Three Stocks for Your DRIP Plan
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Let’s try to make our investing life easy! Let’s stop buying and selling every single week; instead, let's buy those stocks that will (hopefully) be around decades from now.
To be able to do this, we have to find sustainable brands that have the potential to continue selling their products well into the future. The companies in my list all have carved out their place in the market and in my opinion they’ll be able to hold onto their place.
Procter & Gamble (NYSE: PG)
Procter & Gamble had to be one of the companies in this list, and you know it. The company has its “50 Leadership Brands,” the ones that are probably scattered throughout your home. It’s hard to avoid P&G products.
It is for this reason that Procter & Gamble has been able to grow into a $210 billion company.
The company has been consistently growing sales since the financial crisis, and they now sit at around $83 billion annually. Ten years ago, the company had sales of $43 billion, almost half of this past year's.
You’d want to get a DRIP going on this company. Collecting its 2.9% dividend and then reinvesting it for some additional shares is a surefire way to build your portfolio. P&G is trying to help you out too; they’ve been giving that dividend a boost for decades now, and I doubt they’ll be stopping this year.
Merck (NYSE: MRK)
If you haven’t heard of Merck, you’re probably not alone. This company is huge in the medical field, making a variety of vaccines and prescription drugs. The company manages to sell around $47 billion in product every year. They also manage to extract $6 billion in net income from those sales.
Some of the popular names that you may have come across at some point in your life include Dr. Scholls, M-M-R, Nasonex and Claritin.
Just because they have some big brands out there, it doesn’t mean they’re slowing down. Merck has four drugs currently under review and sixteen more in phase three of development.
Like P&G, Merck also pays a hefty dividend. This one sits at 3.9% and also continues to grow. If you can get this company in your portfolio with DRIP working its magic, I think you’ll do alright.
Coca-Cola (NYSE: KO)
Coca-Cola has done quite well over the last century. The company has managed to grow a simple beverage into a worldwide brand distributed in more than 200 countries.
Coca-Cola has turned into a much bigger beast over the last few decades. The company now has more than 500 brands, some that you and I will probably never see in our entire lives.
Since 1919, when this company went public, they have been growing. The growth has been quite exceptional too. A share purchased at the time of the IPO and placed on a DRIP plan would have been worth $9.8 million in 2012. It’s amazing what time and great companies can do for your money.
Not Secure Enough for You?
If these companies aren’t secure enough for you then I’d have to recommend Berkshire Hathaway (NYSE: BRK-B). Berkshire Hathaway and Warren Buffett have made a lot of money by investing in companies over the long haul. Procter & Gamble and Coca-Cola are two of the companies that Buffett has made most of his money on over the years.
You won’t earn a dividend owning this company, but you will know that your money is secure. Taking down this company would require a complete financial collapse, so there’s nothing to worry about; your money won’t be any good anywhere anyway.
I’m obviously a big fan of Berkshire Hathaway; I always have been. People may try to come up with reasons as to why it’s a bad investment, but all I can see is an incredibly diverse and growing company with lots of cash.
The other three companies presented also make heaps of cash, and they’re investing it wisely.
Bottom line is you can’t go wrong buying any of these companies. If you buy one of the first three, make sure you set up that DRIP with your broker. You’ll extract all the gains that you can out of these companies with a DRIP in place.
Ash Anderson owns shares of Berkshire Hathaway and Coca-Cola. The Motley Fool recommends Berkshire Hathaway, Coca-Cola, and Procter & Gamble. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!