Buying and holding stocks for the long term is the best way to predictably generate life-changing wealth. And we're not talking weeks or months; we think investors should consider buying stocks they can confidently own for years -- or, better yet, decades.
To that end, we asked three top Motley Fool contributors to each pick a stock they think you would be wise to purchase and hold for the next 50 years. Read on to see why they like Corning (NYSE:GLW), Accenture (NYSE:ACN), and A.O. Smith (NYSE:AOS).
167 years strong (and counting)
Steve Symington (Corning): Founded way back in 1851, Corning may know better than any other tech company how to thrive no matter what the world throws at it.
As it stands, Corning has built an enviable empire through its ability to create innovative glass products ranging from LCD glass substrates (found in millions upon millions of LCD displays and TVs) to optical cable and components (used in next-generation telecommunications networks), ceramic particulate filters for the automotive market, protective cover glass for mobile devices and automotive applications (known as Gorilla Glass), and even laboratory equipment and pharmaceutical packaging.
Each of these markets enjoys its own ebbs and flows, with strength in some helping to offset temporary weakness in others in any given quarter. But to help reward investors for their patience, Corning outlined a four-year strategic and capital allocation framework in 2015. Corning only recently passed the halfway point of that framework last quarter. But when all is said and done in 2019, it will have returned more than $12.5 billion to shareholders through dividends and stock repurchases, while at the same time investing $10 billion toward future growth opportunities.
Of course, long-term shareholders know Corning won't simply cease its efforts in 2019. Rather, it seems all but certain that Corning will replace its current strategic framework with another when the time comes. As such, I think Corning is a compelling bet for investors looking for a business worth buying and holding for the next five decades.
Helping businesses stay on top of the latest tech trends
Brian Feroldi (Accenture): While it is impossible to know what kind of technological advancements will happen in the next 50 years, it is highly likely that companies everywhere will need help figuring out how to take advantage of the latest and greatest solutions. That's why I think that tech consulting companies like Accenture (NYSE:ACN) are a great long-term bet for investors to make.
Accenture employs a worldwide army of tech-savvy workers that spend a great deal of their time studying the latest in technology. Those investments pay off big-time down the road as companies from a wide variety of industries are willing to pay through the nose in order to bring in Accenture's consultants to help them implement big tech projects.
As evidence of Accenture adaptability, consider that management recently pivoted its workforce training toward high-growth tech trends like cloud computing, data security, and digital services in recent years. When combined, these tech trends accounted for more than half of total revenue last quarter and two-thirds of new bookings. That tells me that Accenture has a knack for training its employees in areas that are in high demand by its customers.
If Accenture can keep that up over the long term, then its top line should continue to head in the right direction. That should easily allow the company to crank out profits that can be used to reward shareholders. For investors, that suggests that the dividend should continue growing -- which is news that should delight income investors since the stocks currently yields 1.7% -- and the share count should continue to dwindle, thanks to the company's healthy appetite for stock buybacks. When compounded over time, I think these factors will allow Accenture's investors to earn market-beating total returns.
Households will always need clean, warm water
Maxx Chatsko (A.O. Smith): When choosing a stock to buy and hold for half a century, one strategy that makes sense is investing in businesses that provide staple goods and services. As a leading global producer of residential water heaters and water treatment products, A.O. Smith Corp certainly fits the bill. After all, I think it's safe to assume people will still enjoy clean, warm water in 50 years' time.
While you may consider water heaters boring business, boring is often a great thing for investors. That's evidenced by the stock's 10-year return of 1,080% -- better than Apple. Shares have also outperformed Facebook stock since its IPO. How does it do it? Well, turns out, A.O. Smith's growth strategy isn't so boring.
Every year the company generates a steady stream of revenue and earnings from the mature consumer market of North America. In 2017, sales climbed to $1.9 billion and represented 63% of total revenue. Meanwhile, the exciting growth opportunities have come from China, which generated over $1 billion in sales last year for the first time ever. The country's quickly growing middle class has proven great for business as many households are purchasing their first water heaters ever, although water treatment and even air purification products have sold well, too.
A.O. Smith has plenty of room left to run through acquisitions in North America, continued market share expansion in China, and a fledgling opportunity in India (although sales in India totaled just $26 million in 2017, management thinks the long-term opportunity mirrors that of China). So even though we can't predict exactly where the business will be in half a century, this stock should provide an above-average growth opportunity for decades to come.
Sit down and stay awhile
It seems an understatement to say a lot can happen in 50 years. And there's no way for us to absolutely guarantee that these three stocks will generate market-beating returns in that time. But between Corning's long history and innovative roots, Accenture's adaptability, and A.O. Smith's essential products and growth potential, we think chances are high that investors who buy today will be more than happy with their decision for decades to come.