Introduction
Investing in stocks that can be held for the long term is a proven strategy for building wealth. The best buy-and-hold stocks are those of companies with strong fundamentals, competitive advantages, and consistent profitability. Here, I will go over ten stocks that I believe are excellent candidates for a long-term portfolio.
Criteria for Selection
Before jumping into the list, it’s essential to understand the criteria I used to select these stocks:
- Consistent revenue and earnings growth
- Strong competitive moat (e.g., brand power, network effects, patents)
- Stable or growing dividends
- Reasonable valuation relative to growth
- Resilience during economic downturns
1. Apple Inc. (AAPL)
- Why Buy & Hold? Apple dominates the consumer electronics market with its iPhone, Mac, and services ecosystem.
- Dividend Yield: 0.50%
- 5-Year Revenue CAGR: 7.9%
- Competitive Advantage: Brand loyalty, high switching costs, and services revenue.
2. Microsoft Corporation (MSFT)
- Why Buy & Hold? Microsoft’s cloud business (Azure), productivity software, and AI advancements make it a long-term winner.
- Dividend Yield: 0.80%
- 5-Year Revenue CAGR: 14.5%
- Competitive Advantage: Enterprise software dominance and cloud computing leadership.
3. Alphabet Inc. (GOOGL)
- Why Buy & Hold? Google Search and YouTube are dominant platforms, and AI-driven innovation keeps Alphabet ahead.
- Dividend Yield: N/A (No dividend)
- 5-Year Revenue CAGR: 17.6%
- Competitive Advantage: Digital advertising and AI capabilities.
4. Amazon.com, Inc. (AMZN)
- Why Buy & Hold? Amazon dominates e-commerce and has a rapidly growing AWS cloud computing business.
- Dividend Yield: N/A
- 5-Year Revenue CAGR: 19.1%
- Competitive Advantage: Massive scale and logistics infrastructure.
5. Berkshire Hathaway Inc. (BRK.B)
- Why Buy & Hold? Warren Buffett’s holding company owns a diversified mix of businesses and high-quality stocks.
- Dividend Yield: N/A (No dividend)
- 5-Year Revenue CAGR: 7.2%
- Competitive Advantage: Insurance and investment acumen.
6. Johnson & Johnson (JNJ)
- Why Buy & Hold? A leading healthcare company with strong pharmaceutical and consumer health divisions.
- Dividend Yield: 2.8%
- 5-Year Revenue CAGR: 4.6%
- Competitive Advantage: Healthcare stability and brand strength.
7. The Coca-Cola Company (KO)
- Why Buy & Hold? A recession-resistant business with global dominance in beverages.
- Dividend Yield: 3.1%
- 5-Year Revenue CAGR: 3.5%
- Competitive Advantage: Brand loyalty and global distribution.
8. Visa Inc. (V)
- Why Buy & Hold? Visa benefits from a growing cashless economy with transaction-based revenue.
- Dividend Yield: 0.8%
- 5-Year Revenue CAGR: 10.7%
- Competitive Advantage: Network effects and strong market penetration.
9. Procter & Gamble Co. (PG)
- Why Buy & Hold? Consumer goods giant with household brands like Tide, Pampers, and Gillette.
- Dividend Yield: 2.4%
- 5-Year Revenue CAGR: 4.5%
- Competitive Advantage: Brand strength and pricing power.
10. NVIDIA Corporation (NVDA)
- Why Buy & Hold? Leader in GPUs, AI computing, and data centers.
- Dividend Yield: 0.03%
- 5-Year Revenue CAGR: 32.1%
- Competitive Advantage: AI and semiconductor innovation.
Historical Performance of Buy-and-Hold Strategy
If an investor had invested $10,000 in each of these stocks 10 years ago, the compounded annual return would be calculated as:
FV = P (1 + r)^twhere:
- P = Initial investment
- r = Annual return
- t = Number of years
For instance, investing in Apple (AAPL) in 2013:
FV = 10,000 \times (1 + 0.25)^{10} = 93,132This means a $10,000 investment would have grown to $93,132 in 10 years at an average return of 25% per year.
Conclusion
Investing in these 10 buy-and-hold stocks allows investors to benefit from long-term capital appreciation, dividends, and compounding growth. By selecting companies with durable competitive advantages and strong financials, investors can navigate market volatility while steadily growing their wealth.
