It’s always a good idea to invest for the long term because this strategy offers you the opportunity to benefit from a company’s growth story — and any bumps along the road won’t be felt as much if you hang on for several years, as the good times may compensate. After all, even the best companies encounter tough market times or headwinds at some point.
And when a company is particularly strong, you may want to make it a core holding, owning it for many years — or even forever. You’ll want a company that’s proven itself over time and one that offers very clear prospects.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Costco (NASDAQ: COST) and Coca-Cola (NYSE: KO) both fit the bill. But if you could only buy one right now, which is the best to buy and hold forever? Let’s find out.
What I like about Costco is that it has what it takes to deliver earnings stability or even growth during tough economic times. This is because the company offers dirt cheap prices on items, so shoppers are likely to favor shopping there during these moments.
It’s also important to note that Costco makes most of its profit through membership fees, meaning it’s benefiting before you even set foot in the warehouse to shop. And the membership renewal rate of more than 90% in the major markets of the U.S. and Canada provides us with visibility into earnings to come.
Costco also rewards shareholders with a dividend, today at $5.20 at a yield of 0.5%, another great reason to hold on for the long term.
Coca-Cola has a rock-solid moat, or competitive advantage, in the form of its brand strength and its distribution network. This has helped the world’s biggest maker of non-alcoholic beverages deliver earnings growth over time. The company also has known how to expand into a variety of beverage types — from water to coffee — and design drinks specifically for certain markets.
Like Costco, Coca-Cola also believes in rewarding shareholders. It pays a dividend of $2.06, at a yield of 2.6% — but most importantly, Coca-Cola has a long track record of increasing its dividend payments. It’s a Dividend King, meaning it’s boosted its dividend annually for more than 50 consecutive years. This shows a commitment to this strategy, suggesting it will continue. So, Coca-Cola is a dividend stock you can count on over time.
