Most of us have heard the old investing phrase "buy and hold." It describes an effective investing style: Buying shares of high-quality companies and hanging on for a very long time, as the companies execute smart strategies and keep growing.
It's worth noting, though, that "buy and hold" shouldn't mean holding blindly. More accurately, we should buy to hold. We should be aiming to hang on for many years, if not decades, but we should also keep an eye on our holdings, in case their circumstances or future prospects deteriorate.
Image source: Getty Images.
That said, here are three stocks I am aiming to buy and hold forever -- or at least until I sell some or all shares in retirement. I own shares of two of them, and wish I owned shares of the third.
Berkshire Hathaway
Berkshire Hathaway (BRK.A 0.64%) (BRK.B 0.54%), helmed by superinvestor Warren Buffett, is one of my oldest and largest holdings. Some might be nervous holding it, as its CEO recently turned 90, but Buffett has had succession plans in place for many years, and the business is sturdy, too. When he's gone (ideally many years from now) -- and for decades to come -- consumers will still be buying insurance, electricity, homes, chocolates, paint, ice cream, jewelry, underwear, shoes, and many other products and services that Berkshire Hathaway offers through its many businesses. (Those subsidiaries include GEICO, International Dairy Queen, Benjamin Moore, See's Candies, Brooks Sports, Johns Manville, Business Wire, Justin Brands, McLane, Clayton Homes, Forest River, Fruit of the Loom, Nebraska Furniture Mart, NetJets, Pampered Chef, Shaw Industries, and the entire BNSF Railway.)
On top of the many businesses that Berkshire owns outright are a bunch of companies in which Berkshire holds a significant stake through stock. As my colleague Sean Williams recently noted, 78% of Berkshire Hathaway's invested assets are in just five companies: Apple, Bank of America, Coca-Cola, American Express, and Kraft Heinz. Again, these are strong companies likely to keep growing for many years.
Walt Disney
Another solid business that I expect I will hang onto for a long time is Walt Disney (DIS -0.45%). It's a conglomerate a bit like Berkshire Hathaway, with a range of large and diverse operations under its roof. Those are divided into several units, each with more than a few very familiar names in it:
|
Business Division |
Includes |
|---|---|
|
Media Networks |
Disney Channel, ABC, ESPN, FX, National Geographic, Freeform |
|
Parks, Experiences, and Products |
Disneyland Resort, Walt Disney World, Disney Cruise Line, Disney Vacation Club, Disney Publishing Worldwide, Disney Store, and parks and resorts around the world |
|
Studio Entertainment |
Walt Disney Studios, Walt Disney Animation Studios, Pixar, Marvel Studios, Disneynature, Lucasfilm, Disney Music Group, Disney Theatrical Group, Blue Sky Studios, 20th Century Studios, Searchlight Pictures |
|
Direct-to-Consumer and International |
Disney+, ESPN+, Hulu, hotstar |
Data source: Walt Disney.
Clearly, that's a group of businesses likely to grow over many more years -- despite occasional headwinds such as our current pandemic-slowed economy that's been keeping many parks and resorts either closed or operating at a reduced level.
It's worth noting that while Disney is a huge company, recently with a market value north of $225 billion, it's still growing -- and adding new businesses that can help it grow more, such as the recently launched Disney+ streaming service, which quickly signed up more than 50 million subscribers.
Disney is also, usually, a dividend-paying stock -- though it announced in May that due to the pandemic slowdown, it would forego its semi-annual cash dividend for the first half of fiscal 2020 in order to keep $1.6 billion in cash in company coffers. The dividend is very likely to resume within the coming year or two, and to keep growing after that.
Waste Management
Finally, Waste Management (WM -0.52%) is a stock I don't yet own, because whenever I have looked into it, it has seemed too overpriced. Of course, had I bought it the first time I passed it up, I'd be sitting on a handsome gain. It's a truth in stock investing that some companies simply often look overpriced.
Waste Management is North America's leading waste management company, offering waste collection, transfer, and disposal services, along with being a major player in recycling and resource recovery -- in part via owning and operating facilities that convert landfill gases to energy.
Waste Management is the kind of company one might hope and plan to hang onto for years because it's in a very dependable business, and not one that is likely to change quickly. No matter what the environment is doing, people and businesses will continue to produce waste that needs to be collected and dealt with. Indeed, during these pandemic days, garbage collection has been deemed an essential business -- and Waste Management serves more than 21 million customers. The company is forward-thinking, with a fleet of vehicles that are mostly powered by alternative fuel. It rakes in more than $15 billion annually, and recently sported a market value of $49 billion.
One never knows what will happen to any company in the future, and even very trusted and familiar names can fall on hard times -- think, for example, of General Motors, Sears Holdings, Eastman Kodak, Blockbuster Video, and Pan American World Airways.
That all supports the value of buying into strong and growing companies with the intent of holding for the long term -- and keeping an eye on them over time, to make sure they remain on track.
