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3 Stocks You Can Keep Forever

By Royston Yang – Sep 30, 2021 at 5:36AM

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These three companies have strong, stable franchises that offer peace of mind and consistent dividend growth.

As the saying goes -- having peace of mind is priceless. It's the same for investing. We all want to own businesses that have a solid franchise and that we don't have to worry about as we go about our daily lives. Companies that boast a long operating track record, well-recognized brands, and a great history of increasing dividend payments are good places to look.

Needless to say, such stocks qualify as keepers that you can own for the rest of your life. Here are three that meet these requirements.

Adult helping a child brush their teeth.

Image source: Getty Images.

Mastercard

When it comes to financial services, Mastercard (MA -0.42%) stands tall as one of the market leaders within the sector. The company had around 2.8 billion cards in issue for the second quarter of 2021, up 8% year over year, and continues to post a resilient set of numbers despite the pandemic. Net revenue for the quarter rose 36% year over year to $4.5 billion while net income jumped 46% year over year to $2.1 billion. 

Not only has the business seen a strong recovery from the depths of the pandemic, but Mastercard has also been paying an increasing dividend over the years. Its quarterly dividend quadrupled from $0.11 in 2014 to $0.44 in the latest quarter, as the company chalked up healthy free cash flow over the last four years despite the challenges it faced during the pandemic. 

Mastercard continues to augment its capabilities through opportunistic acquisitions. This month, it acquired CipherTrace, a cryptocurrency intelligence business that helps customers enhance security and monitors for fraud for cryptocurrency-related activities. The company also acquired European open banking technology provider Aiia to provide a seamless connection with multiple banks and to help its customers develop digital solutions that can solve existing pain points.

Colgate-Palmolive

Colgate-Palmolive (CL -0.54%) is a multinational consumer products company with a wide range of well-known brands such as Colgate, Palmolive, Softlan, Ajax, and Fluffy. The business manufactures and sells oral, personal, and home care products that are used by millions worldwide. Its net sales have remained remarkably consistent over the last 10 years, hovering around the $16 billion mark, while net income has inched up from $2.4 billion to $2.7 billion.

Throughout the economic downturn, Colgate-Palmolive has continued to post a respectable set of earnings. For the first half of 2021, net sales increased by 7.6% year over year to $8.6 billion while net income inched up 2.5% year over year to $1.38 billion. The strength of its brand franchise and the consistent demand for its products has kept the company chugging along despite the tough conditions. The company's real strength, though, is in its dividend payments. Dividends have been paid without fail since 1895, and the company has increased its dividends to shareholders for 57 consecutive years, more than qualifying it as a Dividend King.

Kimberly-Clark

Kimberly-Clark (KMB -0.11%) is another consumer goods giant that sells a wide range of personal and home care products under brands such as Scott, Kleenex, and Huggies. Its products are sold in more than 175 countries, and the company has displayed a consistent, albeit slow, increase in both sales and net income over the last five years. Sales climbed from $18.3 billion to $19.1 billion between 2016 and 2020 while net income went from $2.16 billion to $2.35 billion.

However, for the second quarter of 2021, Kimberly-Clark reported a 34% year-over-year plunge in operating profit despite a 2% year-over-year increase in sales. The weaker results came about as the pandemic disrupted supply chains, resulting in higher input costs for the company, while the pandemic-induced surge in tissue sales last year has tapered down. However, these troubles should only be temporary and the company should see some recovery in the second half of the year.

Despite the lower net income, the company has held its quarterly dividend steady at $1.14 per share. Kimberly-Clark has increased its dividend over 49 consecutive years, making it one year short of becoming a Dividend King. The total annual dividend was $2.53 back in 2010 and has increased to $4.28 in a decade. With such an impressive dividend track record, long-term investors can certainly look forward to many more years of rising dividends.

Royston Yang owns shares of Mastercard. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Mastercard Stock Quote
Mastercard
MA
$343.13 (-0.42%) $-1.46
Kimberly-Clark Stock Quote
Kimberly-Clark
KMB
$133.16 (-0.11%) $0.15
Colgate-Palmolive Stock Quote
Colgate-Palmolive
CL
$75.97 (-0.54%) $0.41

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