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Many of us are too busy with work and family to perpetually baby-sit our stock portfolios, endlessly trying to divine when it's time to buy or sell.
For those among us with real lives, I've come up with a list of 10 stocks to buy and hold forever. What's forever? In this day and age when everything can turn upside down in an instant, we're probably talking five years. Or 10, if we're really lucky.
Admittedly, coming up with such a list is a presumptuous endeavor, since none of us has a clue what the world will be like even five years down the road.
Nevertheless, I think my 10-stock portfolio does have the potential to provide strong returns for several years out.
Four are well-established giants that own brands known and respected worldwide. These companies were selected because their growth will accelerate as more consumers enter the middle and upper classes in emerging countries such as China and India.
Five stocks in the portfolio, because of the nature of their business, will always be primarily U.S. operations. Nevertheless, despite the inevitable short-term bumps along the road, each has several years of growth ahead before running out of expansion opportunities.
Finally, my 10th pick, although very small compared with the others, is a major player in a market niche likely to enjoy substantial growth, both in the United States and abroad, for several years.
An added bonus: Many of these stocks pay substantial dividends that, if maintained, will help reduce volatility.
Without further ado, here are my selections.
Capitalizing on the emerging economies
Procter & Gamble (PG, news, msgs)Expected dividend yield: 1.9%.
As economies around the world grow, so will the demand for consumer products. P&G, with annual sales of more than $70 billion, is the biggest player in that sector. Its 300 brands include Clairol, Charmin, Crest, Duracell, Folgers, Gillette, Pampers, Tampax, Tide and Vicks. P&G's products usually have the biggest share of their market niche.
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P&G grows two ways. It has been an active acquirer in recent years, gobbling up Gillette in 2005 and flashlight and electric lantern maker Garrity Industries in 2006. But even more significant, only a small portion of P&G's current sales come from Asia and other developing areas, so it has ample expansion opportunities abroad.
Expected dividend yield: 2.3%.
With more than 30,000 restaurants in more than 100 countries, you might think that most of McDonald's growth has already happened.
But that's not necessarily so. For years, while consumer tastes evolved, McDonald's was stuck in neutral, offering, in essence, the same menu it started with in 1955. But that's no longer the case. McDonald's now gets it. New menu items have spurred sales growth, and more are on the way. Look for continued domestic sales growth for the next few years as McDonald's learns to upscale its menu.
Looking abroad, only 3% of McDonald's sales come from Latin America, and only 16% from Asia and other developing areas. So there are plenty of expansion opportunities outside the United States.
Expected dividend yield: 2.8%.
While there's plenty of discussion about which way oil prices are headed, most would agree that, propelled by surging demand from the emerging economies, world energy consumption will continue to head higher for the foreseeable future. So, even if oil prices stay put, increasing production levels will drive oil company profits up.
Chevron, the world's second largest player behind ExxonMobil (XOM, news, msgs), engages in every aspect of the energy industry from exploration and production to retail marketing. Thus, either Chevron or ExxonMobil would be a good proxy for the entire industry.
I picked Chevron over ExxonMobil because Chevron has a 50% stake in a huge deep-water petroleum pool under the Gulf of Mexico. The existence of that pool, potentially the biggest U.S. oil discovery since Alaska's Prudhoe Bay, was only recently confirmed. Chevron also holds interests in several other recent major oil and natural gas discoveries.
Expected dividend yield: none
Starbucks operates or licenses more than 8,800 retail coffee shops in the United States and plans to grow that number to around 15,000. The company recently announced its goal to have 40,000 stores worldwide. Starbucks also plans to increase sales by adding new food or gift items to its store mix, as well as developing new products such as ice creams and liquors that would be sold in other venues.
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