I own about 45 different stocks in my portfolio, and I bought all of them with the intention of holding them forever. But, like any responsible investor, I occasionally sell stocks for a variety of reasons. Maybe a business' competitive advantages are fading, maybe management is making some troubling decisions, or maybe future growth prospects are drying up.
With that in mind, there are a select few of my stocks that – unless the entire company is acquired -- I'm virtually certain will still be in my portfolio 50 years from now. Here's why Realty Income (O -0.11%), Apple (AAPL 0.02%), and Bank of America (BAC 0.18%) are in my portfolio and why I plan to hold each one for decades to come.
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Reliable and growing income no matter what
Realty Income is a real estate investment trust, or REIT, that focuses on single-tenant commercial properties, most of which are occupied by retailers.
Now, retail may sound like a scary place to invest, but Realty Income isn't your typical retail company. Specifically, the vast majority of Realty Income's tenants are in industries that are recession-resistant and aren't at serious risk of being disrupted by e-commerce. Think of businesses like convenience stores, warehouse clubs, dollar stores, and grocery stores. (And, they are mainly "essential" businesses that have remained open throughout the COVID-19 pandemic.)
Realty Income's tenants sign long-term leases with annual rent increases built in, so all the company has to do is acquire a property, put a tenant in place, and enjoy year-after-year of predictable income. You may think this business sounds "boring," but the results are not. Realty Income has delivered a 14.6% annualized return for its shareholders since its 1994 NYSE listing, handily beating the S&P. And July's dividend payment will be the 600th consecutive monthly distribution to its investors.
A tech powerhouse whose ecosystem is only getting stronger
The largest publicly traded U.S. company (of any kind), Apple doesn't need much of an introduction. If you aren't a user of Apple's products yourself, you're probably at least familiar with the iPhone, iPad, Apple Watch, and other hardware offerings, as well as their fiercely loyal user bases.
Now, I don't necessarily think Apple will be as innovative on the hardware side of the business going forward as it has been over the past couple decades. But that's not why I'm excited to be an Apple shareholder for the next half century.
The most exciting reason to be an Apple shareholder right now is its services business. This includes things like Apple Music, Apple TV+, Apple Arcade, and more -- basically, everything that produces a recurring revenue stream for Apple. In the 2019 fiscal year alone, Apple's service revenue grew by 19% and is showing no signs of slowing down. And it's worth noting that most Apple TV+ subscribers aren't even paying for the service yet. The upcoming 5G refresh cycle should just add fuel to the fire, and I could see Apple's service business alone worth more than $1 trillion within the next few years.
Excellent management makes all the difference
If you had asked me what the best big U.S. bank to invest in was a decade ago, Bank of America probably wouldn't even have been on my list. Suffice it to say that the company didn't weather the financial crisis well, its asset quality wasn't great, and it wasn't exactly the most efficient bank.
That's all changed. Thanks to the superior leadership of CEO Brian Moynihan and his team, Bank of America is arguably the most improved U.S. bank in the decade or so since the financial crisis. It has continually improved its efficiency and profitability and is now one of the most profitable big banks in the Unites States. Bank of America has also emerged as a leader in mobile and online banking technology, which should not only continue to improve efficiency, but should give the bank a competitive advantage over peers as time goes on.
Will I actually keep all of these stocks for 50 years?
As long as the reasons I discussed here still apply, I don't see myself ever selling these stocks. Having said that, it's entirely possible that something will change with the businesses and I'll change my mind. So, buy with the intention of holding for the long run, but keep in mind that it's still important to do your homework and keep up with how each business is doing.
