When you hear about owning stocks for a 10-year time period, you probably think of young companies that are currently unprofitable but have tremendous growth potential. That's definitely one way to look at investing for the long-term -- but here are two companies that are nearly the opposite, but could still be cornerstones of your portfolio over the next decade: The Boeing Co. (NYSE:BA) and Apple (NASDAQ:AAPL).
Both of these businesses should have good things in store for investors in both the near term and the long term. Let's dig in.
There are a couple of things that investors will immediately enjoy while holding on to Boeing over the next decade. First, Boeing recently increased its dividend by a healthy 25% to $0.91 per share for a 2.5% yield; Boeing's dividend has increased 88% over the last two years, and by 192% over the last 10 years.
In addition to increasing its dividend, Boeing has also been diligent about repurchasing shares.
Sure, Boeing's defense business has suffered slightly while the U.S. government continues to cut military spending, but the growth in commercial aircraft completely outweighs the decline in defense business. In fact, Boeing's backlog of commercial aircraft is sitting at a staggering $431 billion -- and its backlog is at a total of $489 billion if you include its defense orders. That's roughly five year's worth of revenue for Boeing to work on in the near term.
Speaking of orders to work on, Boeing is currently aiming to ramp up production of its commercial aircraft. Production of its bread-and-butter 737 is at 42 per month now, but should reach 44 per month next year, and 52 by 2018. Boeing also reached 10 per month of its 787 Dreamliner, which is currently hurting margins, but should be a boon to its bottom line by the end of next year as it hits production of 12 airplanes per month.
Looking at Boeing's long-term future, it's just as positive. According to Morningstar.com, U.S. air travel has consistently grown 1.5% faster than GDP over a long time frame, and this will continue to fuel Boeing's commercial aircraft business. In fact, Boeing estimates that the world will need more than $5 trillion worth of commercial aircraft as emerging markets continue to fuel demand for new and replacement airplane fleets.
With a healthy dividend, a massive backlog of orders, and a future with plenty of demand for its commercial airplanes, Boeing could easily be a cornerstone of many portfolios over the next decade.
For the near term I believe investors should be more optimistic about Apple's iPhone growth. Sure, the advantage the company has derived from creating a revolutionary smartphone could be diminishing as competitors catch up in hardware, but Apple's operating system and ecosystem are ahead of the competition's in customer loyalty and engagement, and should help retain and grow its business in the U.S. market.
In addition, the real story is going to be China, as its middle class continues to grow and desire more luxurious and tech-savvy products. In the most recent quarter Apple's revenue in China grew 112%, and management expects the region to be its largest market at some point in the near future, which would provide healthy top- and bottom-line growth.
"We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch," CEO Tim Cook said in a press release. "The excitement for Apple Music has been incredible, and we're looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall."
While Apple's iPhone will continue to generate massive profits, the company's long-term future is also lucrative.
Right now many investors are still trying to fathom what exactly the Apple Watch and Apple Pay could do for the company's top and bottom lines. While we can't be sure of what the Apple Watch will be capable of in five to 10 years, what we do know is that sales of conventional watches fell by 14% year over year in June -- the steepest amount in seven years during the month of June -- which many linked to the debut of the Apple Watch, according to research firm NPD Group.
Looking at Apple Pay, as smartphone penetration continues to increase across the globe and Wi-Fi/4G becomes more readily accessible, there will surely be a surge in consumers paying for things via apps on their smartphones or smartwatches. The future of payment seems to directly point to mobile, and it could lead to a lucrative business for Apple over the long term.
Honestly, I can't do Apple's near term and long term justice in such a short amount of space. So perhaps the most important question for investors to ask is, "What can't Apple do?" If investors can seriously debate how Apple would potentially enter the automotive industry, which is practically at the opposite end of the business spectrum from its current industry, the list of possibilities is just about endless. With the amount of cash Apple has -- a pile of cash reserves reaching nearly $203 billion as of the third quarter, which is worth more than the market capitalization of all but 15 companies in the S&P 500 -- and the talent the company has, owning Apple as a cornerstone of your portfolio over the next 10 years seems like a no-brainer.