It's amazing what stocks can do for your wealth if you find and hold the right ones over the long run. The effects of compounding should not be underestimated -- a combination of steady growth and rising dividends over the years can contribute to an impressive return. If you're investing to build up your retirement fund, then you should consider adding some solid names to your portfolio that you can hold onto for years or even decades.
It pays to be selective when searching for companies that qualify to be on this list. The criteria that I look for include a strong brand and franchise, a track record of dividend increases, a culture of continuous improvement, and catalysts that enable the business to demonstrate steady, long-term growth. Once these attributes are present, all you need is patience to wait for business growth to compound your wealth.
I've shortlisted three stocks with those characteristics that I believe you can own forever.
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Visa
Visa (V -0.70%) is one of the largest players in the payments industry and has a strong, recognizable brand. The company had more than 3.9 billion credit and debit cards in use as of June 30 and has a presence in more than 200 countries. Visa's size and scale have enabled it to not only survive the worst phases of the pandemic but have also allowed the company to post growth as the threat recedes. From its fiscal 2019 (which ended Sept. 30, 2019) through its fiscal 2021, net revenue grew from $23 billion to $24.1 billion, while net income rose from $12.1 billion to $12.3 billion. Payments volume increased from $8.8 trillion to $10.4 trillion, while the number of Visa-branded cards available for use went from 3.4 billion to 3.7 billion over the same period.
In the first nine months of its fiscal 2022, Visa has maintained this positive momentum. It posted a 22.7% year-over-year jump in net revenue to $21.5 billion, operating income improved by 19.5%, and net income climbed 26.2% to $11 billion. Free cash flow generated came in at $12.3 billion, up from the prior year's $10.8 billion. CEO Alfred Kelly remains confident that Visa can continue to execute and grow amid an uncertain economic climate. For income-focused investors, Visa has raised its dividend annually every year since it went public in 2008. Its latest quarterly payout came in at $0.375 per share.
Procter & Gamble
If you're looking for a consumer goods behemoth with a long operating history and a stellar track record of paying dividends, Procter & Gamble (PG -0.37%) fits the bill perfectly. Its popular brands of hair care, personal care, and baby care products such as Head & Shoulders, Pantene, Oral-B, and Pampers are sold in more than 170 countries.
The consumer goods giant has grown both its top and bottom lines through good times and bad. Net sales rose from $66.8 billion in fiscal 2018 (which ended June 30, 2018) to $80.2 billion in fiscal 2022. Over the same period, net earnings grew from $9.8 billion to $14.7 billion.
Procter & Gamble has an impressive 37,000 active patents, and invests $2 billion in research and development every year. These numbers show its commitment to innovation and the continuous improvement of its products that have cemented its status as one of the top companies in its product categories. Income-focused investors will also be pleased to know that Procter & Gamble has paid dividends for 132 consecutive years and has increased its annual payout without fail every year for the last 66.
Nike
When it comes to a culture of innovation, look no further than sports apparel and footwear giant Nike (NKE -0.68%). The company is well-known for constantly pushing the boundaries in designing better-performance footwear for athletes. Its brand is also synonymous with quality, efficiency, and durability. Nike's market leadership can be clearly seen in the fact that it was still able to grow its revenue during the more intense stages of the pandemic, when many of the stores that sell its products were temporarily closed.
In its fiscal 2015, revenue clocked in at $30.6 billion, and Nike ended its fiscal 2022 recently with revenue of $46.7 billion. Net income has enjoyed a similarly impressive climb from $3.3 billion to $6 billion over the same period.
Investors may be concerned as Nike faces a slew of problems such as snarled supply chains and inflationary cost pressures, but I believe that these are transient, and that the company can navigate its way successfully through these troubles and emerge stronger. CEO John Donahoe has reiterated Nike's strengths in having a broad portfolio of products and the right strategy in omnichannel marketing. These advantages, coupled with the tailwinds of a broader societal movement toward healthier living and the shift toward digitalization, stand to benefit the company.
Not only is Nike a growth stock, it has also raised its dividends annually for the past 15 years without skipping a beat, giving investors a sweet mix of share price appreciation and dividend growth. There is good evidence that the sportswear market leader can continue to surprise on the upside by leveraging on its popular brand and continuous innovation.
