Every long-term portfolio should feature a collection of blue-chip stocks, Wall Street's best companies. These stocks probably won't make you wealthy overnight, but they have a probability of success if you let them marinate for long enough, letting earnings grow and compound your returns.
These companies may not be the flashiest, but they are proven businesses that thrive both in good and bad times. The best news for investors is that you can start with a small sum. Here are two stocks, each priced under $100, that you can invest in for the long term -- essentially "forever" stocks for all intents and purposes.
A Warren Buffett favorite
The Coca-Cola Company (KO 0.15%) has been a staple of Warren Buffett's portfolio for decades. His company Berkshire Hathaway owns a stake worth approximately $24 billion, its third-largest holding. Coca-Cola is a global beverage leader, selling various brands of sodas, juices, water, teas, coffee, and more.
There are eight billion people on earth, providing an ever-expanding customer base for Coca-Cola. After all, everyone needs to eat and drink to live, and Coca-Cola's products are virtually everywhere, from restaurants to vending machines and grocery stores. Between steady population growth, expanding within markets, and pricing power, Coca-Cola has grown into a behemoth doing more than $43 billion in annual sales.
KO Revenue (TTM) data by YCharts
The company doesn't bottle most of its products; instead, it sells concentrates to bottlers, making Coca-Cola a business that doesn't need a lot of money to run. It returns a lot of its annual profits to shareholders as a result -- Coca-Cola is a famous dividend stock. The company has paid and raised its dividend for 61 consecutive years.
Today, shares trade at roughly $60 each, giving investors a 3% dividend yield. Analysts believe the company will earn $2.61 per share in 2023 and grow earnings by an average of 7% annually over the next three to five years. That's a price-to-earnings ratio (P/E) of 23, a slight premium to the broader market, but understandable considering Coca-Cola's long and successful history. Consider scooping up shares for the long term; the stock's earnings growth and dividend yield offer total investment returns of around 10% moving forward.
An energy stock critical to North America
Even after centuries of industrial advances, energy is still the economic core of society today. And energy company Enbridge (ENB 0.20%) is one of the most important companies in North America's energy picture.
Based in the Canadian city of Calgary, Enbridge's diverse assets span the continent. Pipelines deliver liquids like oil through the Great Lakes region to the eastern parts of Canada, the United States, and the Gulf of Mexico. Its natural gas lines move roughly 20% of all gas in America. Enbridge also owns Enbridge Gas, the largest gas utility by volume in North America. The company also has a growing base of renewable energy assets, including solar energy, wind farms, geothermal heat, and wastewater plants. In all, Enbridge generates more than $38 billion in annual revenue.
ENB Revenue (TTM) data by YCharts
Like Coca-Cola, Enbridge has a long track record of paying profits to shareholders. The company has paid and raised its dividend for 27 consecutive years. The dividend yield is 7.2% at today's share price. While the energy industry can be sensitive to economic swings, a midstream company like Enbridge is more like a toll road for energy resources. It isn't as susceptible to commodity market prices, which has helped Enbridge continue to grow its payout through the ups and downs over the past three decades.
Enbridge moves energy through one of the most economically prosperous regions on earth, and the long-term energy demand might only grow from here. Management is investing $17 billion in projects between 2023 and 2025, fortifying all aspects of its business, including renewable energy. As a result, management believes Enbridge could grow profits by 5% annually beyond 2025, setting investors up for solid investment returns when factoring in the generous starting dividend yield.
