A lot can happen over the course of 12 years. A child can go from infancy to teenager, a car can go from new to clunker, and a sapling can grow into a mighty tree. Over a dozen years, a lot can happen to investments as well. That's why it's best to have an extended time horizon and choose companies that are built for the long haul, so they'll still be surviving and thriving in more than a decade.
To help with that task, we asked three Motley Fool investors to choose companies that they believed could safely stand the test of time. They offered convincing arguments for Amgen Inc. (AMGN -1.11%), Berkshire Hathaway Inc. (BRK.B -0.81%) (BRK.A -0.97%), and Aptiv PLC (NYSE: APTV).
A safe income play
George Budwell (Amgen): Not many healthcare stocks qualify as outstanding long-term buy and holds. The savage competition across the sector and ever-changing regulatory landscape, after all, make these companies prone to marked downturns in value that can persist for extended periods of time. Biotech heavyweight Amgen, however, is one clear exception to this general trend.
Throughout its history, Amgen has proven to have an adept hand at bringing cutting-edge drugs to market for a host of high-value indications. Over the past few years, for example, the company has developed osteoporosis drug Prolia, multiple myeloma medicine Kyprolis, and cardiovascular disease treatment Repatha into major growth drivers. In fact, these three high-growth products are expected to largely offset the falling revenues from former star medicines like Enbrel and Neulasta going forward.
As an added bonus, Amgen has transformed into a top notch income play ever since it began paying out a dividend in 2011. For example, the company currently offers a yield of 3.08%, which is well above average for a healthcare stock. While the biotech's trailing payout ratio of 171% is a concern, Amgen's monstrous cash position -- which presently sits at a staggering $41.7 billion -- should provide more than enough cover for its rich dividend program in the years ahead.
In all, Amgen has a promising line up of new growth products that's smoothing out the edges during its transition away from fading star medicines, along with a juicy dividend that should appeal to any long-term oriented investor.
Decades in the making
Danny Vena (Berkshire Hathaway): There are a lot of reasons to like Berkshire Hathaway, not the least of which is its legendary CEO -- Warren Buffett. The Oracle of Omaha has led the company to virtually unmatched success over the last five decades. Between 1965 and 2017, under Buffett's leadership, the company generated compound annual gains of 20.9%, more than double the results of the S&P 500. The stock achieved a mind-boggling overall gain of 2,404,748% over the ensuing years.
That's not the only reason to like Berkshire. Buffet is 87 year old, and while he may not be running things until 2030, the culture that he has built and nurtured will thrive. In recent years, two hand-picked lieutenants, Ted Weschler and Todd Combs, have been entrusted with tranches of Berkshire's portfolio. Buffett has said that hiring the duo was "one of the best decisions that Charlie [Munger] and I have ever made."
Diversification is another hallmark of a safe investment and Berkshire Hathaway has that covered as well. The conglomerate is comprised of more than 60 subsidiary companies, across a wide variety of industries including insurance, railroads, banking, and consumer goods. The company also holds stock in more than 40 publicly traded companies. The vast assortment of business interests and investments provides investors with diversification -- all within one company.
The world will likely have changed a great deal between now and 2030, and many of the companies making headlines today may have receded into the shadows. However, with the dozens of companies represented by Berkshire Hathaway, an investor can feel confident investing in a company that represents an instant and diversified portfolio.
A driverless future
Daniel Miller (Aptiv): When investors list stocks they can safely own until 2030, the cyclical automotive industry won't have too many companies make the cut. In fact, the word safe and automotive industry have rarely appeared in the same sentence over the past decade, but that won't be true over the next two decades, especially for a stock such as Aptiv.
For those unaware, automotive parts supplier Delphi spun off its powertrain division in 2017 and the remaining company, now named Aptiv, was left to focus on its core business of developing electric vehicle technology and self-driving systems. Aptiv's advanced driver assistance systems (ADAS) and electrified systems provide the company with better compound annual sales growth potential as well as higher margins than its powertrain business, but management believes there's even more future potential.
In fact, Aptiv believes it can leverage company strengths to unlock more than $35 billion in incremental addressable market opportunities by 2025! Those opportunities include active safety on the path to driverless vehicles, with Aptiv providing level 3 solutions to OEMs by 2025. There is also massive opportunity in connected services with Aptiv planning to embed connectivity in all of its solutions by the end of this decade -- it's an effort to unlock value for companies running fleets of vehicles, something similar to General Motors' Maven brand.
If there is anything certain in the automotive industry right now, it's that the future is clearly in electric vehicles and driverless car technology, and that will only become clearer on the road to 2030 -- a road where Aptiv is poised to become a leader.