The nifty nine: a portfolio of stocks to buy and hold forever
Warren Buffett famously said that his favourite holding period for equities was “forever”. Some of your equity investments will be short- or medium-term plays; you hope they appreciate, but you will need to monitor them regularly in case they do not develop as you hoped. Longer-term investments, by contrast, should be “forever companies”: those you can hold indefinitely because they will be so reliable that you will barely have to keep an eye on them at all.
These stocks are leaders in their sector or niche, capable of steady growth, and can withstand hard times because they have little debt or net cash. In most cases they will also produce reasonable dividends. We explore nine examples from eight sectors below.
The main selection criteria used are a record of profitable growth and rising dividends; investment in the future (through research and development, or R&D, capital expenditure and small bolt-on acquisitions); a leading position in a market sector or niche and low debt or net cash.
Certain sectors are more likely than others to contain “forever companies”. The nine examples that follow are from a wide array of sectors to reduce overall risk through diversification. Most of the companies selected have wide “moats” – enduring advantages that help fend off potential competitors – and many are dividend aristocrats, or companies that have increased their dividend every year for at least 25 years.
“Merck’s cancer drug
