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3 Stocks to Hold for the Next 20 Years

By Royston Yang - Updated Apr 27, 2021 at 4:51PM

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These businesses should make you feel confident enough to own them for at least two decades or more.

It can be tough searching for a publicly traded company that makes you feel so comfortable that you want to own its stock for the long term. The pandemic and its associated economic crisis have shaken up formerly steadfast business models and unleashed new trends, making the business world much more unpredictable. Add to that the changing dynamics of industries and the effects of competition, and the list of companies that you would feel comfortable owning stock in for years gets much shorter.

This select list will include quality, well-known names that have a great track record of both financial and operating performance. Such businesses usually have characteristics that make them resilient to crises and an ideal choice to own throughout the economic cycle. They also have quality management and are adaptable and can react favorably to competition while still posting steady, consistent growth.

With all that criteria in mind, here are three stocks to buy and hold for the next two decades.

Lady barista smiling while preparing a cup of coffee at a coffee machine

Image source: Getty images.

1. Mastercard

Mastercard (MA 1.05%) is a financial services company that started life back in 1979. Along the way, the company has evolved into a digital payments company that utilizes technology to connect consumers, financial institutions, and merchants. Mastercard had around 2.7 billion cards in circulation at the end of 2020 and handled 24.8 billion transactions in its latest quarter, showcasing the power of its global ecosystem.

The pandemic had negatively affected Mastercard in 2020, with revenue down 9% year over year and net income declining by 21% year over year. Despite the weaker results, the company provided a business update showing that transaction volume for the week ended Jan. 21 was actually up 2% year over year worldwide. The closure of borders and curtailment of air travel meant that cross-border transaction volumes remained at 70% of the level they were in the same period last year.

The company remains unshaken by this temporary decline, and it has been steadfast in building its capabilities through acquisitions and partnerships. In March, Mastercard formally completed its acquisition of the majority of the corporate services business of Nets, a European payments technology company. The acquisition is set to improve its payment infrastructure and enable faster processing of bills and invoices. And just this month, Ekata, a data analytics firm that analyses digital transactions to deliver valuable insights, was acquired by Mastercard for $850 million. This purchase will help the company to enhance its identity verification processes to combat fraud and ensure payment transactions are authentic. 

2. Procter & Gamble

If you're searching for a reliable conglomerate to invest in, look no further than Procter & Gamble (PG 0.97%). The consumer goods giant, which sells a range of beauty, healthcare, and family care products, operates in more than 180 markets and boasts a decades-long record of sustained profitability. Despite the coronavirus pandemic, P&G has managed to grow its net sales by 5% year over year in its latest quarter, with net income climbing 12% year over year as its portfolio of products remains in high demand. 

Dividend-seeking investors should also love the company for the steady and consistent increases in dividends over the last 65 consecutive years, giving the company the distinction of being a Dividend King. This unbroken track record that spans more than six decades is a testament to the company's strong market position and the ubiquity of its products in almost every corner of the globe.

3. Starbucks

Millions of workers around the world can't start out their day without a stop at a nearby Starbucks (SBUX 1.19%) to grab a cup of coffee or other specialty drink. The coffee giant's stores have become ubiquitous and the company boasts an impressive 33,000 stores worldwide. Although the pandemic lead to temporary closures that dented Starbucks' results in fiscal 2020 (ended Sept. 30, 2020), the company has reported a steady improvement in numbers since then.

For its fiscal 2021 first quarter (ended Dec. 31, 2020), net revenue dipped by just 5% year over year due to continued disruption to customer traffic due to the ongoing pandemic, as well as reduced store operating hours. However, Starbucks continued to expand, opening 278 net new stores during the quarter, while its loyalty program, Starbucks Rewards, saw membership in the U.S. jump 15% year over year to a new record high of 21.8 million.

The company has committed to opening 600 new stores this fiscal year in China, its second-largest market. Its biennial investor day also saw CEO Kevin Johnson announce that the coffee addressable market is expected to grow at an annual rate of 5% to 6% through 2023 to around $450 billion, providing ample growth opportunities for Starbucks. He has also committed to continue growing the number of outlets globally, with the aim of reaching approximately 55,000 stores across 100 markets by 2030. 

Investor takeaway

These three companies have what it takes to beat the odds and continue posting healthy growth for many more years. All three have strong franchises and are continuing to innovate and stay relevant by engaging their customer bases. It's qualities like this that make all three stocks worth holding on to.

Royston Yang owns shares of Mastercard and Starbucks. The Motley Fool owns shares of and recommends Mastercard and Starbucks. The Motley Fool recommends the following options: short April 2021 $110.0 calls on Starbucks. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$88.31 (1.19%) $1.04
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$146.67 (0.97%) $1.41
Mastercard Incorporated Stock Quote
Mastercard Incorporated
MA
$354.27 (1.05%) $3.69

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

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