When it comes to long-term investing, there are two basic approaches. The first is to stick with sleepy but solid companies with a history of long-term dividends, and to just kick back and collect your quarterly checks. The second involves taking a more tactical approach based on long-term trends that could indicate long-term outperformance from share appreciation.
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The following stocks fall into this second camp. They all have outperformed the S&P 500 over the last 10 years, and have unique value propositions going forward that give them a chance for success in the decades to come.
There’s no sure thing on Wall Street, of course. But based on recent numbers, these seven stocks are among the best long-term stocks to buy:
— American Water Works Co. Inc. (ticker: AWK)
— Apple Inc. (AAPL)
— Blackstone Inc. (BX)
— Church & Dwight Co. Inc. (CHD)
— DexCom Inc. (DXCM)
— Palo Alto Networks Inc. (PANW)
— Prologis Inc. (PLD)
American Water Works Co. Inc. (AWK)
Sector: Utilities Dividend yield: 2.1% 10-year return: 205% vs. 190% for the S&P 500
At about $28 billion in market value, American Water Works is among the largest publicly traded utilities that deal with water services. For years, water issues have plagued the American West in states like California and Arizona, but the impact of climate change is increasingly putting pressure on communities around the nation to figure out safe and reliable sources of water. AWK has deep expertise, serving roughly 1,700 communities across 14 states with about 3.5 million active customers. What’s more, it has an above-average dividend and a history of outperformance versus the S&P 500.
Apple Inc. (AAPL)
Sector: Technology Dividend yield: 0.4% 10-year return: 800% vs. 190% for the S&P 500
For many investors, tech icon Apple represents the best example of a stock that has generously delivered on its long-term investing thesis. Consistent double-digit revenue and earnings growth along with a history of innovation to maintain its tremendous brand power makes Apple the envy of just about any other consumer products company out there. The company doesn’t offer a tremendous dividend yield at present, but it is committed to sharing more profits with investors every year.
Adjusted for a 7-for-1 split in 2020, dividends have surged from about 6.7 cents per quarter a decade ago to 25 cents per quarter at present. That income growth, along with tremendous share appreciation, makes it a long-term stock to watch.
Blackstone Inc. (BX)
Sector: Financials Dividend yield: 2.2% 10-year return: 400% vs. 190% for the S&P 500
Regularly ranked as one of the 15 largest money managers on the planet, Blackstone has more than $1 trillion in assets under management and bills itself as the largest alternative asset manager, differentiating itself from retirement account giants like Vanguard Group. In particular, BX is known for its world-class private equity investments and hedge fund arm that provides high-net-worth individuals with elite opportunities. For most of us, scraping together a few million bucks to meet the minimum investment threshold to become a Blackstone client isn’t realistic. But if you want a piece of the long-term success of this Wall Street titan, the publicly traded stock is much more affordable and has an impressive history of outperformance.
[SEE: 7 Dividend Stocks to Buy and Hold Forever]
Church & Dwight Co. Inc. (CHD)
Sector:
Consumer staples Dividend yield: 1.1% 10-year return: 194% vs. 190% for the S&P 500
Slow and steady often wins the race in the long run, and Church & Dwight is a great example of a solid company that provides strong results on a regular basis. Its consumer brands include various Arm & Hammer cleaning and personal products, Orajel dental care lines, Trojan condoms, and a host of other products you will recognize from your own cupboard or medicine cabinet. It’s not a particularly glamorous business, but CHD has proven resilient even as other old-school staples stocks have fallen out of favor lately thanks to changing consumer tastes.
DexCom Inc. (DXCM)
Sector: Health care Dividend yield: None 10-year return: 194% vs. 190% for the S&P 500
Among the smaller stocks on this list, DexCom is “only” a $27 billion company, specializing in medical devices. What makes it a great long-term stock to consider, however, is that it has a special focus on glucose monitoring systems and solutions for diabetics. Roughly 1 in 9 Americans have diabetes — almost 40 million people — and by 2035, the International Diabetes Federation projects almost 600 million people around the globe will suffer from the disease. Health care can be a bit volatile based on the product pipelines of Big Pharma companies, but DXCM is playing a long-term megatrend in diabetes that makes it a good candidate for long-term success.
Palo Alto Networks Inc. (PANW)
Sector: Technology Dividend yield: None 10-year return: 940% vs. 190% for the S&P 500
One of just two stocks on this list without a dividend, cybersecurity leader Palo Alto also happens to be the No. 1 stock when it comes to 10-year returns, lapping the S&P 500 almost five times over. A $110 billion leader in the sector, PANW has world-class clientele including Southwest Airlines Co. (LUV) and consulting giant Accenture PLC (ACN) as customers. What’s more, the company is predicting consistent double-digit revenue growth in the coming years. In a modern digital economy, cybersecurity solutions are a must-have amid persistent threats, so it’s hard to imagine the sector seeing a seismic shift anytime soon. And with a history of success and given its current scale, this leader seems like a strong long-term stock to buy.
Prologis Inc. (PLD)
Sector: Real Estate Dividend yield: 3% 10-year return: 230% vs. 190% for the S&P 500
Prologis is the largest stock in the U.S. real estate sector, but it isn’t a traditional residential or office provider. Instead, this $117 billion firm specializes in industrial properties that include logistics and warehousing hubs. This is a great focus for several reasons, including the high barrier to entry given the size of these holdings as well as the high growth potential in urban markets in the age of e-commerce. PLD is a key part of the global supply chain with its warehouses, which include 1.2 billion square feet of space across 19 different countries and host top clients such as Amazon.com Inc. (AMZN) and FedEx Corp. (FDX). Boasting long-term leases with top-tier clients, PLD has both the scale and the expertise to remain dominant for many years to come.
[SEE: 9 Highest Dividend-Paying Stocks in the S&P 500]
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7 of the Best Long-Term Stocks to Buy originally appeared on usnews.com
Update 09/25/24: This story was previously published at an earlier date and has been updated with new information.
