In this article, we discuss 12 best stocks to buy and hold for a lifetime. You can skip our detailed analysis of income-generating dividend stocks and their previous performance, and go directly to read 5 Best Stocks to Buy and Hold for a Lifetime.
Experienced investors often stress that patience is crucial in investing, and they're definitely right about that. Being patient means looking at investments for the long haul and not rushing into decisions. The most successful investors take their time, study markets and trends, and only decide after watching things for a while. Being patient pays off big time, leading to more success and stability in the long run. A Middlefield Investments report analyzed the S&P 500's total return from December 31, 1992, to December 31, 2022, splitting it into two parts. Out of the total return of +1,481%, 47% came from dividends and reinvested dividends, while 53% was from the increase in stock prices. This shows that patient investors gain a lot from the compounding effect by investing in companies that consistently pay and increase their dividends over time.
The same report from the Canada-based equity income manager also mentioned that dividends act as a strong defense against inflation. High-quality companies often adjust their prices to safeguard their earnings from inflation. This helps them maintain their dividend payments consistently even through different market cycles. That's why dividends played a bigger role in total returns (more than 50%) during inflation-heavy decades like the 1940s, 1970s, and 1980s. It highlights why dividends continue to be a key source for competitive long-term returns for shareholders. On the flip side, other options for yield, like fixed income, can suffer significant losses during high inflation periods.
The blend of yields and dividend growth is a powerful combination that benefits investors in multiple ways. High yields offer an immediate income stream, providing a steady cash flow, which can be particularly valuable in volatile markets or during economic downturns. Meanwhile, companies with a history of consistent dividend growth often signal financial strength and stability. As these companies increase their dividends over time, investors not only enjoy a rising income but also benefit from the compounding effect, amplifying their returns. That said, analysts stress the importance of maintaining a healthy dividend yield to benefit investors because excessively high yields often indicate underlying financial issues within a company. Historical analysis showed that these stocks have performed better than the overall market in the past. The Dow Jones Dividend 100 Index Series, which tracks the performance of 100 high-dividend-yielding stocks in each market with a record of consistently paying dividends, achieved an average annual return of 11.7% between June 30, 2001, and June 30, 2023, considering reinvested dividends. This outperformed its benchmark's 10.2% return during the same period, as reported by S&P Dow Jones Indices.
In addition to generating strong returns, dividend-growing companies often possess the capacity to expand their revenues consistently. These companies typically exhibit strong fundamentals and effective business models. The commitment to sustaining and increasing dividends often aligns with a company's ability to generate steady cash flows and profitability. This financial stability allows them to reinvest profits back into the business, fostering growth initiatives that drive revenue expansion. AbbVie Inc. (NYSE:ABBV), S&P Global Inc. (NYSE:SPGI), and Archer-Daniels-Midland Company (NYSE:ADM) are some of the best stocks as these companies have shown strong revenue growth over the years and have also raised their dividends for decades. In this article, we will discuss some other stocks to buy and hold.
To create this list, we examined a set of over 50 dividend king companies, recognized for consistently increasing dividends for 50 years or more. Then, we selected stocks from that group that have grown their revenue by more than 6% on average over the past five years. This five-year average revenue growth rate helps us see how well a company has been doing over a longer period, showing if it's consistently growing its sales. We ranked these stocks from lowest to highest based on their 5-year average growth rate.
Genuine Parts Company (NYSE:GPC) is an American company primarily involved in distributing automotive and industrial replacement parts, office products, and electrical materials. On November 14, the company declared a quarterly dividend of $0.95 per share, which was in line with its previous dividend. Overall, the company has been growing its dividends for 52 consecutive years. The stock has a dividend yield of 2.77%, as of November 19.
In the third quarter of 2023, Genuine Parts Company (NYSE:GPC) reported revenue of $5.82 billion, which showed a 2.5% growth from the same period last year. For the first nine months of the year, the company generated over $1.1 billion in operating cash flow and its free cash flow for the period came in at $733 million. GPC is among the best stocks on our list.
At the end of Q2 2023, 34 hedge funds tracked by Insider Monkey reported having stakes in Genuine Parts Company (NYSE:GPC), down from 39 in the previous quarter. The overall value of these stakes is nearly $500 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q2.
Hormel Foods Corporation (NYSE:HRL) is a multinational food company that specializes in producing and marketing a wide range of consumer-branded food and meat products. The company currently offers a quarterly dividend of $0.275 per share and has a dividend yield of 3.38%, as of November 19. It is one of the best stocks on our list as the company has been raising its dividends for the past 57 years. In the past five years, the company's revenue grew by 6.33% on average.
As of the close of Q2 2023, 24 hedge funds in Insider Monkey's database owned stakes in Hormel Foods Corporation (NYSE:HRL), worth collectively over $267.2 million.
PepsiCo, Inc. (NASDAQ:PEP) is a New York-based multinational corporation that operates in the food, snack, and beverage industries. The company holds a 51-year streak of consistent dividend growth and currently pays a quarterly dividend of $1.265 per share. The stock has a dividend yield of 3.03%, as of November 19. PEP is one of the best stocks to buy and hold as the company's revenue grew at an annual average rate of 6.34% in the past five years.
PepsiCo, Inc. (NASDAQ:PEP) was a part of 68 hedge fund portfolios at the end of Q2 2023, compared with 70 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a collective value of over $3.5 billion.
An American diversified energy company, National Fuel Gas Company (NYSE:NFG) is next on our list of the best stocks to buy and hold in the long run. In its recently announced FY23 earnings, the company reported a strong cash position. Its operating cash flow for the year came in at $1.24 billion and its free cash flow amounted to $275 million.
National Fuel Gas Company (NYSE:NFG) has an impressive history of returning capital to shareholders as the company has been raising its dividends for the past 53 consecutive years. It currently pays a quarterly dividend of $0.495 per share for a dividend yield of 3.87%, as of November 19.
At the end of June 2023, 26 hedge funds in Insider Monkey's database reported owning investments in National Fuel Gas Company (NYSE:NFG). These stakes are collectively worth over $187.4 million. With nearly 1.2 million shares, GAMCO Investors was the company's leading stakeholder in Q2.
Northwest Natural Holding Company (NYSE:NWN) is an American utility company that distributes natural gas to residential, commercial, and industrial customers. The company also offers underground storage services for natural gas, allowing for the storage and withdrawal of gas to meet seasonal demands and ensure a consistent supply for customers.
Northwest Natural Holding Company (NYSE:NWN) offers a quarterly dividend of $0.4875 per share, having raised it by 0.6%. Through this increase, the company achieved one of the longest dividend growth streaks in the market, spanning over 68 years. As of November 19, the stock has a dividend yield of 5.24%.
Insider Monkey's database of Q2 2023 showed that 13 hedge funds held stakes in Northwest Natural Holding Company (NYSE:NWN), up from 12 in the preceding quarter. The collective value of these stakes is more than $13.7 million.
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement retailer. The company operates a chain of retail stores specializing in home improvement products and services catering to DIY enthusiasts, homeowners, and professionals. On November 10, the company declared a quarterly dividend of $1.10 per share, which fell in line with its previous dividend. Its dividend growth streak stands at 59 years, which makes LOW one of the best stocks to hold. The stock has a dividend yield of 2.16%, as of November 19.
Lowe’s Companies, Inc. (NYSE:LOW) was a part of 64 hedge fund portfolios at the end of Q2 2023, according to Insider Monkey's database. The stakes held by these hedge funds have a total value of more than $3.7 billion. With over 7.4 million shares, Pershing Square was the company's leading stakeholder in Q2.
W.W. Grainger, Inc. (NYSE:GWW) is a leading distributor of maintenance, repair, and operating supplies in the US and internationally. In the third quarter of 2023, the company reported revenue of $4.21 billion, which showed a 7% growth from the same period last year. Its operating cash flow for the quarter came in at $523 million and the company returned $287 million to shareholders through dividends and share repurchases.
W.W. Grainger, Inc. (NYSE:GWW), one of the best stocks to buy and hold, has raised its dividends for 53 years in a row. The company currently pays a quarterly dividend of $1.86 per share and has a dividend yield of 0.93%, as of November 19.
The number of hedge funds tracked by Insider Monkey owning stakes in W.W. Grainger, Inc. (NYSE:GWW) stood at 28 in Q2 2023. The total value of these stakes is nearly $232 million. Among these hedge funds, Millennium Management was one of the company's leading stakeholders in Q2.
