Responsible investors always keep an eye on their investments, but obsessively checking your portfolio can lead to premature, panic-driven selling. That's because during market sell-offs, many investors forget Benjamin Graham's famous quote: "In the short run, the market is a voting machine -- but in the long run, it is a weighing machine."
Therefore, antsy investors should buy "set and forget" stocks that can be owned for decades without the need for constant checkups. Let's take a closer look at three such stocks -- PepsiCo (NYSE:PEP), Waste Management (NYSE:WM), and Disney (NYSE:DIS).
At first glance, PepsiCo might look risky. After all, soda consumption has been plunging worldwide due to health concerns, and hit a 30-year low in the U.S. last year. However, PepsiCo's namesake cola only accounts for a small part of its product lineup, which includes juices, teas, sports drinks, bottled water, Frito Lay snacks, and Quaker packaged foods.
That mix of 22 billion-dollar brands makes PepsiCo a much more diversified play than Coca-Cola (NYSE:KO), which doesn't sell packaged foods. That mix has helped PepsiCo outperform Coca-Cola in recent quarters. In their most recent quarters, PepsiCo posted 4.2% organic growth, while Coca-Cola's organic revenues only rose 3%.
Past performance doesn't guarantee future gains, but PepsiCo's 60% rally over the past five years also crushed Coca-Cola's 22% gain. PepsiCo has also outlined its plans to feed the world's growing population as it hits 9 billion in 2050 -- indicating that the company plans to be around for a very long time. PepsiCo also rewards patient investors with a forward dividend yield of 2.9%, and has raised that payout annually for over four decades.
Waste Management is a straightforward "buy and forget" stock because it's the dominant waste management company in North America. It serves over 21 million customers with its network of recycling facilities, transfer stations, and landfills, and recycled a whopping 15 million tons of garbage last year. It also generates renewable energy with its landfill-gas-to-energy technology, which produces enough energy to power about half a million homes.
Waste Management provides slow but steady growth. Analysts expect its revenue to rise 5% this year, and for its earnings to improve 12%. The company pays a solid forward dividend yield of 2.3%, and has raised that payout annually for over a decade. Waste Management has a massive moat, since it would be too expensive for rivals to match the 35-year-old company's scale, and economic downturns won't reduce demand for its services. Those factors make Waste Management -- which has rallied 120% over the past five years -- a great investment for nervous investors.
If you believe that Disney's theme parks, movies, and franchises from Pixar, Marvel, and Lucasfilm will keep making money hand over fist over the next few decades, then the House of Mouse is a great stock to buy and forget. The diversified entertainment powerhouse is one of the world's largest media companies, and its core properties are built to last for decades instead of quarters.
Disney stock has surged more than 180% over the past five years, but that run was halted this year by growing concerns about cord cutters gutting ESPN and the rest of its cable business. Those concerns are justified, since the cable business still generated 43% of its operating income last year.
However, its cable business is hardly dying. Disney is expanding ESPN's ecosystem with its website, a mobile app, and an upcoming stand-alone streaming service. Moreover, long-term growth in Disney's other business units -- like its new Shanghai resort, Star Wars Land in California, and the expansion of its Marvel and Star Wars universes -- could offset its cable declines as it pivots the business toward internet-based platforms. Disney's forward yield of 1.5% might look paltry, but it's raised that dividend for five straight years and could easily double that payout if it wanted to.
Buy them and forget them
Warren Buffett once told investors that they should buy stocks they'd "be perfectly happy to hold if the market shut down for ten years." I believe that PepsiCo, Waste Management, and Disney fit that profile. The three stocks will inevitably experience some ups and downs over the next decade, but I believe that investors can buy them, forget them, and know that they will likely climb higher by the end of that period.
Leo Sun owns shares of Walt Disney. The Motley Fool owns shares of and recommends PepsiCo and Walt Disney. The Motley Fool owns shares of Waste Management. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.