Forever may seem like a long time, but if you park your money in the right places, you'll get solid returns much sooner than you suspect, and that's why it pays to always be packing your portfolio with forever stocks. But what makes a forever stock different from others? Essentially, it's having a killer business model that doesn't need to change much to stay profitable, relevant, and rewarding for shareholders as the years roll by.
With that thought in mind, let's examine a trio of stocks worth buying and holding forever -- and you've probably already heard of all three.
NYSE: ABT
Key Data Points
1. Abbott Laboratories
Abbott Laboratories (ABT 0.61%) is a no-brainer stock for indefinite holding because it's always growing its dividend and making share repurchases to boost returns. To accomplish those tasks, it manufactures every kind of healthcare good, from glucose monitors to generic medicines, tools for heart surgery, and even diagnostic tests. And that's how, over the last 10 years, its trailing 12-month net income rose by 307%, reaching more than $8.5 billion.
Because of how many different types of products it makes, the risk of its top line collapsing from competitive pressure in any given segment is minimized. That means as economic conditions and market forces shift over the long term, it can rework its strategy in each of its segments gradually, allowing it to stay relevant when more focused competitors might stumble.
At the moment, its forward dividend yield is nearly 1.8%, which is unremarkable. But, in the last five years alone, Abbott hiked its dividend by 77.3%, and it also hit the milestone of 50 years of continuous annual dividend increases. So even if its shares won't outperform the market, you'll have an ever-rising income stream paid for courtesy of Abbott's sales of medical goods that'll always be in demand.
NASDAQ: COST
Key Data Points
2. Costco
Costco Wholesale (COST +1.02%) is another stock that's worth keeping forever because forever is the period of time for which people will continue to need low-cost groceries and home goods. The company's business model is to charge its customers a membership fee, which allows them to shop at its wholesale warehouses, where they can purchase goods in bulk at close to their cost. While its food options are the most extensive, it also sells consumer goods like clothing and kitchenware. It even offers its members access to low-cost pharmacies, insurance coverage, and vehicle repair services.
Everyone likes inexpensive stuff, so it's no surprise that it brought in net revenue of $45.5 billion and net income of $8.5 billion over the trailing 12 months -- and there's likely more growth in store. The business plans to keep opening new warehouses, initiating new growth campaigns like its recent push into e-commerce, and offering new products to attract consumers, just like it's been doing for the prior two decades and beyond.
In that vein, one of the keys to Costco's enduring success is that its members enjoy shopping there thanks to its combination of good customer service, low prices, and decent quality products. Of the 116.6 million members in May 2022, an estimated 92.3% had opted to renew their subscriptions for the next year. That's a lot of happy customers who will continue to spend at its warehouses. And with inflation surging worldwide, its customers will be seeking out bargains more than ever, which should drive short-term growth too.
3. Apple
As one of the world's most valuable companies and perhaps the world's most valuable brand, Apple (AAPL 0.41%) is the third stock here that deserves a forever home in your portfolio. Its cellphones, computers, peripherals, software, accessories, and cloud services are heavily in demand. And its constant work to keep innovating on successful designs has so far made it relevant throughout multiple booms and recessions. In its fiscal third quarter alone, the company brought in revenue of $83 billion and net income of more than $19.4 billion.
NASDAQ: AAPL
Key Data Points
With such a roaring business, it can afford to benefit shareholders through stock buybacks. Since its 2012 fiscal year, Apple spent $529.1 billion (!) on repurchasing its shares. And there's no indication that it'll stop anytime soon, either. As long as consumers build their digital lives in the company's ecosystem of products and software, their switching costs will remain high, and they'll be incentivized to keep buying the latest editions of whatever they use the most.
To keep the growth train going even more, Apple is also diversifying into new segments like payment processing. It might eventually go even further by entering new hardware markets or even vehicle markets. What's more, its base of revenue comes from so many different products that losing in any given segment won't bring down the house, much like with Abbott Labs. In total, there aren't many other stocks that are so consistently lucrative to hold, and those who hang onto their shares for the long-term get the biggest boost from its constant efforts to return capital.
