Buy and hold forever is a popular expression. Admittedly, forever is a long time. Few stocks possess the growth opportunities, competitive advantages, or the ability to evolve with a changing world to warrant permanent residency in a portfolio. That’s why the expression is more about buying high-quality businesses with no planned exit strategy. Ideally, you buy a world-class company, and the stock rewards you with steady returns over generations.
Famous investor Warren Buffett has held some stocks in Berkshire Hathaway‘s portfolio for decades. That’s the goal. But if things don’t go as planned, you sell. So, which stocks might deserve such a serious commitment?
The Dividend Kings are an excellent starting point. This exclusive club comprises companies that have paid and raised dividends for at least 50 consecutive years. This remarkable accomplishment is a testament to the quality and longevity of their business models and cultures. Here are three industrial Dividend Kings poised to generate steady wealth over decades of consistent performance and growing dividends.
For just $500, you can own them all. Consider buying and holding them forever.
Automation company Emerson Electric (NYSE: EMR) began manufacturing electric motors and fans in the late 1800s. Today, it sells automation hardware, software, and smart devices, aiming to capitalize on growth trends such as automation and digital transformation, energy efficiency, decarbonization, and the near-shoring of manufacturing to developed countries like the United States. The company has spent most of the past five years aggressively retooling its business model for these trends with several acquisitions and divestitures. Yet, the constant for Emerson has been its dividend. Management has paid and raised the dividend for a whopping 67 consecutive years.
Emerson is looking forward to years of growth ahead. Management is guiding for 4% to 7% annualized organic revenue growth and double-digit earnings growth over the long term. Emerson is an industrial business that will experience ups and downs as the economy fluctuates. Management’s goals are through the economic cycle, meaning they are averages.
When times are tough, the dividends should continue pouring in. Emerson’s dividend payout ratio is still quite comfortable at 35% of this year’s earnings estimates. The company has plenty of financial breathing room to protect and grow the payout, especially if Emerson achieves its growth targets. The stock won’t make you rich overnight, but decades of solid growth could snowball into needle-moving returns.
