What makes it so hard to understand what investors should do for the next 50 years is that we have an extremely hard time imagining possibilities that far into the future. Look back at the differences between 1966 and today. Technology and societal trends are changing so fast that anyone transported from that time to today would barely comprehend the things we have done in this relatively short time. For investors, though, this is where some of the greatest gains can be made, by buying and holding companies with rock-solid competitive advantages that will stand the test of time.
So we put the challenge of finding stocks that look to be great investments over the next 50 years to three of our contributors. Here's what they had to say.
A company whose stock performs as well as its products taste
Dan Caplinger: Stocks that give consumers what they want are often successful, and in the snack and beverage industry, PepsiCo (PEP -0.11%) has done an admirable job of being a go-to outlet for consumers for decades. The company is best known for its namesake cola and a variety of other soft drinks, but it's also the corporate entity behind the Frito-Lay snack brand. In addition, sports drink Gatorade, the Aquafina water brand, and products like Cheetos, Quaker Oats, and Tostitos tortilla chips round out a diversified portfolio of much-loved consumer offerings.
Sentiment over sugary soft drinks has never been worse, and that has made some people leery of investing in the beverage space. Yet PepsiCo has two advantages over its nearest rivals. First, its diversified portfolio of snack items avoids giving PepsiCo investors concentrated pure-play exposure to any adverse developments in the beverage space, such as taxation or bans. Perhaps more importantly, PepsiCo has been ahead of the curve in encouraging healthy thinking among its brands, launching efforts like reduced-sugar beverages, smoothies containing almond milk, and an expanded lineup of juices that include not only fruits but also vegetables.
PepsiCo's ability to change with the times proves that it has the staying power to survive shifts in what consumers want. Combined with impressive returns, dividend growth, and future prospects, that makes PepsiCo a solid pick for any consumer portfolio.
Over 16 decades of experience
Steve Symington: It might seem strange to choose any technology company as a stock to hold for the next five decades. But arguably no other business knows how to survive and thrive over the long term better than 165-year-old glass tech specialist Corning (GLW -0.70%).
"This is a company that is built to last," insists Corning CEO Wendell Weeks. "A company that continually produces innovations that enhance people's lives and transform industries ... a company that rewards its shareholders with stability, a reliable dividend, and the opportunity for explosive growth from successful new products."
Indeed, last month I singled out Corning as a stock likely to boost its dividend over the next year, namely as part of its aggressive $20 billion capital allocation program unveiled last October. Under that program, Corning promises to not only return more than $10 billion to shareholders through 2019 in the form of dividends and share repurchases, but also to invest around $10 billion over the same period in strategic capital spending, mergers and acquisitions, and research, development, and engineering to ensure its innovations remain at the technological forefront of the industries in which it operates.
More specifically, around 36% of Corning's total revenue last quarter came from its display technologies segment, which primarily focuses on the production of LCD glass. But it also boasts a steady presence making optical communications networking products (32% of revenue last quarter), ceramic automotive substrates to help reduce vehicle emissions under its environmental technologies segment (just over 10% of revenue), high-quality labware under its life sciences division (9% of revenue), and a slate of specialty glass materials (11% of revenue) offering compelling supplemental growth opportunities. The latter category most recently grew to include Gorilla Glass 5, which was unveiled in late July and should begin appearing as the cover glass of choice for leading smartphone and tablet designs by the end of this year.
Of course, this isn't an all-inclusive list of the varied products Corning offers. But as long as Corning continues to plow resources into ensuring its survival -- while at the same time making a concerted effort to reward patient shareholders in the process -- I think investors would do well to buy Corning stock and hold it for decades to come.
A toast to the next 50 years
Tyler Crowe: One thing that hasn't changed much in the past 50 years is our consumption of beer. Sure, maybe total and per capita numbers have changed over that timeframe, but the fact of the matter is that we have been consuming beer for millennia, and it's hard to envision an alternative emerging in the next 50 years that could unseat beer as a beverage of choice. This is the foundation of why Anheuser Busch InBev (BUD 1.04%) looks to be an attractive investment over the next half-century.
Thanks to the still-pending merger with SABMiller, Anheuser Busch has the advantage of being the world's largest brewer. The size alone gives the company some immense advantages. What is more important, though, is the near-monopolies that it will have in several markets worldwide, especially the high-growth markets in South America, Africa, and Asia-Pacific.
It's no secret that the emergence in craft brewing in the U.S. and the more fragmented beer markets in Europe have stagnated growth for many of ABInBev's more established markets, but these emerging markets provide immense opportunities to leverage the power of the combined companies' global brands that could have the ability to ensure growth for many more decades to come.
Since the deal with SABMiller isn't complete yet, it's rather hard to estimate the value of ABInBev's stock today. If you are looking over such a long-term time horizon, however, fretting too much about today's stock price misses the point of investing for the long term.