Millennials and Gen Z individuals have an investing superpower that others don't: time. Time lets compounding do the heavy lifting in creating life-changing wealth over decades.
But only some people are taking advantage. According to a research study by The Motley Fool, just 41% of Millennial and Gen Z investors use retirement accounts and 57% own individual stocks.
The study showed that growth and dividend stocks are popular investing strategies for young investors, so here are three great companies you can buy right now that fit the bill.
1. Berkshire Hathaway
The study also indicated that most younger investors own less than 25 stocks, potentially needing more portfolio diversification. Owning Berkshire Hathaway (BRK.B -0.69%) is a great way to accomplish that while investing alongside Warren Buffett, arguably the greatest investor of all time. Berkshire Hathaway is his holding company, which contains a plethora of businesses and stock investments inside it.
Berkshire is Buffett's life's work, a sprawling conglomerate that owns independent businesses, like GEICO insurance, Duracell, Dairy Queen, and a combination of railroads, energy pipelines, and utilities. Additionally, Berkshire has stakes in public companies like Apple, Coca-Cola, American Express, Bank of America, and more.
Buffett has carefully diversified Berkshire so its shareholders can diversify their investments by investing in Berkshire. Buffett also runs a tight ship financially. Berkshire has a massive cash hoard of over $157 billion, plenty of buying power for future investments or to support its many businesses during tough times. Berkshire is a stock you can buy for the long haul without losing much sleep.
2. Tesla
For Millennials and Gen Z investors, electric vehicles (EVs) were born in their lifetimes. They are, in a way, the present and the future. No company embodies that more than Tesla (TSLA -1.11%). Tesla's already been a fantastic stock. Its unlikely success in disrupting a notoriously difficult industry has created life-changing wealth for early investors.
But Tesla's story is far from over, and that's where the opportunity is for young investors. Tesla produces more than 400,000 vehicles per quarter, but EVs still have a long way to go. Despite roughly 14% of new cars sold last year being electric, the global fleet is still only around 2% electric because vehicles take years to age out of use. Even if consumers buy non-Tesla EVs, the company's charging network is emerging as the leading infrastructure to support EV use.
Factor in Tesla's innovative new products like the Cybertruck, and Tesla could continue growing its vehicle business for years. That's a solid investment thesis before factoring in Elon Musk's tendency to create new markets, including the Tesla Bot, which remains in development but could hit the market later in the decade.
3. Philip Morris International
Dividend stocks are a big hit with Millennials and Gen Z, and for good reason. Dividends are passive income that can be reinvested to turbocharge your portfolio over time. Philip Morris International (PM -1.11%) is a company to watch. While it's most known for selling Marlboro cigarettes in non-U.S. markets, Philip Morris is aggressively pivoting to smokeless nicotine products, and they're proving popular enough to drive long-term growth for shareholders.
Its IQOS system is turning people away from cigarettes using a device that heats tobacco to produce a vapor but not burn it, as burning produces a lot of the toxins because of the smoke. Meanwhile, it recently acquired Swedish Match, the company behind Zyn nicotine pouches, the leading brand in a fast-growing category in nicotine use. Importantly, these products are getting Philip Morris into the U.S. market, which is traditionally very lucrative and gives Philip Morris growth opportunities it never had before.
The company pays a fabulous dividend that yields a whopping 5.7% at its current share price. Philip Morris has raised its dividend yearly since spinning off from Altria Group 15 years ago. It won't give you a ton of price appreciation; shares trade less than 10% higher than a decade ago. However, those looking to start building that dividend snowball can look to Philip Morris for a durable dividend that should slowly get bigger over time.
