In the world of investing, the search for the “10 best stocks to buy and hold for 20 years” is a quest for financial stability and long-term growth. The stock market can be a roller coaster ride but if you invest in companies that are likely to grow over 20 years, you could have the chances to achieve your financial goals too.
In this article, we will talk about what to look for when choosing stocks for the long term and will share some of the companies that are surely the best for long-term investments. So, let’s get started:
Power of Long-Term Stock Investment
It’s important to understand why long-term investing can be a wise strategy. There are several key factors which includes:
1. Compounding Returns
One of the most important benefits of long-term investing is the power of compounding. When you hold stocks for a long period of time, your returns have the opportunity to grow exponentially.
Not only do you earn a return on your initial investment, but you also earn a return on the profits you have already earned. Over time, this compounding effect can lead to substantial growth of your wealth.
2. Economic Growth
Economies grow over time by factors such as population growth, technological advancements and increased productivity. As economies grow, so do company profits, which can drive stock prices higher.
If you hold stocks for 20 years or more, you can potentially capture a good portion of that economic growth.
3. Reduced Transaction Costs
Frequent buying and selling in short-term trading can add up transaction costs such as brokerage fees and taxes. So, it’s better to choose a buy-and-hold strategy in long-term investing.
By doing this, you reduce these costs which will allow your investment to grow more efficiently over time without any deduction.
4. Time to Weather Market Volatility
The stock market is known for rapid price changes often within days or weeks. Yet, when you consider a longer time horizon like 20 years, the impact of these immediate fluctuations reduces.
By holding stocks for 20 years, you give your investment the opportunity to bounce back from market downturns and benefit from longer uptrends.
10 Best Stocks to Buy and Hold for 20 Years
The following companies have demonstrated strong fundamentals and a history of success that makes them worth considering for long-term investors:
1. Apple Inc. (AAPL)
Apple is a big tech company that makes popular products like iPhone, iPad and Mac. The company’s products and services work well together and keep customers coming back for more. Apple’s strong brand, loyal customer base and constant innovation makes it the best choice for long-term investment.
It is one of the most profitable companies in the world and has a strong track record of growth. The company’s revenue has grown at an average annual rate of 15% over the past five years.
2. Amazon.com Inc. (AMZN)
Amazon has changed the way we shop and do business. It now offers a wide range of products and services. Amazon is always focused on making its customers happy and coming up with new ideas. This has helped it become a leader in many different markets.
As online shopping and cloud computing continue to grow, Amazon is well-positioned to succeed in the long term. It has a strong track record of growth and profitability, and its revenue has grown at an average annual rate of 25% over the past five years.
3. Microsoft Corporation (MSFT)
Microsoft is a giant tech company that sells software and cloud computing services. Its products such as Windows, Office 365 and Azure, are used by businesses all over the world. Microsoft’s cloud computing business is growing rapidly and the company has a variety of different sources of revenue, which makes it a safe and best investment for long-term investors.
The company has a strong track record of growth and profitability, and its revenue has grown at an average annual rate of 15% over the past five years.
4. Alphabet Inc. (GOOGL)
Alphabet is a giant tech company that leads the online advertising and technology industries. Its search engine and digital advertising platforms are the most popular in the world. Alphabet is also investing in new technologies and has a strong financial position, making it a promising investment for the long term.
Alphabet is a very innovative and a constantly developing company. It is considered a leader in artificial intelligence and machine learning. Alphabet has a strong track record of growth and profitability, and its revenue has grown at an average annual rate of 20% over the past five years.
5. Meta Platforms (META)
Meta Platforms, Inc., which used to be called Facebook, is a big tech company based in California. It owns Facebook, Instagram, WhatsApp, and Messenger.
Meta is one of the most valuable companies in the world and billions of people around the world use its products and services. The average annual revenue growth rate of Meta Platforms, Inc. (META) over the past five years is 30.7%.
Potential investors should closely monitor its financials, competition, growth potential and regulatory changes in the tech and social media sectors.
6. Johnson & Johnson (JNJ)
Johnson & Johnson is a big healthcare company that has been paying dividends and growing steadily for a long time. The company makes medicines, medical tools, and consumer healthcare products. The healthcare industry is expected to grow in the long term, and Johnson & Johnson’s diverse business makes it resilient.
Johnson & Johnson has a long track record of growth and profitability. The company’s revenue has grown at an average annual rate of 6% over the past ten years and 11.7% over the past five years.
7. Walt Disney Company (DIS)
Disney is a world-famous entertainment company that has many different businesses such as theme parks, movies, TV shows and streaming services. It has bought big franchises like Marvel and Star Wars, which has made its content even better. Disney is able to change to meet the needs of its customers, which makes it a good investment for the long term.
The average annual revenue growth rate of the Walt Disney Company (DIS) over the past five years is 8.2%.
8. Visa Inc. (V)
Visa is a big company that helps people make digital payments around the world. As more and more people stop using cash, Visa’s services are becoming more and more popular. Visa has a lot of customers and is available in many countries, which gives it a big advantage in the digital payment industry. This means that Visa is likely to grow in the long term.
The company has a strong track record of growth and profitability, and its revenue has grown at an average annual rate of 10.9% over the past five years.
9. Berkshire Hathaway (BRK.A)
Berkshire Hathaway (BRK.A) is a big company run by Warren Buffett. It owns many different businesses such as insurance, energy, factories and consumer brands.
Berkshire Hathaway invests in other companies for the long term and has a substantial investment portfolio that includes stocks of different companies. Investors often see it as a safe and steady choice because it has a good track record and leadership.
The average annual revenue growth rate of Berkshire Hathaway Inc. (BRK.A) over the past five years is 9.3%.
10. JPMorgan Chase (JPM)
JPMorgan Chase (JPM) is one of the biggest and most important banks in the world. It offers many different financial services, such as banking, investment banking, asset management, and loans to consumers. JPMorgan Chase is a very important company for the financial industry, and investors and analysts watch it closely. Its performance often reflects the overall economy, so it is an important stock to follow for people interested in the financial industry.
JPMorgan Chase’s average annual revenue growth rate over the past five years is 5.33%
Diversification of Stocks
Even though these stocks may be good for the long term, it is important to spread out your investments. Investing in different industries can help reduce your risk if one stock or industry does not perform well. You should also review your investments regularly and make changes as needed to make sure they are still aligned with your long-term financial goals and how much risk you are comfortable with.
How to Pick Stocks for Long-Term?
Here are some key factors to consider when selecting stocks for long-term holding:
1. Strong Fundamentals
Start by analyzing the fundamental aspects of the companies you are interested in buying stocks. Look for the ones with strong financials such as strong revenue growth, profitable margins and manageable debt level.
These fundamental aspects of a company provide a strong foundation, which is important to achieving success in the long term.
2. Competitive Advantage
Choose to invest in companies that have a strong competitive edge. This advantage can be in a variety of ways such as strong brand recognition, exclusive technology or a dominant market position.
Businesses with a competitive advantage are better equipped to handle economic disruptions and maintain themselves.
3. Dividend Growth
Look for stocks that pay dividends and have a track record of growth. Dividend-paying companies offer a consistent source of income and dividend growth is an indicator of a strong and investor-friendly company.
Choosing to reinvest the profits can boost your wealth growth through the compounding effect.
4. Industry Trends
Review current trends within the industry and the future growth of companies. Choosing to invest in sectors with growth opportunities can increase your chances of achieving favorable results.
Additionally, be alert to industries that may face disruption and select companies that have the ability to successfully adapt and handle such changes.
5. Management Quality
Assess the quality of the company’s management. Strong leadership makes a huge difference in a company’s long-term ability and performance.
Look for the one with a track record of wise decision-making and a clear vision for the future.
Conclusion
When looking for the “10 best stocks to buy and hold for 20 years,” focus on companies with strong financials, sustainable advantages over their competitors and a history of paying and growing their dividends.
These mentioned stocks have the potential to earn you profit in the long term. Remember, patience is key in long-term investing and making the right choices today can lead to a bright financial future.