There are many good reasons to buy and hold stocks for the long term rather than actively trade the market. Perhaps the best is that, despite occasional bear markets and periods of volatility, good-quality stocks tend to rise over the long run. Having a long-term time horizon allows investors to benefit from the overall growth of the market over extended periods.
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Also, because trading stocks can create tax liabilities and may involve fees and commissions, holding stocks is usually a more tax-efficient and less expensive investing strategy. Active trading involves a significant time commitment. An active investor has to constantly monitor their holdings and watch the market. Holding for the long run is a simple but effective strategy that doesn’t require ongoing management.
In theory, trading can generate excellent returns, but those potential returns come with more risks and higher costs. There are very few investors who can successfully and consistently time the markets. Most investors will find that a buy-and-hold approach will better align with their financial objectives.
Here are seven of the best stocks to buy and hold:
| Stock | Sector | Market capitalization | Dividend Yield* |
| PepsiCo Inc. (ticker: PEP) | Consumer defensive | $230 billion | 3% |
| Dow Inc. (DOW) | Materials | $38 billion | 5.2% |
| American Express Co. (AXP) | Financials | $154 billion | 1.1% |
| Johnson & Johnson (JNJ) | Health care | $377 billion | 3% |
| W.W. Grainger Inc. (GWW) | Industrials | $48 billion | 0.8% |
| Intel Corp. (INTC) | Information technology | $183 billion | 1.2% |
| Merck & Co. Inc. (MRK) | Health care | $318 billion | 2.4% |
*Trailing 12 months
PepsiCo Inc. (PEP)
PEP was founded in 1898 to rival the Coca-Cola Co. (KO), which had started 12 years before and was experiencing tremendous success. The company has succeeded brilliantly over the last 126 years. Today PEP is a world leader in the prepared snacks and beverages industry and has a market cap of more than $230 billion.
PEP owns some of the world’s best-known food and beverage brands, including Gatorade sports drinks, Aquafina bottled water, Fritos chips and snacks, and Quaker Oats breakfast foods. Through its involvement in The North American Coffee Partnership with Starbucks Corp. (SBUX), Pepsi has helped capture over 90% of the ready-to-drink coffee market.
A $5,000 investment in PEP shares on Jan. 31, 2014 would be worth about $14,000 today, including quarterly dividends.
Market cap: $230 billion Trailing-12-month yield: 3% Sector: Consumer defensive
Dow Inc. (DOW)
Michigan-based Dow can best be described as a materials science company. The company has three main divisions: packaging and specialty plastics; industrial intermediates and infrastructure; and performance materials and coatings.
Dow’s packaging and specialty plastics division makes containers for hydrocarbon energy sources such as gas and kerosene and also develops innovative uses for specialty plastics. Its industrial intermediates and infrastructure division makes polyurethanes and other chemicals used in construction. Finally, Dow’s performance materials and coatings segment makes high-quality paint, inks and coatings for the consumer and commercial market.
Dow’s global reach and solid reputation allowed the company to generate $44 billion in revenue in 2023. Wall Street is expecting that number to climb to over $45 billion in 2024.
Market cap: $38 billion Trailing-12-month yield: 5.2% Sector: Materials
American Express Co. (AXP)
AXP began 174 years ago as a freight company in Buffalo, New York, where it shipped products and valuable goods across a rapidly expanding nation. Its transition to a financial services firm came as naturally to AXP as it did to Wells Fargo & Co. (WFC), another 19th-century freight forwarding company that became a banking and finance powerhouse.
AXP is best known for offering credit cards and travel services to millions of consumers and merchant services to businesses around the globe. The company also offers an extensive suite of payment and expense management services to commercial customers in every country it serves.
AXP produced $60 billion in revenue in 2023. Alexander Yokum, a CFRA Research equity analyst, predicts record-setting revenues of $66 billion in 2024. Yokum’s estimate may prove to be optimistic, but if the company can achieve that revenue number and has a corresponding increase in earnings, shareholders should be richly rewarded.
Market cap: $154 billion Trailing-12-month yield: 1.1% Sector: Financials
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Johnson & Johnson (JNJ)
JNJ is known worldwide as an established leader in the consumer and commercial health care sectors. The company’s three principal business segments are consumer health, pharmaceuticals and medical technology.
Its consumer health segment focuses on consumer hygiene, health and beauty products for children and adults. Its pharmaceutical segment develops drugs for use in the treatment of infectious and metabolic diseases. Its medical technology segment makes machines and devices that help doctors treat patients in a wide variety of fields.
JNJ will publish its next earnings report on April 6. Wall Street estimates that the company will report $21 billion in revenue for the current quarter. The company has struggled to find its footing in the wake of the COVID-19 pandemic but is making a concerted effort to produce results for its customers and shareholders.
Market cap: $377 billion Trailing-12-month yield: 3% Sector: Health care
W.W. Grainger Inc. (GWW)
GWW is an industrial supply company that is a leader in the sale and distribution of maintenance, repair and operations products. In practice, that means it provides companies in North America, Japan and Europe with just about all the products, machines and equipment they need to keep operating smoothly and efficiently.
GWW is a massive, one-stop shopping platform that offers millions of items for sale online. Almost anything a company needs — from masking tape to lightbulbs, tools and safety equipment — can be found in its inventory and can be delivered in just a few days. Think of GWW as an Amazon.com Inc. (AMZN) that caters to industrial clients.
GWW faces intense competition from other retailers but has managed to be a consistent performer. The stock has appreciated more than 200% over the last five years and is currently distributing an annual dividend of $7.44 per share.
Market cap: $48 billion Trailing-12-month yield: 0.8% Sector: Industrials
Intel Corp. (INTC)
For more than 55 years, INTC has been a pioneer in the design, production and distribution of microchips. Its top-tier status in the semiconductor industry allowed it to produce $54 billion in revenue in 2023. According to average Wall Street estimates, that number will climb to $57 billion this year.
The company is organized into the following five segments: client computing, data center and AI, networking, Mobileye and Intel foundry services. Its customer base is incredibly diverse and includes almost any company that makes advanced computers, communications equipment or modern smart devices.
INTC is in a highly competitive industry, and the firm will have to remain innovative and nimble if it wants to continue to thrive, but it has a proven track record of success that makes it an excellent company to buy and hold.
Market cap: $183 billion Trailing-12-month yield: 1.2% Sector: Information technology
Merck & Co. Inc. (MRK)
MRK is a multinational company that develops and manufactures drugs and other pharmaceuticals for the health care industry. It operates under two segments: pharmaceuticals and animal health.
The pharmaceuticals segment has a special focus on oncology treatment, acute and emergency care, immunology, neuroscience, virology, cardiovascular disease, and Type 1 and Type 2 diabetes treatments. It also develops and distributes a wide variety of vaccines, especially for the pediatric health market.
The animal health segment makes antibiotics and vaccines for pets and livestock. That segment also has a thriving digital identification business that allows farmers and veterinarians to monitor and track the health of large numbers of animals on farms, ranches and processing facilities.
In a research note to clients dated Feb. 5. Cantor Equities, the equity research arm of Cantor Fitzgerald, reiterated the “overweight” rating it holds on MRK.
Market cap: $318 billion Trailing-12-month yield: 2.4% Sector: Health care
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7 of the Best Long-Term Stocks to Buy Now originally appeared on usnews.com
Update 02/12/24: This story was previously published at an earlier date and has been updated with new information.
