Michael Sivy, one of my favorite columnists on the web has an interesting article where he chooses 7 stocks that he figures an investor will be able to hold for a very long time. He basis this on the premise that most stocks worth holding have particular traits that have made them successful investments in the past, and should continue this success into the future:
1. The companies have raised earnings
2. The companies have raised dividends
3. The companies dominate the industry they are in
4. The companies have a unique strategic advantage
Investing can be a funny thing. The things that make an investor successful, when written down in such as list, seem too simple and brainless to work. For some reason our tendency is to assume that if it seems too simple, then it can’t work and we should try to look for the missing complexities. Fact is, IMHO, simplicity in investing is what works and getting too complicated can just hinder results.
What are the stocks that her recommends – they are all big names that you have probably heard about before. Remember though, don’t just go out and buy all of these just because Sivy says so. Do your own research and ensure that you have some understanding of the businesses and can make a judgment on the value. Doing otherwise is not being simple, it is just silly.
General Electric – …consistent growers, having posted increased earnings 30 years in a row
Procter & Gamble – …raised its [dividend] payout for an incredible 50 straight years
Applied Materials – …leading producer of semiconductor-manufacturing equipment
Burlington Northern – …products that industrial companies make still have to be shipped – and railroads are likely to enjoy increasing cost advantages over competing forms of transportation
J.P. Morgan Chase – …these stocks now look timely, trading at less than 12 times earnings projected for 2007 and yielding at least 3%. Nothing gets your long-term results off to a better start than buying low
Anadarko Petroleum – …companies with large reserves in North America and other safe places have an important strategic attraction
FPL Group – …o help balance your portfolio, include a top-quality electric utility. Demand for electricity grows with the overall economy – and also with the population. Much of an electric company’s business is subject to rate regulation, which limits its profit margins. So revenue growth is the key to above-average earnings increases.
Hey Dividen guy…Love the site…I was thinking of buying some large stocks that kick out dividends like Coke, P&G or GE…Right now I do a ton of index and ETF investing…
My question is…Some index mutual funds kick out a higher dividend than say Coke does…What are your thoughts on that?
Thanks!
Hi zook,
I don’t look very often at mutual funds so I can’t comment on any particular funds. I think it depends on what your objectives and goals are. If you do not have the time to spend researching individual stocks then mutual funds may be a good way to go – as long as the MER is not high – an index fund will be cheaper.
If you like the fund, like its holdings, like the manager, and the fees are cheap (i.e. <1.0 – 1.5) then go for it. For my portoflio, I would not do it as I have not seen any active funds that are worth their MERs up here in Canada.