Most people approach investing with a short-term mindset. Buying a stock and holding it forever is madness, isn't it? Don't be so sure. It's true that companies come and go, and it's rare to see a stock thrive for decades at a time. However, there are an exceptional few.
Some stocks are so ingrained in the consumer's way of life that you could buy and hold the stock indefinitely and likely make out very well. The best part is that some don't even cost that much. Here are two buy and hold "forever" stocks that each trade for less than $100.
A Warren Buffett favorite
The Coca-Cola Company (KO 0.30%) is one of the world's largest beverage companies, most famous for its namesake brand, Coca-Cola. It's also a longtime holding of stock market icon Warren Buffett, who has owned the stock since the late 1980s. Coca-Cola's product line-up goes well beyond soda, spanning more than 200 brands of soda, water, juice, tea, and coffee.
Image source: Getty Images.
So what gives Coca-Cola the staying power to hold it forever? Non-alcoholic beverages are a staple of everyone's diet. Technically, we just need water to live (which Coca-Cola sells), but things like soda, juice, and tea are probably not going anywhere, even if consumer tastes shift. Soda is becoming less popular, but many of the beverages replacing soda are still Coca-Cola products.
The secret sauce for Coca-Cola is its worldwide distribution, which commands top-shelf space at virtually every store because of how widespread its collective group of brands is. This keeps competing brands at bay and gives Coca-Cola the ability to buy an emerging brand and grow it with its robust distribution. It's hard to see anyone knocking Coca-Cola off its perch.
Investors need only look at Coca-Cola's dividend history for financial evidence of its excellence. The company has paid and raised its dividend for 59 consecutive years, making it a Dividend King. Dividends are cash expenses, so having the ability to spend more annually through recessions and wars over the years speaks volumes about how durable Coca-Cola has been.
Coca-Cola has more than $12 billion in cash and short-term investments on its balance sheet, so investors can sleep well knowing that the dividends will keep coming in. Management is also guiding long-term revenue growth of 4% to 6% per year, which could continue driving future dividend growth.
Dialing up dividends
Verizon Communications (VZ -0.43%) is one of the leading telecommunications companies in the United States. It's one of three major U.S. wireless networks and offers fiber optics, wired communications, and network services for businesses and consumers. Verizon has more than 115 million active wireless connections on its network.
Society is moving in a direction where the telecommunications infrastructure is becoming more critical than ever. Social media, remote work, gaming, and streaming all depend on networks to work, making Verizon almost as important to a consumer's household as rent and electricity.
Verizon has spent billions of dollars over decades, building and maintaining the towers, fiber optics, and other infrastructure that makes its networks go. It doesn't make a lot of sense for a competitor to spend the time and massive amounts of money just for the chance that it might compete with existing industry leaders, which is why Verizon should be a very durable business moving forward.
The company has been a strong dividend stock; management has raised the dividend for 17 years. Verizon typically spends about half of its profits on the dividend while using the other half to pay for building and maintaining its networks.
Communications technology has evolved over the years. I remember the buildouts for 3G, 4G, and now 5G. Emerging technologies like autonomous vehicles, cloud computing, and high-definition streaming and gaming need fast networks like what Verizon offers. I suspect that Verizon will be there now and for future technology needs, making it a stock you can count on for the long term.
