Every investor thinks about the investing process a little differently. For example, you may only care about broad investor sentiment toward a company if you are only planning to own a stock for a few weeks or months. However, if you are planning to own a stock for decades, you have to look at the business behind the stock very closely. Investor sentiment will wax and wane, but a good business is what shines through over the long term.
Search giant Alphabet (GOOG -3.29%) (GOOGL -2.75%), biotech Amgen (AMGN -0.55%), and diversified landlord W.P. Carey (WPC -0.56%) all have businesses that can stand the test of time. If you are looking for a stock to buy and hold for the next 50 years, each of these companies should be on your radar today.
50 years is more then enough time for a moonshot
Brian Stoffel (Alphabet): When I think about why I own shares of Alphabet now, the answer is easy: absolute dominance in search and related products gives it more data -- at a cheaper cost -- than anyone else in the world. That data is advertising gold.
But when I think about why I'd like to still be holding shares in 2069, I focus much more on the company's "moonshots." Alphabet has lots of products looking to fundamentally change the way we live our lives -- for the better. Nearly all of them will fail, but if even one or two succeed, it could revolutionize what Alphabet is.
Taken in this view, I simply look at the dominant advertising business as a funding source that will allow Alphabet to strike out 50 times while not going bankrupt -- keeping it alive long enough to hit a home run on Moonshot 51.
That said, I don't think it will take that many failures to see a noticeable contribution from the company's other bets. With each passing day, it looks more and more like Waymo's self-driving cars will be the first big hit to come out of the company's non-search-related business. I have no idea what'll be next, but over a 50-year time horizon, I fully expect more blockbuster innovations from the company.
A proven winner
George Budwell (Amgen): Biotech blue blood Amgen is a proven winner. A $10,000 investment in the biotech's IPO way back in 1983 would be worth an astonishing $6.2 million today (assuming a dividend reinvestment plan). While past performance is no guarantee of future success, Amgen appears to have what it takes to keep delivering outstanding returns on capital for patient investors.
Even though Amgen is going through a major product churn right now, the biotech remains on solid footing for the long haul. Over the last few years, Amgen has rolled out a couple of major new products -- and line extensions for already-approved drugs -- that have kept it from losing ground in the revenue department for the most part. The biotech's multiple myeloma medicine Kyprolis, newly approved headache treatment Aimovig, and cholesterol-lowering drug Repatha have all helped to offset the declines from its problematic legacy portfolio. Looking ahead, Amgen is banking on its heavy investments in biosimilars and cutting-edge immuno-oncology drugs to round out its next generation of growth products.
Apart from its healthy portfolio of new growth products and product candidates, Amgen also sports an outstanding balance sheet. In the latest quarter, for instance, the biotech reported having more than $26 billion in cash and cash equivalents in the bank. That enormous war chest gives the company plenty of financial flexibility to pursue value-creating acquisitions in the years ahead.
All told, Amgen should have little trouble overcoming these near-term headwinds thanks to its outstanding clinical pipeline and eye-popping cash position -- making it a great stock to buy and hold for the duration.
Property diversification like no other
Reuben Gregg Brewer (W.P. Carey): Real estate investment trust (REIT) W.P. Carey has proven itself over time, increasing its dividend annually for 22 consecutive years. That's every single year since it came public in 1998. That notably includes yearly hikes during the deep 2007-to-2009 recession that led to dividend cuts throughout the REIT sector. Add in a roughly 5% yield, more than twice what you'd get from an S&P 500 Index fund, and there's a lot to like here.
But what's really important is the business underpinning that impressive history. Carey helped to create the net lease sector, in which a company with property sells it to a third party (like Carey) and then instantly signs a long-term lease. That lease requires the former owner to take care of most of the operating costs of the property (such as taxes and maintenance). This transaction allows the former owner to raise cash to fund things like expansion and acquisitions while retaining use of key properties. And it provides Carey with a low-risk property to add to its portfolio.
That said, you can find other net lease REITs. What you can't find is a net lease REIT with the diversification that Carey offers. It's portfolio is comprised of office (26% of rents), industrial (23%), warehouse (21%), retail (18%), and other. And about a third of its rents come from foreign markets, largely Europe. The benefit for investors? Carey can opportunistically invest where it sees the most value in a way that more focused, domestically centered REITs can't. That, combined with a long history of success, makes W.P. Carey the type of dividend-paying stock you can buy and hold for a very long time.