Finding long-term stocks to buy now and hold forever certainly sounds like a good idea. Sure, many investors often hear that “no one can time the market,” and I think this sentiment is more true now than ever. Time in the market beats timing the market, and those with long-term investing ambitions often do better by doing absolutely nothing than by looking to time the gyrations of the market.
Of course, that’s easier said than done. We all like to try to time the bottom or sell the top.
However, those looking to put some fresh capital to work right now may find themselves in a difficult spot. That’s because valuations are still high, despite recent stock price declines among many big winners in recent years.
The question many investors have right now where to focus one’s energy. Is it better to buy beaten-up growth stocks, with the hopes that the market doesn’t end up in a long-term bear market for tech? Or are safe, defensive stocks a better buy, despite the fact that many of these companies have actually seen their valuations expand of late?
It’s a difficult time. However, here’s a mix of stocks I think are worth a buy and hold strategy over the long-term. Each of these companies are reasonably valued, and have meaningful long-term upside relative to their peers.
Top Long-Term Stocks: Enbridge (ENB)
Enbridge is one of North America’s biggest midstream organizations which operates a massive pipeline network that transports gas and oil, thereby keeping the U.S. and Canada warm and powered. This Calgary-based multinational organization pays a whopping dividend yield of about 6.3%.
Of course, yield isn’t everything, but it’s a solid base to build upon for investors who believe this yield will remain stable. Even modest capital appreciation is likely to result in double-digit annual returns. In these kinds of markets, aiming for modest returns is a good thing.
Now, there are many investors who may take the view that these higher oil prices are unsustainable. However, Enbridge’s model is less-tethered to the price of oil relative to its producing counterparts. As a pipeline operator, Enbridge receives relatively consistent payments which are reliable and grow alongside volume growth.
Those looking for a defensive long-term buying opportunity with the potential to provide double-digit returns may want to consider Enbridge right now.
On the other end of the spectrum, we have Alphabet.
A top growth stock for decades, Alphabet’s core Google business is arguably one of the best businesses from a long-term growth perspective, as well as from a durable competitive advantage perspective.
Alphabet has all but cornered the market for corporate ad spending in the search space. Accordingly, this company simply prints cash each and every quarter, in increasing amounts.
This company has nearly $140 billion in cash and cash equivalents on its balance sheet, with only $14 billion in debt. As Alphabet continues to grow its top and bottom lines, this high-margin business is likely to add even more cash to its hoard, all while providing more in the way of share buybacks for investors.
While Alphabet doesn’t pay dividends, this company does invest heavily in its other growth businesses. YouTube is starting to materially affect the company’s bottom line, and the company’s cloud business is another key area of growth many investors are watching.
Over the long-term Alphabet’s core businesses remain world-class growth opportunities for investors to jump on right now.
Top Long-Term Stocks: Berkshire Hathaway (BRK.A, BRK.B)
Perhaps my favorite company of all time (mostly due to its CEO), Berkshire Hathway is a conglomerate that is nothing short of impressive. Like many others, I can’t wait to read Warren Buffett’s annual letter, which was the shortest it’s been in a very long time (regrettably).
However, it’s Berkshire’s fundamentals and core businesses that most long-term investors stick around for. This company owns and operates a number of entities outright while owning pieces of a number of other world-class companies as well.
Among Berkshire’s largest holdings is Apple, a company I think is a great long-term hold. Those buying Berkshire are essentially getting 40% of their exposure in the form of Apple, something I like in this environment.
Overall, the core businesses within Berkshire’s portfolio comprise a stable of solid, long-term defensive growth companies. Those looking for diversification and long-term modest capital appreciation can’t go wrong owning this gem.
Back to the tech space, Microsoft remains a top pick of mine for those with a long-term growth orientation.
This company was the third of its kind to reach the $1 trillion market capitalization level back in 2019. Since then, MSFT stock has more than doubled, now trading at a valuation of $2.25 trillion.
There are many reasons for this.
Microsoft is one of the leaders in growing the cloud and infrastructure business. Today, this business provides much of the growth Microsoft enjoys. With a strong earnings base driven by the company’s Windows and software businesses, Microsoft is certainly a company that can be categorized as a defensive growth stock.
Interestingly, Microsoft is one of the few mega-cap tech names that pay a dividend and has for a very long time. While the yield is small, those who bought in a decade ago would now be enjoying an annual yield of nearly 10%. Accordingly, Microsoft is a top stock I think anyone can buy and hold for the very long term, despite its incredible rise of late.
Top Long-Term Stocks: Home Depot (HD)
Most homeowners have been forced to deal with those nagging problems around the house during the pandemic. As we all clustered at home, folks everywhere sought out their local Home Depot for supplies, something that has taken HD stock on an incredible ride since the onset of the pandemic.
In the home and garden retail department, Home Depot is in a class of its own. This company’s giant store footprint, product selection, and brand power go unmatched. In fact, many think of Home Depot in a similar way to Amazon, in terms of the moat around this company’s business.
Home Depot’s stock price has taken a hit of late, as valuation multiples have come down due to macro headwinds. However, those looking for long-term growth stories ought to like how this company is positioned.
Forecasts are for the home improvement market to hit $1 trillion in a few years’ time, with Home Depot out to capture as much share as possible. Until folks stop fixing leaky sinks or planting gardens, this is a company worth considering.
A 2.4% dividend yield is the cherry on top that I think further provides a floor underneath this stock, making HD stock a more defensive option to hold long-term.
Let’s stick with the home improvement space for a minute. Sherwin-Williams is an absolute behemoth when it comes to the paint market.
This company sells over one in four paint cans in North America. This paint and coatings maker’s products sell under several brand names in its name-brand store network and retail stores.
Be it a contractor engaged in commercial projects, a homeowner remodeling or someone looking to put an annual coating on a deck, Sherwin Williams is a top choice.
This company’s margins are impressive, and the company has been printing free cash flow for some time. Accordingly, Sherwin Williams has not been afraid to share the love with shareholders. This company’s small but growing dividend is another reason I look to this stock as a long-term buy-and-hold opportunity.
In fact, Sherwin Williams has posted 43 years of consecutive dividend increases, making its 0.8% yield seem out of whack. However, when one considers that this stock has increased over 85,000% over its lifetime, investors can see why this yield has remained low.
Abbott Laboratories (ABT)
Abbott is a healthcare company that many view as defensive.
We all need healthcare, and until the existing healthcare model is radically changed, Abbott’s business model is likely to remain a sturdy one.
This company provides a range of medical devices, generic pharmaceuticals and consumer products to market. Over the last decade, this healthcare conglomerate retooled itself, after spinning off a majority portion of its pharmaceutical business as AbbVie in 2013.
The company’s 2016 acquisitions of Alere for $5.8 billion and St. Jude Medical for $25 billion positioned this company well to focus on medical equipment for diagnostics, cardiovascular applications, and diabetes drugs.
Like other companies on this list, Abbott pays a small but meaningful dividend which may be of use to long-term investors in terms of total return. Over the long-haul, I think Abbott provides interesting upside in this difficult-to-time market.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.