The Investor Abides, Man: Stocks for the Long Term
Nate is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Yes, I've been watching Coen brothers movies lately. Sue me.
Still, the principle espoused by The Dude in The Big Lebowski is an important one. It's easy for an investor to get sidetracked by the latest shiny investment. Whether it's a new stock, or a firm with a new product or good earnings or even some new type of investment item, it can be too easy to decide to flit from one to the next without ever giving investments time to mature and grow.
Like children, the real payoff in investments should be in the long term. By using a buy-and-hold strategy an investor can allow investments to accrue value and pay dividends, thereby building greater value. There's a reason Warren Buffett is an outspoken proponent of buy-and-hold, after all. It's a method that works for maximizing returns.
So I thought I'd take a look at investments that appeal to the inner 'Dude' in me, investments that are worth buying and holding for the next ten or twenty years...or even longer. It's a mixed bag, sure, but these are the types of investments you can buy to allow yourself to start spending time living and stop fretting so much about your stocks. Instead, abide, my friend. Abide.
Intel (NASDAQ: INTC)
Intel, of course, makes chips. Technically, the firm makes microprocessors and chipsets, but people think of it as just chips. Anyway, the firm makes the things that make computers so useful. And that's not to be despised. The firm has picked up several nice technology and patent acquisitions in the last year and I don't see any reason to doubt it.
The firm's stock has had a rough year but I continue to be very confident of its ability to grow. The firm never stopped paying a dividend even in the great recession, and now the yield sits at 4.45%. That's nothing to sneer at, even for a firm as staid as Intel. Even if you're a growth-only investor think hard about picking up Intel for the dividend.
Cisco (NASDAQ: CSCO)
Another tech company, and the last one in this column, I swear. Cisco is famous for making routers and other technology that holds the Internet and networks together. That's not a small thing to accomplish. The first is, in some analyst's opinions, still undervalued and ready for growth.
The company's shares have been on a run over the last six months or so, growing from $15.12 last July to $20.66. 33% growth in seven months is nothing to sneer at, and I think there's more where that came from. Toss in a 2.71% dividend yield and Cisco is a winner for the foreseeable future. You should have some if you can afford to get it.
Kimberly-Clark (NYSE: KMB)
Dryly listed as a firm that makes products from natural and synthetic fibers, Kimberly-Clark is more popular as the Kleenex and Huggies brands. Even some of the cheaper label competition still features KMB materials, so they make money either way. This is a smart company and one that's growing dividends.
Since the recession the firm's shares have risen just a hair under 105%. Not too bad given how volatile and unpredictable things have been. During that time, even in the worst of it, the firm has paid a solid dividend and is about to raise it for the fifth time since 2008. It's currently paying 3.44%. Just get some of this stuff. No matter what, people will need diapers to put babies in.
General Mills (NYSE: GIS)
Another one of my favorite stocks ever. General Mills is a solid, dull company that simply does things well and does them all the time. It's a sort of Zen thing for stocks: Do what you do, do it always, and do it well. I wish more firms were as focused on core missions as General Mills seems to be.
General Mills' stock has appreciated from $23.61 in early 2009 to $45.42. Almost a 100% return in four years. I'll take that over some wildly fluctuating tech stock anyway. It also split 2 for 1 during that time, it says that it expects greater profits and it raised its dividend five times to a current yield of 2.91%. There should be no portfolio that doesn't have General Mills as a part of it.
Philip Morris (NYSE: PM)
It's hard to bet against a company with a primary product that's actually addictive. It's hard to phrase it that way but tobacco sales continue to do well internationally and continue to sell in the U.S. even in the face of what would appear to be ruinous taxes on tobacco. Heck, the firm's operating margin was over 17% last year.
Since the recession hit, the firm's stock price has grown 173% and shows little signs of slowing down. It's also telling that over the last five years the firm has bought back more than 20% of its own stock. More attractive for long-term investors is the history of dividend increases. The firm has raised them five times since 2008, including raising them in late 2008 when the wheels were falling off the economy. That takes confidence.
Look, buy-and-hold isn't for everyone. Some people enjoy treating their investments as a hobby. I certainly had those types as my clients when I was a broker, and they seemed to enjoy shifting things around and paying me the extra commissions. But I never once complained when an investor said that they'd rather just find the right investments to make and stick with them. That's the sort of investor that you like to grow old with. I did, and you should too.
Follow Nate on Twitter: @natewooley
More columns by Nate Wooley:
- Which Tablet Makers Should You Invest In?
- An Odd Worry in Low-End Retail Stores
- Amazon, Streaming Video and the Future
Nate Wooley has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems, Intel, and Kimberly-Clark. The Motley Fool owns shares of Intel and Philip Morris International. 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!