It takes one click of a button to buy a stock but unwavering conviction and patience to hold that stock for a lifetime. While it's hard to not let your emotions get in the way when the prices of your stocks fluctuate, it becomes a bit easier if you have conviction in the company's opportunities and growth prospects.
Companies with a vision and long-term goals, the financial fortitude to convert their plans into action, and a commitment to enrich shareholders along the way should turn out to be big winners in the long term. If you're looking to invest now, here are two such high-conviction stocks you could buy now and hold forever. There's one common link between the two companies: Both are undergoing a transformation, and it's for the better.
Transformation underway: Now's the time to buy
Johnson & Johnson (JNJ -0.46%) has been a global healthcare leader for several years now, with a solid and ever-growing pipeline of drugs. Yet, the company's sales and cash flows didn't take off despite steady growth in its top line. Johnson & Johnson knew it must do something, and in late 2021, it announced plans to spin off its consumer health business. Although consumer health owns some of Johnson & Johnson's most iconic brands, it's also a cyclical, low-margin business that is often blamed by critics for the company's underperformance.
Johnson & Johnson finally spun off its consumer health segment into a separate company called Kenvue (KVUE -0.84%) and listed it on the New York Stock Exchange in May this year. With this move, Johnson & Johnson is now a healthcare pure-play focused on pharmaceutical and medical devices.
Johnson & Johnson recently upped its adjusted-sales and adjusted-earnings guidance for 2023. At its second-quarter earnings call, management also stated it was confident of meeting its pharmaceutical sales target of $57 billion by 2025 given the company's strong performance and pipeline in Q2. For perspective, pharmaceutical -- also Johnson & Johnson's largest segment -- brought in sales worth around $52 billion in 2022.
Meanwhile, the company is committed to increasing dividends annually while investing in growth and buying back shares opportunistically. Johnson & Johnson is one of the finest dividend stocks, having increased its dividend for the 61st consecutive year this April.
Johnson & Johnson, which remains a majority stakeholder in Kenvue, has now devised a plan to reduce its stake by offering investors an option to exchange their Johnson & Johnson shares for Kenvue shares at a 7% discount subject to limits.
Of course, this offer will entice investors who want to bet on a consumer company. Otherwise, hold on to your Johnson & Johnson shares, and if you don't own them yet, it's a great time to buy and hold shares in the company as it enters a new phase.
This dividend-growth stock will keep on giving
If you can find a stock that's dominating in a high-potential industry and has growth targets for earnings and dividends for the foreseeable future, you may have already found a winner. That's the kind of potential I see in NextEra Energy Partners (NEP -0.89%), a stock you'd want to buy now and hold for a lifetime.
NextEra Energy Partners is a limited partnership formed by energy giant NextEra Energy (NEE -1.36%). The parent's backing is a big competitive advantage as NextEra Energy Partners primarily acquires long-term contracted clean-energy projects from the parent's clean-energy arm and operates them to generate steady cash flows. The parent also provides administrative, management, and other services to NextEra Energy Partners, so its expertise also plays a role in the latter's growth.
Over the years, NextEra Energy Partners has built a huge asset base in wind, solar, and natural gas. A change is in the offing though, as NextEra Energy Partners is planning to sell its natural gas portfolio this year to become a renewables pure play. The move will not affect the company's primary business objective, which is to increase its cash distributions (or dividends) over time.
In other words, despite selling a considerably big portion of its portfolio, NextEra Energy Partners' annualized dividend per share will continue to grow at a pace of 12% to 15% between 2022 and 2026 as previously planned. A double-digit dividend raise from a 5.7%-yielding stock is luring.
The global transition from fossil fuels to clean energy is just getting started, and NextEra Energy Partners has already gained solid ground in this high-potential industry. With the stock losing momentum in recent months, it's an opportune time to buy some shares of NextEra Energy Partners and tuck them away in your portfolio for lifetime.
