It's no fun having to check your portfolio daily to see how your stocks are performing -- or precisely, to see that they aren't making losses. You can easily avoid the stress, though, by owning stocks that let you sleep at night even through the market noise and do not require any babysitting at your end. Ideally, stocks of fundamentally strong companies with clear competitive advantages, financial fortitude, and a proven leadership have what it takes to grow year after year without your having to constantly check them.
If you're wondering where to find such stocks, start with Waste Management (WM 1.04%), Sherwin-Williams (SHW 2.14%), and Brookfield Infrastructure Partners (BIP +0.85%).
As long as there's waste, this company will make money
Waste Management has crushed the S&P 500 in the past five years, and it isn't without reason. Given the amount of waste we generate -- the Environmental Protection Agency estimates the U.S. generated 258 million tons of municipal solid waste in 2014 -- a company that's hauling, disposing of, and recycling all that trash must, unsurprisingly, be making money. More so because Waste Management isn't just any company -- it is the leader in the industry with the largest number of landfills and gas-to-energy conversion facilities that serve 21 million customers in the U.S. and Canada.
Image source: Getty Images.
Operating such a capital-intensive business is no cakewalk, which is why Waste Management's solid foothold in the industry itself acts as a barrier to entry. Еven other haulers use Waste Management's landfill facilities for a tipping fee, making it a pretty stable and high-margin business for the company.
Waste Management has grown its net income and free cash flow (FCF) by roughly 33% and 48%, respectively, in the past five years, and has rewarded shareholders with annual dividend increases every year since 2003. The stock has, expectedly, moved up too, gaining almost 165% on a total return basis (stock price appreciation plus dividend) in the five-year period. While past performance doesn't guarantee future returns, Waste Management's leadership in an indispensable business makes it a perfect buy-and-forget stock to own.
Sherwin-Williams is entering a new growth phase
Paint isn't really an essential product, but walls in homes and workplaces get chipped from time to time and need to be repainted. Then there are the new houses and buildings that need their first coat of paint -- inside and outside -- or the aircraft, trucks, and cars that have to be painted before being put up for sale. For all this and more, people turn to Sherwin-Williams, which is why the paints, coatings, and sealants manufacturer makes for such a compelling investment.
During its 150 years of existence, the Sherwin-Williams brand, along with the Dutch Boy and Pratt & Lambert brands, among others, has become a household name. Guess what company made the paints that adorn iconic buildings like the White House and the Burj Khalifa. Yes, it's Sherwin-Williams.
A network of own stores has helped Sherwin-Williams build a strong brand image, so much so that it has been able to pass on higher input costs to customers without losing on volumes. As a result, Sherwin-Williams has doubled its net income and FCF in the past decade and has increased its dividends every year since 1979. This dividend streak is a testament to Sherwin-Williams' resilience -- an essential characteristic for a stock you intend to buy and forget.
Sherwin-Williams has been a six-bagger in the past decade, and I wouldn't be surprised if the stock continues to inch higher given its just-completed acquisition of Valspar, which should hugely expand its global footprint. As the company grows, so should its share price.
An incredible infrastructure play
Image source: Getty Images.
With Brookfield Infrastructure Partners, you can indirectly bet on infrastructure while avoiding part of the cyclicality associated with the sector and also take home fat dividend paychecks. That's because Brookfield Infrastructure doesn't build infrastructure assets, which require massive capital investments. Instead, the company acquires assets at value prices, actively operates them, and resells when the opportunity arises to invest in other businesses. Also, as thanks to its master limited partnership structure, the company passes on a greater portion of its profits to shareholders in the form of dividends. The stock currently yields 4.2% in dividends.
Mind you, Brookfield Infrastructure's portfolio of assets is nothing to sneeze at -- it includes electricity and gas transmission lines, toll roads, gas pipelines, freight rail networks, ports, and cellular towers among others. As most of these businesses also provide essential services, Brookfield Infrastructure's sales and cash flow -- or funds from operations (FFO) -- have been pretty resilient to the ups and downs of the economy:
BIP Revenue (TTM) data by YCharts.
For shareholders, the gains have been twofold -- dividends that have grown at a compounded average rate of 12% since 2009, and total stock returns of nearly 430% since. With the company targeting 12%-15% returns on equity and 5%-9% annual dividend growth in the long run, you can rest assured this stock will fill your coffers while you relax.
