One reason long-term investors have been able to build unfathomable wealth from stocks is persistence. It's easy to buy a stock, but to hold it through market crashes requires immense willpower and patience. But it's not that tough, either. If you have the conviction in the underlying company, there's no reason why you shouldn't be able to sit back and watch it grow, driving your returns higher and higher.
But where do you find such stocks? Start from the five below, which all have such strong growth catalysts that you'll want to buy and hold them forever.
A stock to fall back on at all times
In their pursuit of high-flying stocks, investors often overlook seemingly boring companies that are, in reality, slow and steady winners. For example, did you know Waste Management (WM -0.49%) stock could have more than quadrupled your money in just the past decade? The company offers resilient business and steady dividend growth, both of which are here to stay for decades to come.
Think about it: We generate trash even during the worst of recessions. Waste collection, management, and disposal are essential services that can ring in steady income and cash flows. Waste Management is the leader in the U.S. waste industry, with 20 million customers, a network of 244 solid landfills, 124 landfill gas-to-energy facilities, and 145 natural-gas fueling stations.
Image source: Getty Images.
To further fortify its leadership position, Waste Management bought Advanced Disposal for $4.6 billion in October 2020, acquiring nearly 3 million customers in 16 states. Management is now keen to pare down debt while prioritizing dividends -- the company recently increased its dividend for the 18th consecutive year. This combination of a recession-proof business with dividend growth is a surefire way to grow wealth in the long run.
Transformation underway
3M's (MMM -0.76%) weak operational performance over the past couple of years or so may have miffed investors, but the industrials conglomerate has withstood the test of time and is doing its bit to come out stronger this time around.
For example, 3M is striving to lift its underperforming yet high-potential healthcare segment. While many know 3M for its Post-it notes and Scotch tape, the consumer segment is the company's smallest in terms of sales. Safety and industrial, transportation and electronics, and healthcare are 3M's largest segments. After two major healthcare acquisitions in 2019 -- medical device company Acelity and M*Modal's healthcare technology business -- 3M recently divested its drug delivery business and is reportedly exploring the sale of its food safety unit. Acquisitions drove healthcare sales up by 15% during the nine months ended Sept. 30, 2020, helping 3M offset weakness elsewhere.
These moves, commitment to invest a mid-single-digit percentage of sales in research and development, and focus on innovation should take 3M far. 3M has also increased its dividends for 62 consecutive years and yields above 3%, making 3M a top Dividend Aristocrat to buy and hold forever.
Two megatrends worth your money
Mastercard (MA -0.74%) recently increased its dividend by 10% and initiated a share repurchase program worth $6 billion, reaffirming its commitment to shareholders even as it invests in growth. The company is second only to Visa in the payments processing business. Yet both companies have ample room for growth.
In fact, in its latest investment community meeting, Mastercard said its addressable payments market is worth a staggering $235 trillion. And it's not just its cards business -- service areas like bank-to-bank money transfers offer even bigger opportunities. Processing transactions made using its co-branded credit, debit, and prepaid cards remains its core business, but there's a lot more to Mastercard. The company generates boatloads of cash and has earned annual operating margins above 50% in the past decade.
Mastercard's international reach should help it exploit opportunities stemming from the ongoing global war on cash, even as e-commerce booms. These are megatrends, making Mastercard an incredible stock to own for as long as you can.
A top COVID-19 vaccine stock
Much like 3M, Johnson & Johnson (JNJ -0.36%) is better-known for its consumer products like Band-Aid and Listerine, but its consumer segment makes the smallest contribution to sales. J&J is a well-established and diverse company, running multi-billion dollar pharmaceuticals and medical devices businesses aside from consumer. Pharmaceuticals, for example, generated sales worth $42.2 billion for the company in 2019. In October 2020, J&J acquired Momenta Pharmaceuticals for $6.5 billion to make headway into treatment for auto-immune diseases.
Acquisitions have, historically, played an important role in J&J's growth, but innovation has been an even bigger driver. Consider that nearly a quarter of its annual sales consistently come from products launched in the past five years. J&J is also among the frontrunners in developing a coronavirus vaccine, and that's added to the stock's appeal lately. Also, Johnson & Johnson boasts a solid balance sheet and has increased dividends every year for the past 58 consecutive years. All in, this blue chip stock has made investors filthy rich in the past, and there's a strong chance it could do so again for patient investors.
A multibagger energy stock
While past returns do not guarantee future performance, NextEra Energy (NEE -0.36%) could be an exception given its blistering prospects and potential dividend growth.
With several countries targeting net-zero emissions by 2050, the International Energy Agency (IEA) projects renewables to make up 60% of the global electricity supply by 2030, up from 27% in 2019. NextEra Energy is not only the largest utility in the U.S. but also the world's largest producer of electricity from solar and wind.
With that kind of an addressable market, NextEra could grow exponentially in the coming decades. Between 2004 and 2019, NextEra's adjusted earnings per share grew at a compound annual growth rate of 8.4% and supported 9.4% compound growth in dividends. Given that its current renewables development backlog of 15,000 megawatts has already surpassed its existing renewables portfolio, long-term investors in NextEra Energy could mint a lot of money.
