services
#1 - AT&T (NYSE:T)
AT&T (T) - If I were giving you a pure telecom play, I could probably find a different stock. But the reason to choose AT&T (NYSE:T) goes beyond the idea that the telecom space will always be in demand. It also extends past the breakthrough that’s happening in 5G. AT&T is about all that and more.
With the acquisition of Time Warner (NYSE:TWX) content, the company is emerging as a player in the streaming wars. And there is increasing evidence that viewers, instead of consolidating their streaming services continue to add to them. This puts AT&T in a sweet spot of being able to deliver a whole home experience that includes mobile, wireless, and potentially their entertainment as well.
The company does face a few headwinds in relation to its partnership with DirecTV. Specifically, whether DirecTV will lose its exclusive rights to the NFL Sunday Ticket, which is a primary driver of that service. But any impact from that is over a year away and in the meantime, you can be invested in a stock that has a dividend yield currently above 6% and approximately $50 billion in the bank.
About AT&T
AT&T Inc provides telecommunications and technology services worldwide. The company operates through two segments, Communications and Latin America. The Communications segment offers wireless voice and data communications services; and sells handsets, wireless data cards, wireless computing devices, carrying cases/protective covers, and wireless chargers through its own company-owned stores, agents, and third-party retail stores.
Read More - Current Price
- $22.83
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $23.40 (2.5% Upside)
#2 - Medtronic (NYSE:MDT)
Medtronic (NYSE:MDT) is both a health care company and a technology company. While that does make the company’s stock volatile, it also means that investors should expect stable, consistent demand for its products.
Medtronic’s goal is to be a leader in robotic surgery and surgery training solutions. To this end, the company bought Mazor Robotics a company out of Israel that provided robotic-assisted surgery (RAS) systems. Digital surgery will usher artificial intelligence (AI) into the surgery realm. But aside from this catalyst, there are other reasons to own MDT stock. They have a trailing free cash flow of over $6 billion, which means they have plenty of cash to deploy into research and development. Even with that said, the company has a deep pipeline of products and is expanding its reach beyond the United States. And the company is a dividend aristocrat, meaning that it has increased its dividend every year for at least 25 years.
About Medtronic
Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Its Cardiovascular Portfolio segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; cardiac ablation products; insertable cardiac monitor systems; TYRX products; and remote monitoring and patient-centered software.
Read More - Current Price
- $84.11
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $95.19 (13.2% Upside)
#3 - 3M (NYSE:MMM)
3M (MMM) At the J.P. Morgan (NYSE:JPM) Industrials conference on March 10, 3M (NYSE:MMM) CEO Mike Roman estimated that the company’s potential revenue for respiratory products related to the coronavirus outbreak could be around $250 million.
While that should provide a boost to the company’s top line numbers heading into a quarter that is going to be brutal for most companies. But that’s not the reason why I like 3M. The reason I find 3M appealing is that the company is sort of a contrarian. Where other companies are becoming hyper-niche focused, 3M maintains a broad reach into other sectors beyond health care.
One of those sectors is manufacturing. That sector’s recovery is being delayed due to the voluntary and (perhaps mandatory) quarantines that will keep down production. But, at this time, manufacturing is expected to have a strong push later this year and into 2021.
And like many stocks on this list, 3M is a dividend aristocrat. It has a very attractive dividend yield of just under 4% (3.99 as of this writing) and has increased its dividend every year for the past 42 years.
About 3M
3M Company provides diversified technology services in the United States and internationally. The company's Safety and Industrial segment offers industrial abrasives and finishing for metalworking applications; autobody repair solutions; closure systems for personal hygiene products, masking, and packaging materials; electrical products and materials for construction and maintenance, power distribution, and electrical original equipment manufacturers; structural adhesives and tapes; respiratory, hearing, eye, and fall protection solutions; and natural and color-coated mineral granules for shingles.
Read More - Current Price
- $127.83
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 3 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $144.87 (13.3% Upside)
#4 - Walmart (NYSE:WMT)
Seeing Walmart (NYSE:WMT) on this list may make you wonder what, no Amazon (NASDAQ:AMZN)? Amazon is certainly a company for you to consider for growth. But if you’re looking for a steady Eddie to guide you to, and through, your retirement years, Walmart may be a better, and cheaper, play.
Simply put, Amazon has a market cap about 2.5 times what Walmart has. However its stock price is more than 10 times that of Walmart and the latter offers a dividend. Walmart has been no slouch when it comes to growth either. The stock is up nearly 40% in the last five years.
The company is an example of how traditional brick-and-mortar retailers can compete against Amazon. Rather than concede the digital space to Amazon, Walmart made investments in their online space. And with the emergence of order online, pickup at store or even have it delivered to you, they are winning customers.
And for investors looking for shining stars in what looks to be an impending bear market, you can look at Walmart. The company’s stock was among the least affected during the country’s last recession which occurred in 2008-2009. The company is also a dividend aristocrat that has increased its dividend for the last 45 consecutive years.
About Walmart
Walmart Inc engages in the operation of retail, wholesale, other units, and eCommerce worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under Walmart and Walmart Neighborhood Market brands; membership-only warehouse clubs; ecommerce websites, such as walmart.com.mx, walmart.ca, flipkart.com, PhonePe and other sites; and mobile commerce applications.
Read More - Current Price
- $87.18
- Consensus Rating
- Buy
- Ratings Breakdown
- 29 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $91.51 (5.0% Upside)
#5 - Alphabet (NASDAQ:GOOGL)
Alphabet (NASDAQ:GOOGL) is not a dividend darling. But the company continues to build shareholders equity. In the summer of 2019, Alphabet announced plans to buy back $25 million of stock. For some analysts, this was a step in the right direction for a company they have been critical of for focusing too much on stock-based compensation for its employees and not enough on its shareholders.
But maybe this is a preview of things to come. Alphabet for sure is looking towards the future. Many analysts are concerned about the possibility of the company coming under regulatory fire. This, in turn, is causing speculation that the company could start seeing declining ad revenue from internet search.
That, however, is a battle for another day. What makes Alphabet compelling is that they are pivoting into areas such as artificial intelligence and cloud computing. In fact, the company is forecasting much of its future growth to come from three AI initiatives: mobile assistants, health care, and driverless cars.
About Alphabet
Alphabet Inc offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.
Read More - Current Price
- $175.98
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 35 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $205.90 (17.0% Upside)
#6 - Apple (NASDAQ:AAPL)
Apple is another company that does not issue a dividend, but is very worthy of being on this list. I’ve been bullish on Apple (NASDAQ:AAPL) for some time. To put it mildly, I love the company’s products. But that’s not the reason to buy the stock. It’s the fact that other people millions of others also like Apple products. The company’s Air Pods alone were one of the hottest gifts this past holiday season.
The company is expecting to see robust demand for 5G iPhones which are due out later this year. And this comes after Apple had stronger than expected demand for its Series 11 iPhones. Plus, the company continues to see growth in its Services business. This is giving the company a more diverse revenue stream.
To be sure, the company is one that has its supply chain affected by the Covid-19 virus. Despite assurances by CEO Tim Cook that the company will have product available, that remains to be seen. But this is about the long term. And Apple has been confounding its critics for years. This is a company with a proven track record, solid sales in the present, and a future that continues to look bright.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $229.00
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $235.25 (2.7% Upside)
#7 - Southern (NYSE:SO)
Southern (SO) Maybe you’re a more traditional buy-and-hold investor. If so Southern (NYSE:SO) is an ideal stock for your portfolio. Southern has increased its dividend for the last 18 consecutive years and has increased its dividend an average of 2.54% over the last three years. But the company has been growing something else for the last three years, profit. SO has averaged an 18% gain in the stock over the last three years.
Utilities aren’t the most glamorous of stocks, but they have the advantage of having regional monopolies. This means while they have razor thin margins, they have pricing power.
Southern Company operates primarily in the south, but does have a reach in other regions. Even though analysts are somewhat sour on the company’s 12-month outlook, they have a price target that, with the recent correction suggests a near 10% upside. But with utility stocks, any growth you get is the cherry on top of the sundae. Southern has a solid dividend that’s backed up by a predictable revenue stream.
About Southern
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations.
Read More - Current Price
- $87.97
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $89.27 (1.5% Upside)
#8 - Johnson & Johnson (NYSE:JNJ)
To get excited about Johnson & Johnson (NYSE:JNJ) stock you have to look away from the short term news. Over the last two years, two major lawsuits have made the company’s stock more volatile than usual. However, the company has been resilient. First, the company recently posted a solid earnings report that calmed investors. And second, the company is one of several companies on the forefront of the ongoing race to develop a vaccine for the Covid-19 virus (aka: coronavirus).
Over the last five years, the company’s stock is up over 35%. And remember, this is a presentation about stocks you can buy and hold for a long time, so you’re looking for proven performance over time. You’re also looking for value. Brand Finance ranked Johnson & Johnson as the most valuable pharma company for 2020. The company is currently worth $10.9 billion.
And if the company provides a nice dividend as a bonus, that’s even better. Johnson & Johnson is a Dividend King, which means they have a 50 year history of increasing its dividend. Prior to 2020, the company had increased its dividend for 57 years and counting.
About Johnson & Johnson
Johnson & Johnson, together with its subsidiaries, researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company's Innovative Medicine segment offers products for various therapeutic areas, such as immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; infectious diseases comprising HIV/AIDS; neuroscience, consisting of mood disorders, neurodegenerative disorders, and schizophrenia; oncology, such as prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; cardiovascular and metabolism, including thrombosis, diabetes, and macular degeneration; and pulmonary hypertension comprising pulmonary arterial hypertension through retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use.
Read More - Current Price
- $153.10
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $175.94 (14.9% Upside)
#9 - Colgate-Palmolive (NYSE:CL)
There’s a reason why consumer staples stocks belong in every buy-and-hold portfolio. Companies such as Colgate-Palmolive (NYSE:CL) make products that consumers come back to again and again, regardless of the market. And with brand names like Colgate and Palmolive, CL has the advantage of brand loyalty. That’s nothing to brush aside too quickly in this market.
The last few years have been uneven in terms of growth. In fact, with the recent market volatility, the company is slightly negative for the last three years as of this writing. One explanation for this is the company got a little sloppy in how it spent its cash. Analysts and investors were not too pleased with the company’s margins. But that appears to be changing.
If you’re not invested in Colgate-Palmolive, now may be the time. According to reports hedge funds have never been so bullish on the stock and many have opened up long positions on the stock. That means institutional investors like the company’s future prospects.
About Colgate-Palmolive
Colgate-Palmolive Company, together with its subsidiaries, manufactures and sells consumer products in the United States and internationally. It operates through two segments: Oral, Personal and Home Care; and Pet Nutrition. The Oral, Personal and Home Care segment offers toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants, skin health products, dishwashing detergents, fabric conditioners, household cleaners, and other related items.
Read More - Current Price
- $93.91
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $105.11 (11.9% Upside)
#10 - Republic Services (NYSE:RSG)
The two biggest names in waste management are Republic Services (NYSE:RSG) and Waste Management (NYSE:WM). Arguably, Waste Management may be the better-known name. However, over the last few years Republic has outperformed Waste Management, and the stock has done slightly better as well. Honestly, picking one over the other is more like saying you prefer chocolate ice cream more than vanilla. They’re both good, it can be just a preference.
Although Republic Services is not a utility, they provide a service that is always needed. This means there will always be a high demand for its services. And while they have to compete for business in many markets, often with Waste Management, there’s little doubt that the buy is big enough for both companies.
Republic does have a juicy dividend in its favor. Although the company only has a yield of 1.80%, it is increasing its dividend at an average pace of 6.80% over the last three years.
About Republic Services
Republic Services, Inc, together with its subsidiaries, offers environmental services in the United States and Canada. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions.
Read More - Current Price
- $212.62
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $215.71 (1.5% Upside)
We may look back on the coronavirus as an event that brought the word “security” back into investors’ minds. Stocks are certainly taking a beating, and if you’re hesitant to jump back in, that’s OK. However, the market will come back and when it does, the companies listed in this presentation will still be among the highest quality stocks you can own.
The thing about high-quality buy-and-hold stocks is that they provide a certain amount of peace of mind. In volatile market conditions, you’ll still have more ups and downs than you may like, and when the market is racing higher some, but not all, of these stocks, may not deliver market-beating growth. But remember, you’re buying these stocks for the long haul, not the short run.
The definition of buy-and-hold stocks may be changing, but remember the proof is in the performance. Over time, buy-and-hold stocks should not be leaving you anxiously monitoring every dip in the market. They should be the stock that you look at every five years and remember exactly why they fit your plan.
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