There are some stocks in my portfolio (you can find a full list of all the stocks I own here) that I bought because I think they'll do well during the Trump administration, or over the next few years. On the other hand, there are several stocks I own because I think they'll do well for decades to come. Here are four of my "forever stocks" and why I don't plan on ever selling them.
Share prices are as of 5/10/2017.
My "forever" stocks and why I like each one
Image source: Getty Images.
This is an easy one to start with -- after all, what's not to like about Apple (NASDAQ: AAPL)? For starters, the company has a fiercely loyal customer base, and one of the most valuable brand names in the world that gives it pricing power to operate more profitably than competitors. In addition, Apple has done a great job of growing its service-based revenue sources such as Apple Music, AppleCare, and Apple Pay, which provide a steady, predictable stream of income to complement the boost the company sees when it releases a new product. Oh, and Apple's $256.8 billion cash hoard is a nice bonus, and could allow Apple to pursue some interesting value-adding opportunities if a tax repatriation holiday happens.
2. Realty Income
Retail REIT Realty Income (NYSE: O) is one of my forever stocks for two simple reasons. It has delivered fantastic performance over the years, and has done so without putting investors at a high level of risk.
Specifically, Realty Income primarily invests in high-quality freestanding retail properties, most of whose tenants are in recession-resistant or competition-resistant business models. To name just a couple of examples of Realty Income's major property types, drug stores sell products people need, no matter what the economy is doing. And fitness centers and movie theaters are immune to online competitors.
Furthermore, tenants are on long-term "net" leases, which requires them to pay the variable costs of property ownership, such as property taxes, building insurance, and maintenance. All Realty Income needs to do is find a tenant and enjoy years of steadily growing, predictable income.
3. Berkshire Hathaway
I've written before that Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), the conglomerate led by legendary investor Warren Buffett, is such a well-rounded company that it could potentially stand alone in a stock portfolio.
Berkshire Hathaway's primary business is insurance, which it operates through wholly owned subsidiaries such as GEICO. Over the years, however, Berkshire has also built up an impressive portfolio of businesses, many of which are household names. Fruit of the Loom, Pampered Chef, BNSF Railways, and Clayton Homes are some of the more well-known Berkshire brands, just to name a few.
In addition, Berkshire invests substantial sums of money in common stocks which are hand-picked by Buffett or his stock pickers. The company has a pretty impressive portfolio that includes substantial stakes in Wells Fargo, Coca-Cola, and American Express, among dozens of others.
Welltower (NYSE: HCN) is a real estate investment trust that focuses on healthcare properties, with a main focus on senior housing. The company is the largest healthcare-focused REIT in the market, with about 1,400 properties in the U.S., U.K., and Canada.
The main reason I own Welltower as a "forever stock" is that the market for healthcare properties, and senior housing in particular, should perform quite well over the coming decades. The population in the U.S. and Welltower's other two markets is aging rapidly. In fact, the senior citizen population is expected to roughly double by 2050, and the oldest age groups, such as 85-and-up, are growing even faster.
As the largest player in its industry, Welltower has the financial flexibility to pursue opportunities as they present themselves, and the operational efficiency advantages to capitalize on the growing industry more than peers.
A final thought
When I say that I'll hold these stocks forever, I mean that I plan to do so as long as the companies' current business models remain intact. For example, if Realty Income decided to boost its leverage ratio from less than 30% to more than 60%, I might have to reconsider my investment.
The point is, these are some of the largest holdings in my portfolio, and they are stocks I bought with the intention of owning forever. However, it's still important to keep yourself informed about how the company is doing, and what has changed, at least on a semi-regular basis (say, by reading its quarterly earnings releases). And if something changes, you need to reevaluate accordingly.
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Matthew Frankel owns shares of American Express, Apple, Berkshire Hathaway (B shares), Realty Income, and Welltower. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends American Express and Welltower. The Motley Fool has a disclosure policy.