Please ensure Javascript is enabled for purposes of website accessibility

3 Stocks I'll Hold Forever

By Matthew Frankel, CFP® – Mar 7, 2016 at 10:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here are three stocks this Fool plans to keep for as long as he's an investor.

"Our favorite holding period is forever" is one of my all-time favorite Warren Buffett quotes, as it sums up the ideal of long-term investing. When you're weighing a stock, ask yourself: "Can I see myself still owning these shares in 20 years? What about 50 years?"

There are many qualities that can make a stock a good "forever" investment. Maybe the business can hold up in any economy, good or bad. Or maybe the revenue stream is diverse and steady. Here are three stocks from my own portfolio that I intend to hold for as long as I'm an investor.

The right kind of retail
I'm a big fan of real estate investment trusts, particularly those with a long track record of smart execution and market-beating performance. One of my favorites is National Retail Properties (NNN 0.72%), which invests in single-tenant freestanding retail properties.

Many investors consider retail to be risky, and that's somewhat true. There have been several high-profile retail bankruptcies, and many others are struggling to stay above water. However, National Retail invests in a certain type of retail. Most of its properties are occupied by non-discretionary or service-based retail businesses, both of which face little threat from online competition because their goods and services still demand physical locations for consumers to visit. Consider National Retail's five largest business types:

  • Convenience stores (16.8% of the portfolio)
  • Full-service restaurants (11.2%)
  • Limited-service restaurants (7%)
  • Automotive service (6.9%)
  • Family entertainment centers (5.4%)

This is the reason National Retail Properties has an industry-leading 99.1% occupancy, which hasn't fallen below 96.4% in recent history, even during the financial crisis. The company uses long-term (15- to 20-year) "net" leases, which generally have rent increases built in and require tenants to pay variable costs such as property taxes, building insurance, and maintenance.

Source: NNN company presentation.

This business strategy results in consistent market-beating performance. National Retail Properties has averaged a 14.8% total return over the past 25 years and has increased its dividend every year during that time.

A ready-made portfolio in just one stock
Berkshire Hathaway
(BRK.A 0.35%) (BRK.B 0.40%) is the one stock in my portfolio I'm most confident that I'll actually hold forever.

The reasons are simple. Most importantly, Berkshire Hathaway is like a complete investment portfolio all in one. The company has a long list of subsidiary companies that includes GEICO, The Pampered Chef, and Fruit of the Loom. And you get Berkshire's rock-solid portfolio of about four dozen stocks, some of which are pretty large holdings. Just to name a few of Berkshire's stock holdings:


Ticker Symbol

Berkshire Stake

Market Value

Wells Fargo



$23 billion

American Express



$8.3 billion

DaVita HealthCare



$2.5 billion

Deere & Company



$1.8 billion

International Business Machines



$10.6 billion




$17.6 billion

Kraft Heinz Co.



$24.2 billion

Phillips 66



$5.9 billion

Berkshire has delivered incredible returns to investors over the past 50 years, and I don't realistically expect anything close to that over the next 50 years. The company has simply gotten too big to sustain that level of growth. Even Buffett said so in the company's most recent letter to shareholders. However, I look at Berkshire as a bulletproof company with the potential to beat the market for decades to come.

A different kind of tech company
Another of my "forever" stocks is data center REIT Digital Realty Trust (DLR 0.25%). While this is the newest of the three companies mentioned here (IPO in 2004), it has delivered impressive results so far, and the industry trends show that Digital Realty's best days could still be ahead of it.

Global IP traffic is expected to grow at an annual rate of 23% through 2019, and cloud data center traffic is growing even faster at 32% per year. Basically, as people store more data in the cloud, all of that data will need to be stored somewhere, and that's where Digital Realty comes in.

Basically, Digital Realty builds data centers and leases the space out to more than 1,000 customers, including a who's-who of the tech and financial world. Facebook, Oracle, IBM, AT&T, and JPMorgan Chase are all among Digital Realty's largest tenants. The property portfolio is currently 93% occupied, and data center tenants tend to renew their leases more than other types of properties.

This business model seems to be working. Digital Realty's properties generate higher rates of return than those of its REIT peers, and the stock pays an above-average dividend. The company has grown its FFO per share by an average rate of 14.2% per year -- well above other leading REITs. In fact, Digital Realty just announced its 11th consecutive dividend increase, which has grown at a 14% average rate since the IPO. Impressively, Digital Realty has done this with a relatively conservative balance sheet. The company has less debt relative to its EBITDA than its peers, and its interest coverage is higher as well.

Something to keep in mind
Although you may buy stocks like these with the intention of holding them forever, you should still monitor any company's progress regularly. As I mentioned earlier, Buffett likes to hold stocks forever, but even he sells holdings from time to time.

A great example is Buffett's investment in Freddie Mac in the 1990s. Berkshire built a huge stake in the company, because at the time it made sense to Buffett as a long-term investment. In 2000, however, he felt the company was being too shortsighted and risky, so he pulled the plug, locking in a nice profit. We all know how Freddie Mac turned out in the years that followed.

My point is that just because a stock looks like a "forever" investment right now doesn't mean this will always be the case. If the reasons you loved a stock in the first place no longer apply, move on.

Matthew Frankel owns shares of American Express, AT&T;, Berkshire Hathaway, Digital Realty Trust,, and National Retail Properties,. The Motley Fool owns shares of and recommends Berkshire Hathaway, Facebook, and Wells Fargo. The Motley Fool owns shares of Oracle. The Motley Fool is short Deere & Company and has the following options: short March 2016 $52 puts on Wells Fargo. The Motley Fool recommends American Express and Coca-Cola. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Berkshire Hathaway (A shares) Stock Quote
Berkshire Hathaway (A shares)
$478,675.55 (0.35%) $1,655.56
Berkshire Hathaway (B shares) Stock Quote
Berkshire Hathaway (B shares)
$317.43 (0.40%) $1.25
National Retail Properties Stock Quote
National Retail Properties
$46.04 (0.72%) $0.33
Digital Realty Trust Stock Quote
Digital Realty Trust
$111.27 (0.25%) $0.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.