Investing in stocks isn't tough, but the ability to buy and hold them for years regardless of the market's movements can be as tough as it gets. Remarkably, that's also the only way to build real wealth from stocks -- have the patience and persistence to allow your stocks to multiply and your money to compound.
There's a trick to how you can do that: Find companies that are built to last and will not just survive but thrive for decades. The stronger your investing thesis, the easier it'll be to hold on to your stocks. Such companies, of course, should have strong growth catalysts that can fire up their share prices -- just like the three stocks below, which you will want to buy and hold for a decade once you see what they have to offer.
Two megatrends you can't ignore
The COVID-19 pandemic was tough on Mastercard (MA 0.12%) as consumer spending plunged, but the company still earned an operating margin of 52.8% during the year. That's the power of Mastercard's asset-light business model. Although a financial company, Mastercard is not a lender. It simply facilitates transactions made using its cards anywhere in the world over its payments-processing network and earns a fee on each transaction.
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Two trends -- e-commerce and the war on cash -- are going to be the biggest growth drivers for Mastercard. The company understands the risks that come along with e-commerce, which explains its recent move to acquire digital identity company Ekata for $850 million. Mastercard has also ventured into cryptocurrency and is going all-out to cash in on fintech. One example is its Engage platform, which offers young, fintech companies access to Mastercard's suite of products.
Now, these examples are only drops in the sea of things Mastercard is doing and reflect the kind of opportunities ahead of the company. Mastercard already enjoys unparalleled brand power, and with a multitrillion-dollar addressable market to tap, Mastercard is the kind of stock you'd want to own for decades.
An underrated multibagger stock
Would you expect a stock in a typically defensive, slow-growth sector like utilities to more than quintuple in one decade? Waste Connections (WCN 0.30%) has silently made millionaires out of patient investors, and there's every chance you could become one too if you can buy and forget this stock.
But before that, you may ask: It's easy to understand that a company that collects and disposes of waste has a steady, recession-proof business, but what's going to drive its growth? You see, Waste Connections has a couple of things going for it.
First, it relies on exclusive service-provider agreements and acquisitions in new markets, particularly the low-penetrated secondary and rural markets, to expand its landfills and customer base. This strategy has proven hugely successful so far. The company made 21 acquisitions each in 2019 and 2020. Second, Waste Connections' subsidiary R360 is a key waste management player in the oil and gas sector, having operations in major shale plays like the Bakken, Permian, and Eagle Ford basins.
Waste Connections expects revenue to grow 6.5% in 2021, but that doesn't account for potential acquisitions. Also, another double-digit dividend increase is in the cards -- the company has increased dividends every year for 10 consecutive years. That should add to the stock's appeal, making Waste Connections a great stock to own for the long haul.
This healthcare titan is known to mint money
Johnson & Johnson's (JNJ 0.32%) clout in healthcare, diversified portfolio, focus on research and development (R&D), impressive pipeline, and dividend growth makes for the perfect wealth-building recipe for patient investors.
Remarkably, many still believe Johnson & Johnson is a consumer healthcare company, which isn't really surprising given the worldwide popularity of its products like Band-Aid, Neutrogena, Listerine, and Nicorette. Truth is, consumer products are only a small part of the company. In 2020, pharmaceuticals made up 55% of Johnson & Johnson's sales. The segment continues to be a winner -- drugs for multiple myeloma and autoimmune diseases sold out fast in the first quarter. That's something investors expected to see after Johnson & Johnson's recent $6.5-billion acquisition of immunology specialist Momenta Pharmaceuticals.
Also, things are looking up for its medical devices segment, which contributed only 28% to sales in 2020 as the COVID-19 pandemic hit sales hard. The segment reported a 10.9% jump in year-over-year sales in the first quarter of 2021.
So, what's the biggest growth driver for Johnson & Johnson? Prioritizing investment in R&D over inorganic growth while maintaining a rock-solid balance sheet, which has driven its cash flows higher and supported dividend increases for 59 straight years. It's proven to be an incredible ride for long-term investors so far.
The company also got a shot in the arm recently as the pause on its single-shot COVID-19 vaccine was lifted. Even if not a big source of revenue, vaccines should supplement Johnson & Johnson's sales even as it works on its pipeline, which includes several drugs in the late-stage phase. That should set the stock up for strong growth in coming years, making this Dividend King totally worth your money.
