While the stock market has always been volatile, it has been especially unstable in the post-pandemic era. While they may rattle some, these tumultuous ups and downs barely affect those who routinely invest in long-term stocks.
Investing in long-term stocks helps one avoid most of the drama that the mainstream media loves to cover on Wall Street. This is why many investors try to invest in shares of companies that show stable growth over the years or decades.
That said, what exactly are the best long-term stocks?
Long-term investments or assets are stocks or similar investments you make intending to let them grow for at least three years. Stocks, fixed deposits, real estate, etc., are the usual form of long-term investment assets.
As mentioned, these kinds of investments are not subject to stock market fluctuations. So they will not likely get you ridiculously high returns over a short period. But they are great at building meaningful wealth over time and a safer option to make money in the stock market.
But how does one recognize the best long-term stocks and shares to invest in?
The best way to judge if a long-term stock is worth investing in is to track metrics that show stable, dependable growth through the years. The more stable the long-term stock, the less likely it is to face gut-wrenching crashes and stupidly high (unsustainable) gains. Those are usually the characteristics of short-term assets.
Which ones are the best long-term stocks to buy in 2023? These stocks should show a steady rise in sales and little to no price drops, especially compared to other stocks in the market. Moreover, if a company has demonstrated dependable growth through the years, chances are that its equity valuations are high too.
The goal is to find the perfect balance between dependability and competitive pricing. Fortunately, post the pandemic debacle, the value of many of these equities has hit a record low, making it the perfect time for long-term investors to grab the best long-term stocks in the market while avoiding a massive hole in their pockets.
The 5 Best Long-Term Stocks of 2023
Dependable and ever-witnessing steady growth, the stocks on this list are the best long-term stocks to invest in this year:
1. Visa Inc.
When it comes to digital payments and credit card networks, there may be no bigger shark in the business than Visa. This year’s fiscal quarters have been smooth sailing for the company as returns continue to exceed expectations.
Armed with a diverse business model, Visa is somewhat recession-proof and has a reasonable valuation. As people’s preferred payment mode continues to take a seismic shift towards establishing a cashless planet, one can easily assume that Visa will continue offering high returns and dividends to its shareholders.
2. Elevance Health, Inc. (ELV)
Elevance currently serves over 119 million people in the US. These numbers include government-sponsored, employer, and individual plans. They are one of the biggest medical insurance providers in the country. Carelon, Anthem, and Wellpoint are all operated by this company.
At the moment, Elevance’s dividend yield stands at 1%. The payout has grown steadily in the past few years, making it a safe bet for long-term investment.
Elevance has always been a steady grower. In the last half-decade, the annual EPS increases averaged 12.2%. It has also steadily outpaced S&P 500 every year for the past five years by an impressive 10%.
3. Mastercard Inc. (MA)
One of the dominant digital payment and credit card networks in the market, Mastercard has seen solid growth so far this year. Recently, with its post-pandemic reemergence in China, Mastercard can quickly emerge as one of the most prominent players in the international payments business.
The company has always boasted a strong balance sheet and cash flow profile. Like Visa’s, its business model is diversified enough to be recession-proof. Since the pandemic-driven shift to digital and credit card payments, the company should keep seeing enormous revenue growth in the coming quarters.
4. Apple Inc. (AAPL)
The biggest US public company, Apple, currently continues to outpace the S&P 500 easily. In the last five years, it has shown incredible stock performance. Its average EPS growth has remained over 20% in the previous few years, although it may fall to 8.7% in the next five years.
Apple’s current dividend yield is 0.6%. In comparison, shareholder yield is 4%, mainly because the company has been working to reduce the outstanding number of shares.
5. Home Depot Inc. (HD)
A leading retailer in home improvement in North America, Home Depot has shown a significantly high dividend yield of 2.4%. The housing market boom during the pandemic led to a lot of growth in the home-improvement sector.
The market has since cooled, with mortgages becoming more pricey than ever. Home Depot has countered the situation by raising prices to maintain steady sales growth. Home improvement is a niche that remains relatively unaffected by online competition, and Home Depot remains the most significant player there.
Advantages of Long-Term Investing
Why should you consider long-term investing? Some of the most significant advantages of investing in the best long-term stocks are:
Great for Beginners
While long-term investments aren’t great at getting people immediate returns, they make the best choice if you want to create a nest egg. What makes it great for beginner investors is that they are relatively low-risk.
You need very little knowledge of the stock market to invest in these stocks. The assets grow in value steadily over the years without you having to intervene.
It Doesn’t Need Constant Monitoring
Long-term investing needs little monitoring and is significantly less time-consuming than short-term investing. You don’t need to constantly monitor the ebb and flow of the market or engage in the stock market drama.
The best long-term stocks are better left alone and can help build meaningful wealth over the years.
Lower Transaction Fees
Suppose you ignore the risk of a price crash. In that case, the most considerable percentage of investment costs comprises capital gain taxes and brokerage fees. Long-term investors are charged these fees less frequently.
Sometimes, the transaction rates are significantly lower, too, compared to what short-term investors must pay. You can even avoid paying capital gain taxes, which are lower in rate than those for short-term earnings anyway, by just letting the returns sit in your accounts and compound.
Tips for Investing in Long-Term Stocks
When in the pursuit of investing in the best long-term stocks, you need to keep the following few things in mind:
Your Investments Should Match Your Goals
Begin by knowing how much you want to save and the time frame you wish to hit said goals. Consider how much risk you are willing to take. While long-term stocks are generally a stable option, there are still low, high, and mid-risk stock options, with the returns varying wildly.
Don’t Put All Eggs in One Basket
Diversify your portfolio as much as possible. So, even in the unlikely scenario where the value of one of your long-term stocks declines, the returns from others should make up for it. Consider investing in multiple asset classes. You can even invest in the subcategories within various asset classes.
Opt For Slow Yet Steady Growth
The biggest perk of investing in the best long-term stocks is stability. Unlike in the case of short-term investments, you don’t need to monitor these stocks constantly. Instead, it is better to leave them alone and let them grow slowly but steadily.
There is no need to try and time the market and keep moving your money from one investment to another. Constantly stock picking, buying, selling, and transferring assets can prove counter-effective when investing in long-term stocks.
Consider Dollar Cost Averaging
Decide how much you are going to invest regularly and stick to it. This makes for a great long-term stock investment strategy. When the unit prices are low, the same amount of dollars can help you buy more units, giving you higher returns.
This may seem counterintuitive, especially when the value of units surges. But dollar cost averaging can help you remain consistent with investments without worrying about market fluctuations. It can also help you balance out potential losses in the long run.
This article originally appeared on Wealth of Geeks.