Forever Stocks Aren’t Stocks to Buy and Hold “Forever”, But They Do Provide Investors with a Steady Stream of Income Over Time
The word “forever” is often hyperbole. What do you say if you’ve been waiting a long time in line at the DMV or on hold with your cable provider? “I’ve been waiting forever!” The term “forever stocks” is a similar exaggeration.
They aren’t stocks to buy and hold “forever”, but you do hold onto them at least until retirement. Forever stocks are stocks that are fairly evergreen. Typically they are industry leaders that have been growing for a while and should continue to grow for decades to come. Our FREE report, 10 Forever Stocks to Buy Now—and How to Find the Best Growth Stocks offers more details.
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Qualities of Forever Stocks
Forever stocks you can count on to be viable not only today, but 20 or 30 years from now. There are five key attributes you want in forever stocks:
- A product or service or business model that is revolutionary
- A mass market
- A company that’s still small enough to grow rapidly
- A company that is not respected—perhaps not even known—by the majority
- And last but not least, a stock that’s trending up, indicating that investors’ perceptions of the company are improving. This is important because perceptions are always at least as important as reality, at least on Wall Street.
Unfortunately, you can’t just buy any stock, hold it forever, and expect to come out ahead. The market is littered with Enrons, Worldcoms, even General Motors. Holding forever didn’t matter a lick with them.
Look for companies that:
- Enjoy huge (and lasting) advantages over the competition
- Pay their investors each and every year by dishing out fat dividends
- Buy back massive amounts of their own stock
Our research has shown that more often than not, these are the companies that can make you money in the long run. And once you find them, the strategy is simple–just buy shares and hold them for the long term.
It makes sense–strong companies that take care of their shareholders tend to do better over the long run.
What Companies are Forever Stocks?
Forever stocks aren’t synonymous with safety stocks or even dividend stocks, necessarily. You’re not searching for the next Procter & Gamble (PG) or Johnson & Johnson (JNJ)—reliable, low-beta dividend growers that will deliver a steady stream of income and decent, if unspectacular, returns. Their purpose is to make you rich.
You want to find the next Apple (AAPL), Google (GOOG) or Amazon (AMZN)—stocks that if you had bought them 10 years ago (or more), you would have earned 10, 20, even 100 times your initial investment. Those are life-changing investments. And that’s what forever stocks are supposed to be.
Not every type of forever stock will deliver those kinds of returns, of course. In fact, you’ll be lucky to find a single buy-and-hold stock that will provide the same kind of return as you would have gotten by investing early in Apple or Amazon.
But if one or two of these stocks can gain half the long-term return of an Apple or an Amazon, you can position yourself for a nice financial windfall by the time you retire.
Do you understand forever stocks better now? What else would you like to know?
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