Some stocks are more suitable for holding for many years or even decades at a time. Generally speaking, the stocks that make the best long-term holdings are stable, well-established companies with good dividend histories.
This mix of a proven track record and income-producing potential is critical for investors who want to hold their stocks over many years. Here are three promising stocks with long-term potential at the moment.
Packaging giant Amcor (NYSE:AMCR) has been around since 1860 and certainly isn’t going anywhere anytime soon.
During that time, the company has maintained a firm hold on the market for packaging everything from food to pharmaceuticals. Today, Amcor is also investing in greener packaging materials to keep up with the demands of a new generation of consumers.
Amcor’s results for fiscal year 2021 were quite promising.
The company increased its EPS by 16 percent and achieved a free cash flow of $1.1 billion. GAAP net income hit $939, up 53 percent from the previous year.
Going into 2022, the company projected further EPS growth of between 7 and 11 percent. It also announced a plan to repurchase $400 million worth of its shares.
One of Amcor’s most prominent advantages is its high dividend yield. The stock yields 4.1 percent and pays $0.48 annually. This yield makes Amcor an excellent long-term choice for income in your portfolio. Although its dividend history is short compared to the S&P 500 dividend aristocrats, it also appears to be quite stable.
In addition to a strong yield, Amcor also has modest upside potential over the coming 12 months. The current median price target for Amcor is $13, up 10.8 percent against the most recent price of $11.73.
Keep in mind, though, that this doesn’t include the dividend payouts. Although this still doesn’t make Amcor a high-growth stock, it does give it a decent overall return that should be sustainable in the future.
Even if Amcor doesn’t generate massive returns this year, it’s still a stock with ample long-term potential. The company’s investments in sustainable packaging will very likely pay off as businesses and consumers look for greener alternatives to traditional packaging.
The company has also seen good growth over the last year and seems to be in a strong position to keep that growth up going forward. Amcor is certainly a long-term play, but it’s one that could pay off for patient investors.
STORE Capital (NYSE:STOR) is a real estate investment trust that focuses on single-tenant properties. Between 2011 and 2021, the company’s holdings saw enormous growth from just $1 billion to $10 billion.
Impressively, this growth has not put the company into a difficult debt position, allowing it to stand out as one of the best REITs at the moment.
Being a REIT, STORE’s dividend is higher than that of the typical stock at 5.19 percent. This equates to an annual payout of $1.54 per share.
As with other REITs, STORE is required to pay out a minimum of 90 percent of its taxable income to shareholders each year.
Tellingly, dividends have advanced steadily as the STORE portfolio has grown. Assuming the company continues on its current trajectory, investors can expect further dividend growth in coming years.
In addition to steady growth and a structure that favors stable dividends, STORE Capital has also done a remarkably good job of diversifying its holdings while managing its debts.
No single tenant’s locations make up more than 3 percent of the overall real estate portfolio, protecting the trust from sudden business failures. The trust’s debts are rated as investment grade by rating agency Moody’s, suggesting excellent debt management.
A final argument in favor of STORE Capital is its expected share price gain this year. While REITs tend to focus on dividends and not price growth, shares of STORE are expected to advance by 17.6 percent from $29.34 to $34.50 over the next 12 months. Combined with the company’s impressive dividend, investors can expect a good year for this stock.
STORE Capital is clearly on a very positive track. The company is building its assets rapidly while managing its debts exceptionally well. Gains in both share price and dividends reflect these facts, making STORE attractive for a long-term investment.
This is especially true if you’re looking for a strong passive income producer to add to your portfolio, as STORE will always be bound to the high payout requirements that come with being a REIT.
Medtronic (NYSE:MDT) is both a dominant player in the medical devices market and a dividend aristocrat, having raised its dividend for 44 consecutive years as of the time of this writing.
The company also has a long-standing history of stable growth and outperforming expectations. Because most of its devices are geared toward elective procedures, though, the company did struggle when hospitals suspended many of these surgeries during the pandemic.
In Q4, Medtronic saw exceptional growth. Net income and diluted EPS each increased by over 150 percent. Emerging markets revenue increased by 44 percent, showing a strong move beyond the US market that currently makes up 51 percent of the company’s revenues.
Overall revenue for 2021 increased by 4 percent to reach $30.1 billion. Free cash flow reached $4.9 billion, or 81 percent of non-GAAP net earnings.
Over the long run, Medtronic is an excellent stock to buy and hold. It is one of relatively few stocks that consistently outpace the market over time.
The company is also more than capable of continuing to raise its dividend, as it is in a very strong financial position. Being in a field that is constantly evolving, Medtronic will also continue to benefit from new product launches going forward.
Although Medtronic is a dividend aristocrat, its yield is substantially lower than those of Amcor and STORE Capital. At 2.24 percent, the stock pays out $2.52 annually per share. However, it should be noted that this is still a relatively high dividend yield these days.
Amcor’s history of consistently raising its dividends also somewhat offsets this lower yield, as there’s virtually no chance the company would give up its dividend aristocrat status.
Medtronic also appears to have a reasonably 12-month upside. The median target price for the stock is $124.50, a gain of 11.6 percent from the current trading price of $111.50. This gives it a lower upside than STORE, but a slightly higher one than Amcor.
Together, these factors make Medtronic quite attractive. The company’s growth was particularly strong in Q4, showing the beginnings of a rebound after the difficulties it faced during the pandemic.
Although 2022 may be another year of muted gains, the combination of share price growth and dividends should be worth investors’ while. Though past performance is no guarantee of future gains, Medtronic’s impressive history also strongly suggests that it will be able to capitalize on its renewed growth effectively.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.