There are few better, simpler, and more accessible ways to accumulate wealth over the long term than buying and holding shares of outstanding companies. And although it can be challenging to find corporations that can last -- let alone thrive -- over the long run, they do exist.
Here are two options investors should consider: Johnson & Johnson (JNJ +0.92%) and Merck (MRK 0.95%). These two healthcare leaders have seen their share prices jump significantly and outpace broader equities over the past six months. They may or may not maintain that momentum this year, but they are worth holding on to for the next two decades.
Here is why.
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Two robust businesses
Johnson & Johnson and Merck are among the largest pharmaceutical companies on the market. The latter specializes in oncology and currently markets the world's best-selling cancer drug, Keytruda. The medicine is approved to treat over a dozen forms of cancer and continues to grind out new indications, which will help keep its sales moving in the right direction through its patent cliff in 2028.
Merck has also prepared for the loss of patent exclusivity of its most important product. It earned approval for a subcutaneous version of Keytruda that is faster and easier to administer, without compromising efficacy. It has also launched new products, including Winrevair for pulmonary arterial hypertension and Capvaxive, a pneumonia vaccine, among others. Merck is well positioned to overcome its upcoming challenges and perform well long after.
NYSE: MRK
Key Data Points
Much of the same holds for Johnson & Johnson. Even through patent cliffs and tariff threats -- which it faced last year -- Johnson & Johnson delivers consistent revenue and earnings, thanks to a vast portfolio of pharmaceutical products and a deep footprint in the medical device market. Johnson & Johnson and Merck have outstanding track records of long-term performance for a reason. Even though the past is no guarantee of future success, they still possess the qualities that have made them market leaders.
NYSE: JNJ
Key Data Points
Great dividend stocks
Over the long run, dividend stocks tend to outperform non-dividend payers. There are many reasons for that, one of which is that companies that can sustain a dividend program for a while almost always have a solid underlying business. That's what we've got with Johnson & Johnson and Merck. Starting with the latter, it currently offers a forward yield of 3.1%, and it has raised its dividend payout by 94% over the past decade.
Johnson & Johnson is dividend royalty, literally. The company is part of the Dividend Kings group. To make it in that clique, a corporation must have had at least 50 consecutive years of annual payout raises. Even in this exclusive group, Johnson & Johnson stands out as one of the more impressive companies, with 63 straight years of dividend hikes. For long-term investors, reinvesting dividends will significantly boost returns over the next two decades. It's another great reason to stick with Johnson & Johnson and Merck through 2046.
