While no one can say with exact certainty which stocks will do well and which stocks will deliver subpar performance, great businesses have a habit of rewarding investors over the long run. The right stock selections for your portfolio will depend on your personal investing preferences and risk appetite.
Value stocks can be a great addition to your portfolio in a wide variety of market environments, as these companies are often established businesses with storied leadership in their respective industries. If you're looking for value stocks that can drive your portfolio to new heights well into the next decade, here are two names to consider the next time you go stock shopping.
1. Eli Lilly
Eli Lilly (LLY 3.67%) has been a mainstay in the pharmaceutical industry since the 19th century. The company has gained a resurgence of popularity with investors recently for its role in the diabetes and weight loss drug boom, specifically driven by the rise in demand for glucagon-like peptide-1 (GLP-1) agonists.
Whereas Novo Nordisk has its Ozempic and Wegovy, Eli Lilly's equivalents are sold under the names Mounjaro for diabetes and Zepbound for weight loss. Both Mounjaro and Zepbound feature the same active ingredient, tirzepatide, while Novo Nordisk's equivalents share the active ingredient semaglutide.
It's estimated that tirzepatide could surpass its widely publicized competitor to reach annual sales of $27 billion before the end of the decade, with tirzepatide becoming the market leader for the treatment of weight loss and diabetes. Considering the fast and growing addressable market for GLP-1 agonists, there's plenty of room for multiple players in this space, too.
Diabetes care has long been an area of focus for Eli Lilly, in addition to other core therapeutic areas like cancer and immunology. The company also made headlines recently when it garnered approval for Kisunla, which is a treatment for early symptomatic Alzheimer's disease. Kisunla is the second approval of a medicine that falls into the class of drugs known as disease-modifying therapies that have been approved for Alzheimer's disease.
NYSE: LLY
Key Data Points
A disease-modifying therapy is intended to slow or even reverse disease progression by addressing the root cause of the illness. In late-stage clinical trials, Kisunla was shown to reduce cognitive and functional decline by 35% compared to participants who took the placebo. Some analysts think Kisunla could hit sales of $2 billion by 2030.
On top of its newer portfolio additions, Eli Lilly also has other long-standing blockbusters like Verzenio, a prescription medicine called a CDK4/6 inhibitor for people with HR+/HER2- breast cancer; plaque psoriasis drug Taltz; and Jardiance, a medication that is approved for type 2 diabetes, heart failure, and chronic kidney disease. Over the trailing-12-month period, Eli Lilly delivered profits of $6.1 billion on revenue of about $36 billion.
As a long-standing dividend payer, Eli Lilly pays a dividend that currently adds up to $5.20 per share annually. While its yield is less than 1%, which is not uncommon when shares of dividend-paying stocks experience above-average growth, the stock has delivered a total return of approximately 700% over the trailing five years. Incidentally, Eli Lilly's dividend payout has also increased 100% in that period. It's also paid a dividend of some kind every year since 1885.
As a leader in the pharmaceutical industry with a portfolio of profitable drugs and a superior growth runway ahead, not to mention a stalwart dividend payer, Eli Lilly looks like a wise buy for investors of different ages as well as trading styles. While past performance isn't a promise of future gains, this company looks like it is on track to continue rewarding investors well into the next decade, and those with the sufficient buy-and-hold horizon may want to jump aboard.
2. Walmart
Walmart (WMT 1.60%) is a company that needs no introduction, known for its warehouse style and discount chain stores that sell everything from clothes to food to household goods to automotive supplies. The company has well over 10,000 stores located around the world, including e-commerce sites open in 19 different countries.
The company divides its reporting segments into three areas: its U.S.-based Walmart stores, its international stores, and Sam's Club. Most of Walmart's stores are still based in the U.S., where it operates 162 distribution facilities that cover the majority of its domestic supply chain. It also ships some items directly from suppliers to customers, while its U.S. e-commerce platform sources from dozens of its own fulfillment centers as well as direct delivery from thousands of its stores across the country.
Walmart is the world's largest retailer, and it also accounts for approximately 9% of all retail sales in the U.S. alone. With 90% of the U.S. population living within 10 miles of a Walmart store, and the company's dedication to providing low prices to customers, there's a significant value proposition for consumers to frequent its locations in a wide range of economic environments.
Now, it's no secret that the current economic environment has presented challenges for companies with exposure to discretionary spending. Walmart's low-price promise to shoppers is a huge advantage, and it benefits from the fact that it sells a wide range of items including products that are both essential and nonessential.
NASDAQ: WMT
Key Data Points
In the first quarter of the company's fiscal 2025, ended April 26, it reported $161.5 billion in revenue, up 6% from the year-ago period. It also delivered operating income of $6.8 billion, up 9.6% from one year ago. Walmart's global e-commerce sales rose 21% year over year, while its global advertising business generated 24% growth from the year-ago period.
Over the trailing-12-month period, Walmart has delivered profits of about $19 billion on revenue of $657 billion. Its operating cash flow in that window has total around $35 billion.
Walmart is a faithful dividend payer. In fact, it has raised its dividend every single year since declaring its first dividend in 1974. Walmart has a payout ratio of about 33% of earnings. Its current dividend is less than $1 annualized, while its yield sits around 1.2%. That yield is in line with what the average stock trading on the S&P 500 pays.
While Walmart's dividend might seem on the low end, if you look at the stock's total return, which factors in capital gains and dividend growth, that five-year return is in the ballpark of 100%. Walmart is dealing with a difficult environment like other retailers, but its resilience is showing through, its financial health is overall in excellent shape, and its commitment to its dividend has remained untarnished. These are all factors that bode well for value-oriented investors seeking superior returns and dividend income over the next five to 10 years.
