2030: It's only 13 years away. At the same time, 2030 can seem like an eternity away to investors. Technology and innovation have been disrupting businesses forever, but it seems as if the pace of disruption has increased in recent years, putting more and more companies at risk of getting left in the dust.
And while it might seem that way, there are plenty of companies with real and sustainable advantages that have lasted for decades and are likely to last for decades more. Here are three that some of our contributing investors particularly like as not only being around in 2030, but also thriving between now and then. Keep reading to learn why Hormel Foods Corp. (HRL 1.31%), Waste Management, Inc. (WM 0.79%), and BofI Holding, Inc. (AX 2.09%) are three stocks we especially like for the world of 2030.
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This is what banks will look like in 2030
Jason Hall (BofI Holding, Inc.): You know what's not going to go away by 2030? Banking. But you can pretty much write it in stone that there will be far fewer retail banking centers open than there are today. The bottom line is, people just don't need to use them much anymore.
And while that's going to mean a lot of changes for traditional banks that will need to close those branches, cut staff, and dispose of all those assets, BofI Holding, the company behind Bank of Internet, is already there. It's one of the big reasons BofI's operating costs are far lower than most other banks, and why it generates far higher profitability.
Here's the thing: Since BofI is still a small bank -- with around $8 billion in assets last quarter -- but already benefits from bigger profits and a leaner business, it has a huge head start and more resources to invest in outperforming its bricks-and-mortar peers for years and years to come. And management is doing just that -- steadily spending more on expanding its book of business into multiple lending lines across both consumer and business lending.
Trading for less than 14 times trailing earnings and 2 times book value at recent prices, it's also cheap for its growth rate and profitability. If management can continue investing in diverse growth and conservative lending, BofI could make investors a lot of money between now and 2030.
People will still eat in 2030, and this company should still deliver big investor value
Reuben Gregg Brewer (Hormel Foods Corp.): I could argue that Hormel is a great option because we'll all need to eat in 2030, just like we do today. It's a good reason to like the maker of Spam and other proteins, but it's definitely not the only one.
Another reason I like Hormel is its commitment to returning value to shareholders via dividends. Its record of consecutive dividend increases is an incredible 51 years. And there's the rate at which the dividend has been increased -- roughly 15% annualized over the past decade. At that rate, the dividend has doubled roughly every five years. By 2030, the dividend could be almost triple what it is today.
HRL Dividend Per Share (Quarterly) data by YCharts
One more reason to like Hormel's prospects out to 2030 is its willingness to change with the times. (You don't build a 51-year dividend streak without being flexible.) Recently that's meant jettisoning older, slower-growing brands and products (like salt) and buying newer brands such as Wholly Guacamole, Skippy, and Justin's Nut Butters. Hormel is also focused on innovation, with a goal of having 15% of revenue come from newly developed products by 2020. Hormel is no stick in the mud letting the competition to pass it by.
The best part, however, is that Hormel's yield is currently over 2%, which is toward the high end of its historical range. I wouldn't call Hormel cheap, but it appears to be a great company trading at a fair price -- and that's hard to find in today's stock market.
You fill your trash bins; this stock fills your wallet
Neha Chamaria (Waste Management): When you're thinking really long term --as in a decade or more -- the stocks you choose to invest in must not only belong to an industry that's unlikely to die, but the company should also have a sustainable competitive advantage over its rivals. The business of managing trash is a perfect example. Whether it's us or our generations to come, we'll continue to generate waste -- which means Waste Management should be around until 2030 and beyond.
Waste Management is the largest player in the industry, with a customer count topping 21 million in the U.S. and Canada. The company deals with every aspect of managing waste, from hauling it to recycling it. Waste Management also has an extensive landfill gas-to-energy conversion network through which it converts landfill gases to electricity. The company has even opened 100 natural gas refueling stations to power its expanding fleet of natural-gas trucks. Such self-sufficiency initiatives are a mark of a visionary management.
WM Net Income (TTM) data by YCharts
Over the years, Waste Management has successfully combined the resilience of its business with forward thinking to rapidly grow earnings and cash flow. That has been a double treat for investors: Waste Management has increased its dividends annually for 14 straight years, and the stock has more than quintupled on a total return basis. There's little reason to believe this stock won't make investors who buy today happy in 2030.
