Stocks to hold for 50 years? At first, that seems like an impossible request. We've all seen it in recent years: Even huge, great companies fade, get disrupted, or run aground on scandals or disasters of various kinds.
But sometimes, you can tell that a company isn't just great now, it's built to be great for decades to come. With the caveat that nothing in the future is certain, our Foolish contributors think Alphabet (GOOG +2.92%) (GOOGL +2.53%), Amazon.com (AMZN +0.53%), and Eaton Corporation (ETN +2.56%) are good choices to add to a truly long-term portfolio.
Alphabet's self-driving car company, Waymo, is just one of its many moon shots. Image source: Fiat Chrysler Automobiles.
Possibly the world's greatest innovation engine
Keith Speights (Alphabet): If you didn't use Alphabet's Google nearly every day this week, you're probably one of the few in the developed world who didn't. Alphabet is best known for its Google search engine, Chrome browser, YouTube video site, and Android mobile operating system, which powers nearly 9 out of 10 smartphones.
Why buy and hold Alphabet for the next 50 years? The company simply doesn't stop innovating. Innovation doesn't just apply to Alphabet's moon shot efforts. The company continues to improve its existing products, sometimes in ways that you don't even notice. (Those can be the best kinds of innovations, actually.)
However, I admit to being intrigued by the moonshot programs. Alphabet's "other bets" business segment includes Calico, Nest, Verily, Waymo, and X. Two of these initiatives are in the healthcare arena. Calico is focused on increasing the human lifespan, while Verily works on technology like developing glucose-sensing contact lenses for diabetic patients. Nest is developing home automation technology. Waymo is a pioneer in self-driving cars. And X focuses on a variety of projects including using a network of balloons to bring internet access to the two-thirds of the world's population that doesn't have it yet.
While Alphabet pursues these incredibly cool ideas, its core businesses are generating revenue of more than $90 billion and earnings of $19.5 billion annually. Many of the company's moon shots won't pan out. But I suspect that some will. I also think that 50 years from now, Alphabet will still be innovating -- and still making investors a lot of money.
"E-commerce king" is just the beginning
John Rosevear (Amazon.com): Amazon hardly needs an introduction, but it always surprises me to find that many tech-savvy investors don't own any shares of the online-retail-and-more colossus.
If you're one of those investors, it's time to reconsider. Yes, Amazon is already huge. Yes, its stock price is high. But it still has immense growth potential, and it genuinely has the cash-generation ability and management team to fully pursue that potential.
Between Amazon's Alexa voice-recognition software (and the powerful artificial intelligence capabilities that underlie it), its Amazon Web Services cloud-computing empire, its incredibly dominant online-retail business, and the dozens of small bets that CEO Jeff Bezos seems to add every quarter... the upside here probably isn't limitless, but it's big. Twenty-plus years in, it's still seems like Amazon is just getting started.
And while other companies will come and go, Amazon isn't going anywhere. It's got plenty of cash, management that is heavily invested, and good wide moats around its core businesses -- together, a recipe for profitable growth for decades to come. I own Amazon shares, and I suspect my sons will inherit them -- hopefully, many years from now.
Always adjusting to the times
Reuben Gregg Brewer (Eaton): Global industrial giant Eaton Corp.'s sales have fallen in each of the last two years, buffeted by slow economic growth and currency volatility. However, the company managed to increase its operating margin in both years because of aggressive restructuring efforts. The bottom line, meanwhile, has held up relatively well (Eaton made $4.21 a share in 2016, down just $0.02 from 2015), and the dividend has been increased every year for the past seven years.
Eaton's focus is on power management, which it covers through its electrical products, electrical systems and services, hydraulics, automotive, and aerospace segments. It has a long history of buying and selling businesses to adjust its portfolio over time. Its biggest recent deal was the 2012 acquisition of Cooper Industries, a $12 billion transaction that materially expanded its electrical operations. Tweaking businesses to get the most out of them, as highlighted above, is another ongoing focus.
Essentially, Eaton is a pro at shifting with the changing times via acquisition and internal tweaks. In fact, it started its life over 100 years ago as an axle manufacturer, eventually selling that division in 1998 to focus on more lucrative operations. It's unlikely that you will ever find Eaton an exciting stock to own, but you can rest assured that it will deftly navigate the ups and downs of the business cycle over the next 50 years, transforming itself with the market as it goes. Meanwhile, you'll be rewarded with a nice 3.2% dividend yield that has a long history of increases behind it.
