If you are looking to invest some money today and have a holding period that is 10 years or more, you're going to want to pick from an elite group of companies. You want industry-leading monsters that have something unique about them that will keep them ahead of the pack. Nucor (NUE 3.16%), Federal Realty Investment Trust (FRT -0.52%), and Enterprise Products Partners (EPD -0.71%) all fit the bill. Here's why.
1. Nucor is a giant U.S. steelmaker
Steel is a cyclical industry that is a bit out of favor today. That's left U.S. steelmaking giant Nucor's stock down about 30% from its 2023 highs. Don't let that deep downturn worry you, it is actually pretty normal for a steel company. In fact, the best time to buy a cyclical business can often be when Wall Street has placed it in the dog house.
What sets Nucor apart from its peers is its status as a Dividend King. Despite the inherent swings in the industry, this company has managed to continue to increase its dividend through thick and thin. Helping that along is a boring and reliable playbook focusing on continually investing in the business. That has notably included both the production of bulk steel and the expansion of the portfolio into higher-margin steel products.
Some investors will buy Nucor to play the steel cycle. But this is the type of company that you might want to buy and sock away for 10 years or more. Although the dividend yield is a bit miserly at 1.7%, this stock is really about getting exposure to a reliable and growing steel business.
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2. Federal Realty is the only one of its kind
Sticking with the Dividend King theme, real estate investment trust (REIT) Federal Realty has also increased its dividend annually for more than five decades. It is the only REIT to have achieved that feat, making it an industry standout even though it is actually a fairly small business.
Don't let the company's modest portfolio of about 100 properties fool you. It happens to own some of the most desirable strip malls and mixed-use developments in the markets where it operates. It is the focus on quality over quantity that has resulted in Federal Realty's strong track record.
That said, the REIT is a very active portfolio manager. So it is always buying and selling assets, redeveloping new acquisitions to increase the value so they can be sold down the road at a premium price. Federal Realty won't excite you, but you can be sure that the attractive 4.6% dividend yield is backed by an incredibly reliable business.
3. Enterprise Products Partners is an industry leader
Enterprise Products Partners is one of the largest midstream businesses in North America. Its portfolio of pipelines, storage, processing, and transportation assets is vital to the world's energy markets. And it largely charges fees for the use of its assets, which makes the cash flows it generates highly reliable regardless of the price of the commodities moving through its system.
This is the big-picture story that supports the master limited partnership's (MLP's) huge 6.9% yield. The slow and steady growth the business has achieved over time, meanwhile, is what has supported Enterprise's streak of 26 consecutive annual distribution hikes. That's not enough to make it a Dividend King, like Nucor and Federal Realty, but Enterprise hasn't been around for 50 years, either. It has been around for a little over a quarter of a century, having gone public in 1998. Which means the distribution has been increased on the regular from day one.
Three monster options from three different sectors
Nucor, Federal Realty, and Enterprise are vastly different businesses, but each one is a monster in its own way. And each one has an incredible dividend track record. If you are looking for stocks to buy and hold, this trio would be a good place to start today.
