Buy and Hold Investors: 5 Excellent Stocks To Consider
Christopher is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Unless you have the time to watch the stock market continuously from day to day, a long term investment strategy can limit your risk as well as your stress if you diversify your portfolio around a solid core of long term positions that provide residual gains. Dividends not only provide a repeated return on your investment but they also allow you to reinvest without any additional cost to you, strengthening your position and increasing your returns as time goes by. You may want to consider the following companies as additions to your long term strategy or as pillars with which to build your long term portfolio.
M&T Bank (NYSE: MTB) is a solid buy due to its resilience both in a hard economic time for banks and its ability to thrive in upstate New York- a very unlikely location to find a successful bank tucked away. M&T made a net profit of over $1.6 billion in the period between 2008 and 2010 and has seen its stock more than double its value from $38 per share to just over $81. Its dividends are just as solid as its profits and growth in the market, paying $0.70 per share quarterly at about a 4% yield and 0.60 payout ratio. I expect this stock to remain solid for many years to come with future dividends reflecting the bank's future growth.
Predictions of the return of gas to $4 per gallon puts ConocoPhillips (NYSE: COP) in a good position as one of the largest gas and oil companies that operates completely outside of the Middle East, making this stock a buy for both short term and long term benefits. ConocoPhillips reported over $11 billion in profits in 2010 and has paid out dividends of $0.66 for each of the last quarters. Its current payout ratio is 0.35 with a yield of just under 4%, but I expect the dividend to increase as tensions flare up in the Middle East and gas prices rise.
Procter and Gamble (NYSE: PG) is a safe and consistent stock that will provide long term growth and excellent dividend returns and has become one of my favorite long term stocks. Procter and Gamble is the largest consumer product manufacturer and owns a long list of brands for products such as shampoo, toilet paper, clothing, personal hygiene products, dog food and laundry detergent. It made net revenues of nearly $12 billion in 2011 and pays handsome quarterly dividends of $0.52 per share. I believe this is the perfect long term stock buy for anyone looking for a dividend reinvestment plan because of its consistency, longevity and residual returns on investment.
Exxon Mobil (NYSE: XOM) is a definite buy for 2012 for many of the same reasons that ConocoPhillips is. The company stands apart, however, through the pursuit of efficient and clean technologies and good public relations. Exxon Mobil made $30 billion in 2010 which was a major leap from its $19 billion performance in 2009 and pays quarterly dividends of $0.47 per share, coming to a payout ratio of 0.22 and a 2% yield. Should gas prices rise amid tensions in the Middle East, Exxon Mobil could stand to benefit greatly and I expect that more profits will be delivered to its shareholders via increased dividends.
Bank New York Mellon (NYSE: BK) is a world leader in financial services and was created through the merger of Mellon Financial and New York bank back in 2007. The dividend could be better than the $0.13 per share it currently paid out on a profit of $2.5 billion in 2010 and the bank has been involved in litigation concerning alleged fraud on part of the bank. I feel that there are much better financial stocks out there than Bank New York Mellon and actually feel that this stock should be avoided due to the bank's low dividends, questions against its ethics and its plummet from $32 per share to $19 in 2011.
I expect Exxon Mobil and ConocoPhillips to move quickly and sharply if political pressure in the Middle East causes the closing of the Strait of Hormuz and both stocks will succeed over the long term regardless of how the situation plays out. Procter and Gamble is the safest and most secure dividend stock in the group, in my opinion, but I believe that its returns will require more patience and commitment over time. Finally, I firmly M&T bank is a worthy buy due to its ability to succeed despite an extremely poor financial market and a surprising location, which makes the company worth every bit of its $81 per share price tag.
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