Despite the fact that Warren Buffett is one of its biggest proponents, buy-and-hold investing gets a bad rap among many investors. That's not surprising in a society that is consumed by short-term thinking. Investors should always be on the lookout for breakout opportunities. But what many successful long-term investors know is that time in the market beats trying to time the market.
However, you have to own the right stocks. One myth of long-term investing is that “safe stocks" won't outperform the market. That couldn't be further from the truth. In fact, there are many blue-chip stocks that have an established history of beating the S&P 500 and pay a great dividend that increases your total return.
The focus of this special presentation is long-term stocks that are likely to beat the S&P 500 for years in the future. These are household names that many institutional investors own and with good reason. Owning these stocks can help you sleep well at night while never having to worry about your investments losing value over time.
Quick Links
- NVIDIA
- Walmart
- UnitedHealth Group
- AbbVie
- Netflix
- Palo Alto Networks
- McDonald’s
#1 - NVIDIA (NASDAQ:NVDA)
NVIDIA Corp. (NASDAQ: NVDA) has been one of the hottest stocks since 2023 but is still one of the best long-term stocks to buy. However, it wouldn’t have seemed like that five years ago when it was trading for under $6 a share. Chip stocks are historically a cyclical industry.
However, in the last five years, and more specifically in the last 18 months, NVDA stock is up more than 243%. The reason behind NVIDIA’s explosive growth comes from the insatiable demand for the company’s GPUs. This gives the company a lead in market share that is unlikely to be erased anytime soon.
It will be difficult and unlikely for the company to match or eclipse the 243% return of the last five years. But even if that growth slows by 50%, it will likely stay ahead of the S&P 500, which has averaged about 12.5% in annual growth in the last 10 years.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $135.72
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 39 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $142.46 (5.0% Upside)
#2 - Walmart (NYSE:WMT)
Walmart Inc. (NYSE: WMT) has delivered a total return of over 299% in the last 10 years. And with the stock up 55% in 2024, it shows no signs of slowing down even after a 3-for-1 stock split in January. Even as its core consumer is burdened by inflation, the company has shown the ability to capture the dollars of more affluent consumers who are looking for value.
A key reason to consider Walmart stock as a tremendous buy-and-hold stock is its commitment to innovation. The company is using automation and artificial intelligence (AI) to make their operations more efficient and profitable. Add to that the company’s successful implementation of its Walmart+ service and investors can see why Walmart is becoming a formidable competitor to Amazon.com Inc. (NASDAQ: AMZN) in the e-commerce space.
WMT is also a dividend king that has increased its dividend for 52 consecutive years, and the company is not even halfway through a $20 billion share buyback program that was authorized in November 2022.
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
- $81.22
- Consensus Rating
- Buy
- Ratings Breakdown
- 29 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $82.96 (2.1% Upside)
#3 - UnitedHealth Group (NYSE:UNH)
The healthcare sector is a good place to look for long-term stocks. One of the best options for investors is UnitedHealth Group Inc. (NYSE: UNH). UnitedHealth is one of the leading providers of health insurance mandated by the Affordable Care Act (ACA) health marketplaces. It’s also one of the leading providers of Medicare Advantage plans.
The aging of America will continue to be a driver of growth. Even if Medicare-for-all doesn’t become a reality, Medicare-for-most is a near certainty. In fact, the Centers for Medicare and Medicaid Services projects that Medicare spending growth will average 7.2% between 2021 and 2030, the fastest rate among the major payers.
Over the past five years, UNH stock has delivered a total return of around 150% to investors. That’s slightly above the S&P 500 over that time. It’s also down sharply from the pace of growth for the stock in the last 10 years. However, the company has a growing base of customers that is allowing it to beat revenue and earnings on a year-over-year (YOY) basis.
About UnitedHealth Group
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage, and health and well-being services to individuals age 50 and older addressing their needs; Medicaid plans, children's health insurance and health care programs; and health and dental benefits, and hospital and clinical services, as well as health care benefits products and services to state programs caring for the economically disadvantaged, medically underserved, and those without the benefit of employer-funded health care coverage.
Read More - Current Price
- $571.30
- Consensus Rating
- Buy
- Ratings Breakdown
- 20 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $615.16 (7.7% Upside)
#4 - AbbVie (NYSE:ABBV)
A different way to invest in the healthcare sector is through the biopharmaceutical industry. This can steer investors to unprofitable start-ups with the potential for meteoric gains “if” they can get a candidate approved. A better choice is a company with a proven pipeline of commercially available drugs, such as AbbVie Inc. (NYSE: ABBV).
ABBV stock has delivered a total return of 219% to investors over the past five years. Much of that has to do with its blockbuster drug, Humira. The patent protection on Humira has expired, but the company is seeing robust growth in new drugs such as Skyrizi and Rinvoq to pick up the slack.
Looking to the future, AbbVie has a pipeline of over 90 drug candidates, with more than 50 in mid- or late-stage trials. These drugs include areas such as immunology, oncology, and neuroscience.
AbbVie is another dividend king on this list of stocks, and it’s an impressive one at that. The yield as of October 16, 2024, is 3.26%. Plus, the stock has increased its annual payout by an average annual rate of 7.84% over the past three years. That’s nearly triple the rate of inflation.
About AbbVie
AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers.
Read More - Current Price
- $190.46
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $198.00 (4.0% Upside)
#5 - Netflix (NASDAQ:NFLX)
It seemed like not that long ago, the term “streaming fatigue” became popular. This proliferation of streaming content options was supposed to signal the end of Netflix Inc. (NASDAQ: NFLX) which was racing to produce original content at a time when other players were scooping up the company’s legacy content.
The reason that’s important is because of the pivot that Netflix has made. The company has managed to launch a basic, ad-based membership tier, its maintained its membership base despite a crackdown on password sharing, it’s improved the scope of its original content, and it’s starting to lean into the live-sports arena.
All of this gives the stock a strong fundamental base that will drive future growth. NFLX stock is up 148% in the last five years. As the price action in the stock has shown, there may be plenty of dips to buy, but the king of streaming is not likely to give up the crown anytime soon.
About Netflix
Netflix, Inc provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices.
Read More - Current Price
- $702.00
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $704.26 (0.3% Upside)
#6 - Palo Alto Networks (NASDAQ:PANW)
The cybersecurity sector is likely to be one of the fastest-growing fields over the next 10 years and beyond. One of the catalysts for this sector is the strong demand for AI which increases the threat levels to consumer and corporate data. Palo Alto Networks Inc. (NASDAQ: PANW) is one of the leading cybersecurity companies, and this is one sector where that size comes with advantages.
Specifically, the company began integrating AI into its product offerings over two years ago. The launch of Cortex XSIAM has been a huge driver of revenue growth. The company also offers a platform that allows its customers to assess the threat that third-party AI applications place on their networks.
Palo Alto is moving towards a platformization model that is impacting its top end as it allows customers to “test drive” its platforms. But this is likely to be just a short-term concern. PANW stock has increased 428% in the last five years and will continue to be one of the best buy-and-hold stocks for investors.
About Palo Alto Networks
Palo Alto Networks, Inc provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention.
Read More - Current Price
- $373.23
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 31 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $372.28 (0.3% Downside)
#7 - McDonald’s (NYSE:MCD)
Rumors of the demise of the Golden Arches looks to have been greatly exaggerated. McDonald’s Corp. (NYSE: MCD) stock is up 21% in the three months ending October 16, 2024. That's pushed the stock higher for the year and increased the gain to over 25% in the last 12 months.
The company’s stock has been under pressure after missing on the bottom line for two consecutive quarters. Plus, the company reported a decline in same-store sales for the first time in over 20 years. The reasons given spanned everything from an inflation-strapped consumer to the proliferation of GLP-1 drugs.
But a volatile market reminds investors of the win-win nature of McDonald’s stock. That is, when investors believe growth stocks are overvalued, they turn to MCD for a rock-solid dividend that has grown for 49 consecutive years and has a 2.26% yield. And when the consumer begins to spend, investors will realize how the company’s embrace of digital technology will sustain its bottom line.
About McDonald's
McDonald's Corporation operates and franchises restaurants under the McDonald's brand in the United States and internationally. It offers food and beverages, including hamburgers and cheeseburgers, various chicken sandwiches, fries, shakes, desserts, sundaes, cookies, pies, soft drinks, coffee, and other beverages; and full or limited breakfast, as well as sells various other products during limited-time promotions.
Read More - Current Price
- $312.93
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 20 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $315.69 (0.9% Upside)
Sharp-eyed investors may give some of the stocks on this list the side-eye based on valuation. That is, the fundamentals for these stocks may make them expensive to own right now. Two common metrics used are the price-to-earnings (P/E) and price-to-sales (P/S) ratios. Investors may also look at the stock's performance relative to its 52-week average.
However, it's important to remember that just as many stocks can be inexpensive for a reason, many premium stocks usually carry a premium value for a reason. More importantly, if you're looking to buy and hold a stock for the long term, a high valuation in the short term doesn't matter as much as the opportunity you have for future gains.
Market timing is tricky, but having the discipline to use time to your advantage is the real key to a buy-and-hold investment strategy. Over time, best-in-class companies like the ones in this presentation offer investors the best chance for market-beating gains.
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