Companies that are able to survive for a century or more require certain special attributes. After all, they have to weather not only changing consumer tastes over time but also the ups and downs of the market, their industries, and the economy as a whole. There's good reason why businesses like these aren't all that common.
We asked three Motley Fool investors, and they came up with Johnson & Johnson (NYSE: JNJ), Wal-Mart (NYSE: WMT), and Stanley Black & Decker (NYSE: SWK) as stocks that you would do well to buy today because they'll likely still be standing 100 years from now. Let's find out why.
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Keith Speights (Johnson & Johnson): What's the average life span of a publicly traded company? It's probably lower than you think. A study by the Santa Fe Institute found that public companies exist for only 10 years on average before it's bought out, merges, or goes out of business. My thought, therefore, on finding a stock to buy and hold for 100 years is to identify one that has already lasted for at least that long. Johnson & Johnson definitely fits the bill.
Johnson & Johnson was founded way back in 1886. It has survived and thrived over the years by adapting to change. J&J started out selling sterile wound care products, and later expanded into consumer healthcare products, then to pharmaceuticals and medical devices.
J&J's past success has given it an enviable financial position. Over the last 12 months, the company made $72.5 billion in revenue, $50.2 billion gross profit, and generated free cash flow of $17.6 billion. They say it takes money to make money -- and J&J has what it takes.
The greatest reason to believe that Johnson & Johnson has staying power for the next 100 years, though, is its continual innovation. J&J ranks No. 4 among big pharma companies in research and development spending and has the fifth-best drug pipeline in the world. That innovation should allow investors to buy J&J stock and hold on for a long time.
A retailer with a winning approach
Demitri Kalogeropoulos (Wal-Mart): Wal-Mart has been a public company for just under 50 years, and I'd bet its focus on delivering the lowest possible prices will help keep it a market leader well into its next century of business.
That operating model allowed it to reach almost $500 billion of annual sales last year, up from the $78 million it booked just after its initial public offering in 1972. Wal-Mart owned 51 locations in the U.S. at that time, and today the retailer serves over 260 million customers each week through 11,700 stores that span 28 countries.
As the world's biggest retailer, Wal-Mart stands to lose the most if customers abandon their shopping trips in favor of doing all of their business online. But it seems more likely that consumers will balance e-commerce spending with physical shopping over the long term.
Wal-Mart's latest results show how the business could deliver solid returns in a scenario like that. Customer traffic ticked up 1.3% last quarter, average spending rose, and digital sales surged higher by 60%. These trends combined to push comparable-store sales up by 1.8% in the U.S. to mark the retailer's 12th straight quarter of positive results. I'd expect Wal-Mart to use its dominant market position to set many more such streaks in the decades ahead.
A workman-like history
Rich Duprey (Stanley Black & Decker): There's never not going to be a need for tools, hand or power, and none makes more or better tools than Stanley Black & Decker.
Stanley has existed for the last 100 years. In fact, it's been around for nearly 200 years, and it's been paying a dividend for 141 of them, better than any other industrial company listed on the New York Stock Exchange.
In that time, it has also expanded beyond the narrow confines of simply being a toolmaker, and now also operates electronic security and monitoring systems and healthcare asset and child protective systems.
Tools and storage still comprise two-thirds of its annual revenue,, and with smart acquisitions like the one it made earlier this year with Sears Holdings (NASDAQ: SHLD) to purchase the still-respected Craftsman tool brand, it will continue to see growth well into the future.
Stanley's dividend of $2.52 per share currently yields 1.6%, and it has an incredible string of 489 consecutive quarters of making a payout to shareholders, while increasing the dividend every year for the past 50 years. That alone puts it among a rarefied group of stocks known as Dividend Kings.
If there's a stock you want to put in your tool bag for the long haul, Stanley Black & Decker is it.
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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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