It's always a great idea to buy stocks and hold them for the long term. That means at least five years. This offers you the opportunity to benefit from any dividend payments and/or growth in earnings. And all of that could translate into share price performance. But you'll want to hold some stocks for an even longer period -- for example, 10 years. That's because they have so much to offer that you'll have trouble letting them go any sooner.
In fact, you may want to hold onto certain stocks forever. You'll find plenty of candidates in the healthcare industry. These players bring you growth through promising new products and a certain amount of safety when it comes to earnings. After all, people need their medications no matter what the economy is doing. Let's take a look at three top long-term stocks to add to your portfolio now.
1. Johnson & Johnson
Investors will love Johnson & Johnson (JNJ -1.00%) for the annual income that it pretty much guarantees to pay shareholders. The company is a Dividend King, meaning it's increased its dividend for at least the past 50 years. Johnson & Johnson's streak is at 60 years. Nothing is guaranteed, but there's a strong track record of payments and increases here.
Today, J&J pays an annual dividend of $4.76 a share, representing a dividend yield of roughly 3%. This is higher than the average yield of the pharmaceutical industry.
But J&J isn't just a passive income buy. The stock also has steadily increased sales in its two main businesses of pharmaceuticals and medtech. And overall growth may be about to get a boost. J&J is spinning off its slower-growth business -- consumer health -- this year.
The company also is making moves to keep pharmaceuticals and medtech revenue growing. J&J's pipeline includes more than 100 drug candidates and J&J has made key acquisitions -- such as the purchase of heart pump maker Abiomed last year -- to drive medtech growth.
Today, J&J shares trade for 15 times earnings estimates. That's down from about 18 last year. This looks like a great entry point considering the consumer health spinoff and the promise of growth ahead.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.98%) has built global leadership in the area of cystic fibrosis (CF) treatment. The company's CF drugs bring in billions of dollars in annual revenue and profit.
Today, the biggest potential threat to Vertex blockbuster Trikafta is being developed by... guess who?... Vertex. The triple combination therapy is in phase 3 trials right now. You'll want to hold Vertex shares to benefit from this dominance in CF.
But you'll also want to get in on Vertex for the company's expansion into other areas. And we're in the early days of this potential growth story. Vertex recently completed a regulatory request for exa-cel, a gene-editing candidate for blood disorders. It's a one-time curative treatment in areas with limited treatment options. So, exa-cel, if approved, could become a blockbuster.
Vertex also is ushering other exciting and much-needed potential products through the pipeline: candidates for type 1 diabetes and pain management, for example.
All of this means that Vertex is on the road to becoming a company with multiple areas of expertise. And that could signal major growth well into the future.
That also makes Vertex look cheap today, trading at 23 times earnings estimates.
3. Moderna
Some investors have stepped away from the Moderna (MRNA -0.95%) story because coronavirus vaccine demand is declining. And the vaccine is Moderna's only product right now. But I would buy Moderna for the long term for two reasons.
First, though demand isn't the same as it was in earlier pandemic days, it's not disappearing. In fact, Moderna predicts the post-pandemic vaccine market will follow that of the flu market. And that means the biotech company could continue to generate billions of dollars in annual revenue from its coronavirus vaccine.
At the same time, Moderna is progressing with the rest of its pipeline. Respiratory vaccine candidates represent a particularly interesting opportunity. The company expects to launch coronavirus boosters, a flu vaccine, and a respiratory syncytial vaccine in the next few years. Moderna expects this respiratory vaccine portfolio to capture $8 billion to $15 billion of the market by 2027.
So, it's clear there's a lot ahead for Moderna. The shares right now are trading for about 8 times earnings estimates. That looks dirt cheap considering Moderna's long-term prospects. And that's why right now is the perfect time to add Moderna to your portfolio -- and sit back and wait.
