Investing in a company with the intention of holding it forever may seem like a simple idea, but in reality, it is a challenging task. Most companies are unable to maintain their competitive advantages indefinitely, and many eventually succumb to threats such as competition or disruptive innovation. Some industries even face extinction, taking the companies within them down with them. So, what does it take to identify buy-and-hold forever stocks?
First and foremost, companies that are suitable for long-term investment should operate in industries that are unlikely to disappear. One such industry is healthcare, which is known for its resilience and constant demand. Healthcare companies are essential for society and are likely to remain relevant for the foreseeable future.
Additionally, when looking for buy-and-hold forever stocks, it is crucial to consider companies that have a track record of staying relevant and profitable. One way to gauge this is by looking at their dividend history. Companies that consistently pay dividends, especially those that increase them year after year, demonstrate their ability to generate sustainable profits and grow over time.
With this framework in mind, let’s take a closer look at three healthcare stocks that are well-positioned to provide passive income for investors for decades to come.
AbbVie (NYSE: ABBV) is a pharmaceutical company and a Dividend King, with over five decades of continuous dividend growth. Despite facing challenges such as patent expirations and setbacks in drug development, AbbVie has managed to overcome these obstacles with a diverse product portfolio and pipeline. Analysts estimate that AbbVie will continue to grow earnings by an average of 8% annually, providing ample room for dividend increases. With a history of raising its dividend by an average of 14% annually over the past decade, AbbVie is a reliable choice for long-term investors.
Stryker (NYSE: SYK) is a medical technologies company known for its innovative products and global presence. With nearly 13,000 patents protecting its products, Stryker has maintained a stable business model over the years. The company’s consistent sales growth and dividend payments for 31 consecutive years make it a strong contender for investors seeking reliable passive income. With a dividend payout ratio of only 26% of its 2024 earnings estimates and a history of raising dividends by 10% annually over the past decade, Stryker is a solid choice for long-term investment.
Cardinal Health (NYSE: CAH) is a lesser-known but crucial player in the healthcare industry, providing medical, pharmaceutical, and laboratory products to care providers and hospitals. With a global footprint and a history of paying and raising dividends for 29 consecutive years, Cardinal Health is a reliable source of passive income for investors. The company’s dividend payout ratio is currently just over 25% of its estimated 2024 earnings, indicating financial stability and room for future dividend growth.
In conclusion, investing in buy-and-hold forever stocks requires careful consideration of the company’s industry, track record, and dividend history. By focusing on companies like AbbVie, Stryker, and Cardinal Health, investors can build a portfolio of reliable income-generating assets that can provide long-term financial stability and growth.
