Today we’re talking about which stocks to buy now and hold forever.
Also, let me know in the comments below which stock is your favorite to invest in.
Alright, so trying to time the market can leave you in shambles.
Even making buying and selling decisions based on the market can leave you with a fraction of the money you could have had compared to it you had just held onto them.
Warren Buffet himself said that “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
Now, I know…
Forever is going to feel you’re going to be holding onto these stocks… Forever.
So, which stocks are worth holding forever? Which ones can withstand market crashes? Which ones can we pass down to our kids one day?
This list is going to be 7 stocks that you should be buying today and holding onto them forever.
Dividend Percentages
Before we get into it, I want to go over dividend percentages really quick.
This is so that we can better understand how well these companies can reinvest into themselves to grow over the long term.
For those of you who don’t know already, a dividend is simply a distribution of a portion of the company’s net profits to their investors.
And if a company pays out 100% dividends, that means that they are sending 100% of their profits out to investors.
This sounds awesome on the surface, but this means that the company does not have ANY money to reinvest into itself for growth.
This means no capital improvement projects, no research and development, no expansions, and the list goes on.
But a company that pays out 50% dividends is only sending 50% of their earnings to the investors and reinvesting the other 50%.
Over the long term, we want to invest in companies that are going to innovate and grow so that they do not become obsolete.
And the first on our list is…
- Berkshire Hathaway (BRK.A, BRK.B)
Buffet has been stirring up the markets lately.
He has sold all of his airline stocks, his Goldman Sachs stocks, and has reportedly lost $50B just this year.
Berkshire Hathaway’s annual revenue in 2019 was $254.6B. Berkshire Hathaway’s net profit was $29.2B. And Warren has $128B in cash sitting on the sidelines.
Berkshire Hathaway has been paying out dividends for 89 consecutive years. Just kidding – Berkshire Hathaway doesn’t make dividend payouts at the moment.
Which means that they are able to reinvest 100% of their earnings.
Warren states that he’d rather use that money to reinvest into the business, acquire other businesses, and buy back stock from shareholders.
And as of today, Berkshire Hathaway is trading for $200.66.
If you had invested $1,000 into Berkshire Hathaway 5 years ago, your money would now be worth $1,425.54.
If you had invested $10,000 into THIS stock at the early days of the company, it would be worth $274M today.
- McDonald’s (MCD)
McDonald’s is by far the biggest fast-food chain in the world by sales.
Its annual revenue comes in at $21B, with total profit being $6B. (#2 results when searching “net”)
It also had the most valuable food brand in the world in 2019, at $130.4 billion.
McDonald’s has increased its total annual dividend payments every year since 1977.
In the 10 years leading up to 2020, the stock’s total return, excluding reinvested dividends, was 132.5%.
But if you had reinvested all of your dividends, the total return would have been 190.54%.
McDonald’s pays out 64% of its earnings through dividends.
Which means that they are able to reinvest 36% of their earnings.
This means that they are great stocks to buy if you are more of a dividend investor and are looking for passive income.
With earnings of $6B, that places them at paying out $3.84B and keeping $2.16B for the business.
And as of today, McDonald’s is trading for $197.16.
If you had bought $1,000 of McDonald’s stock 5 years ago, you would have $2,063.64 today.
- Microsoft (MSFT)
In April of 2019, Microsoft became the third company to achieve a market cap of $1T.
Microsoft’s annual revenue is $125.8B. Microsoft’s annual net profit for 2019 was $36.8B.
Microsoft has been migrating their business services from the Microsoft Office suite into a cloud infrastructure for businesses.
Their revenue from cloud-based server products is 30% of their total revenue.
And that’s one of Microsoft’s big attractions over the long term.
They are currently outpacing the competition when it comes to the cloud market.
Microsoft has also paid out quarterly dividends since the 4th quarter of 2004.
Microsoft pays out 42.9% of its earnings through dividends.
Which means that they are able to reinvest 57.1% of their earnings.
With earnings of $36.8B, that places them at paying out $15.8B and keeping $21B for the business.
And as of today, Microsoft is trading for $187.08.
If you had bought $1,000 of Microsoft stock 5 years ago, you would have $4,057 today.
- Johnson & Johnson (JNJ)
As a new dad, I personally use Johnson & Johnson’s no tear shampoo to keep myself from crying in the shower over the high cost of baby ownership.
Johnson & Johnson is a MONSTER pharmaceutical giant.
Johnson & Johnson’s annual revenue in 2019 was $82.1B. Johnson & Johnson’s net profit was $15.1B.
J&J has been paying out dividends for 57 consecutive years. That’s 228 quarters. That’s 684 months. That’s 399 dog years.
Johnson & Johnson’s dividend payout percentage is sitting at 46.5%.
Which means that they are able to reinvest 53.5% of their earnings.
With earnings of $15.1B, that places them at paying out $7B and keeping $8B for the business.
And as of today, Johnson & Johnson is trading for $147.25.
If you had bought $1,000 of J&J stock 5 years ago, you would have $1,493.56 today.
- Apple (AAPL)
Our next contender is the largest fruit producer in the world.
Some would even say buying an Apple a day keeps the poor away.
Man, I wish I could afford to buy an Apple stock every day.
- Apple was the first company to hit a market cap of $1T in 2018.
- 2.2B iPhones have been sold.
- In 2018, iPhones only accounted for 18% of smartphones sold, but iPhones accounted for 87% of profits made from smartphone sales.
- Apple raked in $142B JUST from iphones in 2019
Apple’s annual revenue in 2019 was $265.5B. Their annual profit was $59.5B. They have $131.3B in circulating cash that in the form of accounts receivable, inventory, and cash.
Apple started paying dividends in 2012.
Apple pays out 27% of its earnings through dividends.
Which means that they are able to reinvest 73% of their earnings.
With earnings of $59.5B, that places them at paying out $16B and keeping $43.4B for the business.
And as of today, Apple is trading for $331.
If you had bought $1,000 of Apple stock 5 years ago, you would have $2,572 today.
- Amazon.com (AMZN)
This new small company is our next rising star in the world of monopolies.
Amazon is now the largest retailer in the world after recently passing Wal-Mart. They have bought companies like Zappos, Whole Foods, Kiva Robotics, Pill Pack, and Twitch, totalling $17.4B in acquisitions.
Amazon repeatedly dominates its competition and maintains sole focus on serving the end customer.
Amazon’s annual revenue in 2019 was $280.5B. Amazon’s net profit was $11.5B.
Amazon does not currently pay out any dividends.
Which means that they are able to reinvest 100% of their earnings.
And as of today, Amazon is trading for $2,483.
If you had bought $1,000 of Amazon stock 5 years ago, you would have $5,815.67 today.
- Alphabet (GOOGL, GOOG)
Google is the largest search engine, accounting for 73% of the world’s search traffic.
Just like Microsoft, Google is doubling down in cloud services. In 2019 alone, their cloud services grew 40%. Currently, Google is growing its cloud revenue at two times the rate of Amazon’s cloud revenue growth.
In the past few years, Google has bought major companies like Nest, DoubleClick, Looker, YouTube, and Waze. These acquisitions have totalled $11.5B.
Google’s annual revenue in 2019 was $161.8B. Google’s net profit was $34.3B.
Google does not currently pay out any dividends.
Which means that they are able to reinvest 100% of their earnings.
If you had bought $1,000 of Google stock 5 years ago, you would have $2,617.69 today.
And as of today, Google is trading for $1,438.50.
But that’s all I have for today guys.
I hope that this list helps you whether you’re a beginner looking how to get started or a pro at investing in the stock market.
Which of these stocks are your favorite? Let me know in the comments below.
