Are there some stocks you can buy and literally hold forever, the ideal time frame according to Warren Buffett. Some critics will say one should never be wedded to a stock. However, there are a select few that, assuming the company isn't involved in any fraud, you can and should hold forever.
These are businesses fundamental to mankind. They are wrapped up in the DNA of not just the global economy, but the lives of every single person on the globe. You buy these companies, never sell them, accrue and reinvest their dividends, and pass them on to your kids.
By forever, do I really mean "forever"? Essentially. I mean a 30 to 60 year time horizon, and possibly longer, because no matter what headwinds these companies face, there is nothing they will not overcome.
I've written about a few of these before, and I took my time before rolling out my next picks because I wanted to really vet them, and make certain I would truly be comfortable holding them until I became Rip Van Winkle.
America will always need military firepower and as such, we will always need the defense industry. There are five great stocks in this sector that people always look at: Boeing (BA), Raytheon (RTN), Lockheed Martin (LMT), Northrop Grumman (NOC) and General Dynamics (GD). They also happen to be the largest government contractors, and as we know, government has unlimited funds. So these are all fine choices, but as a Forever Hold, I choose the venerable Boeing. Last year it came through with stellar results even after all these years. Revenue up 7%, operating profit up by 17.6%, and margins expanded 10%. It's Q1 net profit was up an unbelievable 58%. The company sits on some $10 billion in cash, and routinely generates billions in free cash flow. Plus it pays a 2.5% dividend. All this good news and much of it wasn't even the result of big government spending!
Next comes Intel (NASDAQ:INTC). Look, the company owns some 84% of the world's chip market and always has. It's not gong to change. What company is going to break into the game at this point? None. And if a company does get pushy, Intel can just buy it. Further, as processing moves into the cloud, power for all the data centers has to come from somewhere. It'll be Intel. And what company do you think is always going to be on the cutting edge of technology? The company has $14 billion in cash, half that in debt, and routinely generates $10 billion in free cash flow annually. That's a gigantic ton of cash to fuel everything it'll ever want to do, including paying the 3.2% yield.
Although entertainment is generally a terrible investment, only one company has managed to make it a cash cow. It's been a global brand name for more than 50 years, is the go-to name for countless products for every new parent around the world, has tremendous product diversification, and makes robust acquisitions that help it stay ahead of the competition. I'm talking about Walt Disney (NYSE:DIS). It knows how to make good movies, and the purchases of Pixar and Marvel only buttressed its offerings. Childhood is Disney and Disney is childhood. That's not going to change. I know, I know, in life anything can happen. But given all that America and the world has endured since Walt came onto the scene, somehow Disney both survives and thrives. I wish it's 1.3% yield was larger, but it needs lots of that free cash flow to continue to operate.