Building a long-term portfolio requires detailed research, patience, and focus. It's not complicated, but it can be challenging to know when to buy high-quality stocks at reasonable prices on a consistent basis. The current market decline may provide just the right opportunity for investors to add the following high-quality stocks to long-term portfolios. Here's why Waste Management (NYSE: WM), American Tower (NYSE: AMT), and Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) are companies you can buy and hold for half a century without much concern.
From solid waste to solid profits
I began learning about the stock market by reading Peter Lynch's book One Up on Wall Street a long time ago. He utterly loved stocks that were boring and gross: "Better than boring alone is a stock that's boring and disgusting at the same time. Something that makes people shrug, retch or turn away in disgust is ideal."
He explained that if a business did something unpleasant, investors would subconsciously want to avoid thinking about it, let alone buy it.
One of the best companies handling disgusting waste-hauling duties is Waste Management. The company picks up garbage for 22 million residential and commercial customers in the U.S., Canada, and Puerto Rico.
Its collection and disposal business continues to be driven by strong organic growth. On a year-over-year basis, the collection and disposal segment's adjusted operating EBITDA grew $120 million, or 9.9%, in the fourth quarter 2019 and $402 million (8.5%) for fiscal 2019.
Strong growth from collection and disposal was partly offset by recycling-commodity price headwinds in 2019. Lower market prices for recycled commodities meant a $244 million decline in full-year recycling segment revenue.
Nonetheless, overall revenue for fiscal year 2019 increased 3.6% to $15.46 billion, compared with $14.91 billion for 2018. On an adjusted basis, earnings per diluted share were $4.40 for the full year 2019 versus $4.20 for the full year 2018.
Waste Management operates with a wide moat. It has the largest number of landfills in the industry, the infrastructure to efficiently move waste, recycling operations, and waste-to-energy facilities.
As long as people inhabit the earth, there will be garbage to haul away. The stock price has dropped more than 15% year to date as the market has reacted to the coronavirus crisis. With a 2.3% dividend yield, Waste Management is a growing company whose stock has been beaten down through no fault of its own. Investors would do well to pick up some shares now and hold them for a very long time.
Telecom tower market growth won't pause for years
American Tower operates as a real estate investment trust (REIT), providing wireless and broadcast communications infrastructure with a portfolio of about 180,000 sites around the world. The company is in an excellent position to benefit from demand for 5G wireless streaming capability and the Internet of Things (IoT).
On Feb. 25, American Tower presented fourth-quarter 2019 earnings that shed light on the opportunities for the company. The adoption of 5G coverage in the U.S. is the primary mover when looking at mid- to long-term growth, while the continued buildout of 4G in less mature markets provides steady growth now and for the future.
American Tower expects the merger of T-Mobile and Sprint to drive demand for tower space, as well as DISH Network's plan to build a new nationwide network. Both T-Mobile and DISH will help speed deployment of 5G broadband service to U.S. consumers.
The company has been expanding its footprint globally to meet demand. Construction hit a record of more than 4,500 sites in 2019. The company expects to build approximately 6,500 more sites in 2020. Additionally, in 2019, American Tower acquired about 5,800 sites across Africa, 2,400 sites in Chile and Peru, and over 400 sites in the U.S.
Its quarterly dividend was just increased 6.8% to $1.08. Investors enjoyed 20% dividend growth in 2019, the eighth consecutive year for a payout increase. In its earnings call, the company said it expects to grow the 2020 dividend by 20% again, subject to board approval.
American Tower is a good buy for both dividends and long-term total returns. The U.S. is requiring more-integrated streaming and phone communications, with the rest of the world following close behind. Drivers of growth for American Tower are 5G implementation, the rise of smart cities and the IoT, and international expansion.
The coronavirus may slow world economies for a bit, but American Tower's prospects look very good indeed. As a buy-and-hold investment for the next 50 years, it's an attractive choice.
You've 'got a guy' in Omaha with investing sense for the ages
Based in Omaha, Nebraska, and led by Buffett and Charlie Munger, Berkshire is the largest shareholder in Delta Air Lines, and a major shareholder in Coca-Cola, American Express, Apple, Bank of America, and many others. Berkshire also wholly owns some very successful businesses, such as GEICO, the second-largest auto insurer in the U.S.; BNSF Railway, the largest freight railway in North America; and Mid-American Energy, meeting energy needs of 1.6 million mid-western customers.
Berkshire ended 2019 with a massive pile of cash and cash equivalents of $125 billion. Buffett is known for buying stocks during market downturns, and is no doubt deploying cash during the coronavirus crisis. Buffett and Berkshire Hathaway investors made a killing from his timely investments during the financial crisis in 2008.
Unfortunately, nobody will know for sure what he is buying today until mid-May when 13F filings are made public. By then, who knows where stock prices will be? Buffett is no doubt shopping for stocks with strong cash flows, low debt, and strong brands.
His track record is unassailable. So if you're looking for investments to hold for 50 years or more, it's a good idea to invest with him through Berkshire. The consistency of returns -- not wavering for 30 years -- speaks for itself. In fact, Berkshire Hathaway earnings per share for 2019 were $33.20, a 1,937.88% increase year over year.
The company's diversified holdings give investors exposure to a cross-section of the market, but at much lower risk. With the year-to-date stock price down 19% on both classes of shares due to coronavirus fears, I think investing at these levels is an opportunity for the long term.