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4 Stocks That Could Set You Up for Life

By James Brumley - Mar 26, 2021 at 7:15AM

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If you just want to set it and forget it, this quartet of quality blue chips is an ideal grouping.

Are you an investor looking for above-average gains but not interested in checking your stocks every single day? No problem -- that's perfectly possible. In fact, many investors ultimately crimp their potential returns by not leaving things alone and letting them simmer long enough.

To this end, here's a look at four different stocks that, together, can serve as the core components of a truly great buy-and-hold portfolio.

1. Microsoft

Software giant Microsoft (MSFT -4.78%) doesn't quite turn heads the way it did a couple of decades ago when the personal computer industry was exploding and consumers, as well as corporations, had fewer software options than they do now. Microsoft's already proven, however, that it's going to be fine in an environment that doesn't center around sales of boxed, premium software like Windows or its Office productivity suite. Indeed, it may be better off with its current business models.

An happy older couple sitting at a table, reviewing their portfolio.

Image source: Getty Images.

Yes, one of these new models is renting access to software rather than selling it outright. Office 365 accounts only cost a few bucks per month (and even less for one-year subscriptions), but it's recurring revenue the company can count on for the indefinite future.

Customers love the concept too. Last quarter's commercial Office 365 Commercial revenue improved 20% year over year.

Perhaps the bigger reason Microsoft is well-positioned for multi-decade success is its venture into business lines most consumers and investors don't see. Cloud computing, small business marketing, video gaming subscriptions, and work-related networking tools like LinkedIn are just some of the offerings now in the company's repertoire, expanding its digital ecosystem, and giving Microsoft more ways to win -- which it's been doing. Microsoft's trailing 12-month operating income of $60 billion is nearly six times 2000's total.

2. Procter & Gamble

It's unlikely Procter & Gamble (PG -6.23%) will ever be a long-term investor's biggest winner; there's only so much annual growth to be gleaned from detergent, diapers, and shaving supplies. The trade-off for long-term reliability, however, is worth it. P&G's brands are some of the most recognized and respected on store shelves, and the company is prepared to keep things that way.

See, Procter is one of the world's biggest advertisers. Until last year it was typically the biggest advertising spender, in fact, slipping to second place in Ad Age's annual tally of corporate advertising outlays. It's still shelling out on the order of $11 billion per year though, which rivals like Unilever and Clorox just can't match.

Bonus: Procter & Gamble isn't just a Dividend Aristocrat. It's a Dividend King, having increased its payout every year for the past 57 years, or for 64 consecutive years when counting it the way the company itself does.

3. Amazon

It's not a name that needs an introduction. Amazon (AMZN -7.16%) is not only one of the world's most recognized brand names; it's also the biggest name in e-commerce, generating nearly $341 billion worth of merchandise-related revenue last year. And that figure doesn't include the $45 billion in revenue Amazon's cloud computing business produced in 2020.

Sheer size doesn't necessarily make a stock worth owning, however. Amazon offers other reasons too. Namely, it's effective at using its size (and deep pocketbook) to ensure it maintains its close ties to consumers.

Case in point: Beginning next year, the e-commerce giant will be paying about $1 billion per year for exclusive broadcast rights of all the NFL's Thursday night games. To access these games, fans must also be members of Amazon Prime, who happen to spend about twice as much at Amazon.com in any given year as non-Prime customers do.

It's just one example of how good Amazon is at getting -- and staying -- within sight of consumers.

4. Lockheed Martin

Finally, add defense and aerospace contractor Lockheed Martin (LMT -1.51%) to your list of stocks that you can buy and hold for decades to build and maintain a financial nest egg.

It seems subject to economic ebbs and flows, not to mention any budgetary constraints the federal government may decide to put in place in any given year. Those headwinds are a relative rarity though, and not dramatic when they do materialize. Indeed, Forecast International data indicates the United States' aerospace and defense companies have collectively grown their revenue every year between 2008 and 2018.

In this vein, Lockheed Martin's top line has grown every quarter since late 2016, shrugging off the impact of last year's pandemic. It hasn't booked an operating loss in any quarter for decades now.

The most compelling reason to own Lockheed Martin for the long haul, however, isn't its consistency. It's the dividend. The current yield of 2.9% is respectable even if not thrilling, but the current quarterly payout has grown at an incredible annualized clip of 13.2% over the course of the past 10 years.

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Stocks Mentioned

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$434.33 (-1.51%) $-6.67
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$254.08 (-4.78%) $-12.74
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,142.25 (-7.16%) $-165.12
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$145.04 (-6.23%) $-9.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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