Buy These 3 Companies and Sleep Easyhttp://www.fool.com/investing/general/2013/10/07/buy-these-3-companies-and-sleep-easy.aspx Josh Kohn-Lindquist
October 7, 2013
Averaging 9.4% annualized gains since 1965, the S&P 500 Index (SNPINDEX: ^GSPC) has outperformed the great majority of individual investors, hedge fund managers, and even our beloved activist investors. Whether they're day traders, technical analysis experts, self-proclaimed contrarians, or even buy and hold Fools, it is often difficult to outperform the index on a yearly basis. Making things worse, many investors are pulling their hair out worrying about their investments. Consider J.P. Morgan and his famous quote, "Sell to your sleeping point." Too simple right? Perhaps, yet this holds tremendous merit, as it can have a profound impact on the average investor's decision making.
However, with the aid of dividends, stock buybacks, and huge moats, it is possible for the average investor to own stocks, sleep well, and outperform the market all in one fell swoop. Today we will take a look at 3 stocks to buy for the long term, helping you sleep like a baby.
With our second dividend aristocrat, we have the personal care juggernaut that is Kimberly-Clark (NYSE: KMB). Holding a wide variety of well known brands such as Kleenex, Huggies, Kotex, Scott paper towels, and Cottonelle, the company is one of many behemoths in the personal care arena. While Kimberly-Clark may not have the immediate top-line growth capabilities of a company like 3M, it offers an incredibly safe investment as it provides nothing but essential products for day to day life. While that in itself is a tremendously boring investing thesis, it is what makes a company with a huge moat so powerful. Aiming for revenue growth of 3%-5% and earnings-per-share growth in the high single digits, Kimberly-Clark will continue to dive into new markets and broaden its market share across the globe.
Representing my only selection outside of the dividend aristocrat realm, we have global payments company, Visa (NYSE: V). While Visa does not qualify as a dividend aristocrat due to its fairly new existence on the stock market, it has made a dividend payment in each year of its life as a public company. However, what Visa lacks in historical dividend payments, it makes up for with a global payment network that gives the company one of the biggest moats in all the investing world. Posting annual revenue growth of 12% and EPS growth of 40% yearly since its inception, Visa has proven to be a dominant force. Perhaps the most exciting aspect of Visa's future, is its No. 1 catalyst -- the simple fact that roughly 85% of the world's transactions are still done via cash or check.
Buybacks and Dividends
Over the last 10 years, it is clear to see each companies intentions as each has dramatically reduced its number of shares outstanding. In just the third quarter alone, Visa bought back almost $1 billion in shares. Similarly, 3M expects to buyback $3.5 billion-$4.5 billion in 2013, which it believes will add 1%-2% to EPS on its very o