Stocks to Buy & Hold

[SmallPotatoes]

PP established, I'm paying roughly 0.1% per year on my paper assets (500 index, GLD), but I've yet to settle on a VP mainly because I can't help but want PP style security. So, I've come up with a simple VP that won't cost much and is perfect for entertaining the desire to win big: pick a few stocks for the long run.

The idea has been around forever and is simple enough, but what I want to ask of the members here is what you would pick (if anything) and why. I know the risk involved and I'm not day trading, but considering putting a few thousand in several select stocks and letting iit ride for 10-30 years.

[MediumTex]

I follow many stocks and my reasons for following each are different, but in general I am attracted to companies with one or more of the folllowing:

1. Heavy insider ownership
2. Low levels of debt
3. Strong revenue and earnings growth
4. Strong market position relative to peers
5. Sector with strong fundamentals (I'm thinking technology and energy in coming years)

Do your own due diligence, of course, but these are companies that I think will do well in coming years:

AAPL (strong brand, product pipeline and customer loyalty)
INTC (great value play)
PXP (strong mid-cap in E&P energy space)
JOSB (strong mid-cap in men's clothing retailers, with excellent management)
NOV (great oilfield services company)
MO (nicotine is addictive and Marlboro brand is dominant)
SIRI (Sirius enjoys monopoly in satellite radio space and I think the service is something that will one day have international appeal)
L (Tisch family has assembled a nice portfolio of companies under the Loews name and heavy insider ownership is a plus)

Buying an oil and gas major such as CVX or COP is also probably going to be a good bet over almost any extended period of time (on the theory that industrial capitalism simply cannot function without ready supplies of fossil fuel-derived energy inputs).

[LifestyleFreedom]

My favorites for a long-term buy-monitor-hold portfolio are dividend growers (see http://www.dividendgrowthinvestor.com/).

I'm not going to name names, but I start with the Dividend Aristocrats list (U.S.-based multinationals on the S&P500 list that have grown their dividends for at least a quarter of a century -- there are 42 such companies for 2011).  Then I  check the Dividend Achievers list (U.S.-based companies that have grown their dividends for at least a decade -- there are over 200 such companies for 2011).

Dividends don't lie.  Companies that can consistently grow their dividends over a long period of time and a number of business cycles are generally (although not always) safer bets than other types of companies.  A company with a 3% dividend yield today and growing its dividend at 7% a year will have a dividend payment that is about 4 times higher 20 years from now.  If its dividend yield is still 3% 20 years from now, its stock price will also be about 4 times higher then also.  In the meantime, I get all that cash from the dividend payments to either spend or reinvest.

Since my dividend growth portfolio is in a DRIP (dividend reinvestment program), I find myself wishing for lower stock prices in the years ahead (as long as the underlying companies in my portfolio continue to be strong dividend growers).  That way, each dividend reinvestment buys more shares than it otherwise would if stock prices were rising rapidly.

[AdamA]

...what I want to ask of the members here is what you would pick (if anything) and why.

I watch the National Bank of Greece (NBG) daily.  I think it's a great buy right now, albeit very speculative. 

Financials are almost impossible to value, especially in Greece, so this would be purely a "contrarian play," although I know that NBG does a lot of business outside of Greece, in more fiscally responsible nations. 

I don't know about buy and hold x 10 plus years on this.  What I would probably do is buy 1000 shares and then sell the Jan 2013 calls.  There's about $.90 on the upside in the stock price this way + roughly $.30 for selling the call (this portion would be taxed as a short term capital gain in a taxable account).  Pays a dividend too. 

I'd be prepared to either lose my shirt due to bancruptcy, or to just keep selling covered calls until I got called out of the position. 

Disclaimer:  I don't have a VP, because I do not think that my picks could outperform the PP by enough on on a consistent basis to make it worth my while. 

[dualstow]

I share LifestyleFreedom's love for dividend stocks, but I was mostly into them before I learned of the pp and before I discovered bogleheads.
The V in my VP also stands for vestigial.

I hold Chevron, Altria (and Philip Morris International), McDonalds, Intel, Praxair, CVS and about 50 other stocks, most of which increase dividends each year. I know they generate taxes, but the bottom line is that I always have fresh cash to invest after paying bills and taxes.

[MediumTex]

I like McDonalds a lot as an investment.

Their success in cultivating mind control techniques on children is very impressive.

[Jan Van]

I like McDonalds a lot as an investment.

Their success in cultivating mind control techniques on children is very impressive.

Children? We go to Mcd every Sunday because I need my "Iced Coffee + Spicy Chicken Sandwich" fix!

The stocks I own are the once I like/use personally, like Amazon, AMD, Apple, Coke, Google, McDonalds and Sandisk. So everytime I spend $3 on my Mcd fix I feel I'm doing my shareholder duty :-)
Then, on occasion I bet on a stock if its seems worthwhile, like on VTI during the flash crash. That's when all the cash in the PP comes in handy!

[dualstow]

So everytime I spend $3 on my Mcd fix I feel I'm doing my shareholder duty :-)

Sometimes I feel that way about Diageo when I have a shot of Sambuca in my espresso.
Who needs mind control when you have products for adults, many of whom can't control themselves? Alcohol, tobacco, calories.
I miss krispy kreme stock's heydey.

Edit: and don't forget JNJ for health treatments to clean up the aftermath. ;-)

[AgAuMoney]

My favorites for a long-term buy-monitor-hold portfolio are dividend growers (see http://www.dividendgrowthinvestor.com/).

I'm not going to name names, but I start with the Dividend Aristocrats list (U.S.-based multinationals on the S&P500 list that have grown their dividends for at least a quarter of a century -- there are 42 such companies for 2011).  Then I  check the Dividend Achievers list (U.S.-based companies that have grown their dividends for at least a decade -- there are over 200 such companies for 2011).

Same here.

And many studies show that companies with a history of growing their dividend, and currently paying asubstantial dividend also grow earnings faster in subsequent years than the market average and comparable size peers.  Why?  nobody knows, but there is a lot of speculation such as the imposed disciple of cash accounting and so they avoid money wasting acquisitions, etc. and only do true accretive investment.

Whatever the reason, if you want to discover good dividend payers I've yet to find a better starting point for research than David Fish's Dividend Champions spreadsheet (Champions, Contenders, Challengers = CCC).  Find it at http://dripinvesting.org/Tools/ (typically updated monthly, expecting a new version any day now).  IIRC, David is editor of The MoneyPaper, a dividend reinvestment newsletter and service as well as a frequent contributor on SeekingAlpha.com, which is where I learned of his spreadsheet.

[SmallPotatoes]

I had considered a dividend portfolio before I discovered the PP as it seemed a safer strategy.  Now, however, I wonder if it's the best option for a taxable VP or if I should just wait until next year when I have more tax-sheltered space to employee this strategy.

The reason I'm interested in buying a few individual stocks for the long term is simply to take advantage of the security the PP provides.  In fact, my pre-PP plan was so conservative I hated the idea of individual stock ownership due to the risk and research involved.  Post-PP I feel that I really can hold a VP and my nest egg will still be there trucking along come VP hell or high water.

[Pkg Man]

I think it would be preferable to have a VP in a tax-deferred space, particularly a Roth.  I don't do that myself as I need most of that space for the LT bonds, but I really wish I had done so years ago when I made some very lucrative (and lucky) stock picks.

If I recall correctly HB suggested putting a VP in tax-deferred accounts.

[hrux]

I am a big believer in thematic investing and one sector I like is solar stocks, specifically Chinese solar stocks such as LDK Solar.  The stock has been way oversold and has recently bounced nicely the past 3 sessions however beware as it is extremely volatile.  I see this as a 10 bagger over the next 10 years.  Something you will not get with blue chip growth stocks like Apple

[LNGTERMER]

I think we are all used to the incredible bull run starting on early 80s.
I think that period coincided with the introduction of 401ks and massive influx of retails investors
into the stock market as well as the favorable boomer generation is over. As Mt pointed out many
times beware of the secular bear.

I would not buy and hold any stock from here on till the next 20 year passes. :-)
If one needs to play with odds, there stock options, futures, poker or other leveraged instruments.

[SmallPotatoes]

I have decided I like holding a few choice, Blue Chip companies.  As the driving force of any S&P or TSM (domestic) the Blue Chips are not a bad gamble especially when limited to > 25% of the total portfolio.

I feel that baby-sitting a small equities portion in the VP actually helps reduce the temptation to tinker in the core of the portfolio, the PP.

[LifestyleFreedom]

There is a difference between the Permanent Portfolio and Dividend Growth investing.  The difference is in how you perceive your investing activities.

With dividend growth, your focus is on the income stream from the dividends.  In the old days, you would put your stock certificates in a safety deposit box and cash your quarterly dividend checks in order to pay your living expenses.  You weren't interested in what other investors might pay you for your stock certificates.  Instead, the executor of your estate would deal with the matter after your death.  With dividend growth, you are also depending on the company managements to navigate the prosperity, inflation, recession, and depression phases of the economy for you.  The trick to making this approach work is in choosing the right companies that will continue to pay (and hopefully grow) their dividends during your lifetime.

With the permanent portfolio, you are depending on other what other investors are willing to pay you for your stocks, bonds, cash, and gold to navigate the prosperity, inflation, recession, and depression phases of the economy (which is done when you re-balance, or when you dollar-cost-average in with new money to invest or dollar-cost-average out because you need the money to pay your living expenses).  The trick to making this approach work is the discipline to stick with the plan and re-balance when necessary, which means you will be buying and selling assets every once in a while (a post on a different thread mentioned that this re-balancing effort has been required historically about every four years).

There is nothing inherently wrong or right with either approach.  Instead, they are just different ways to manage your money (there are also many other ways to manage your money besides these two).  The good news is that you are not in an either/or situation.  You can use both ways simultaneously with the permanent and variable portfolios, which is what I'm doing.  I want investment style diversity because I don't trust any one approach to work all the time (I'm just a born skeptic and I've already seen too many tail events in my lifetime to trust any one approach completely).

[HB Reader]

The good news is that you are not in an either/or situation.  You can use both ways simultaneously with the permanent and variable portfolios, which is what I'm doing. 

Me too, along with some other speculations in my VP.  Although if I absolutely had to choose only one, after thirty-six years of investing I'd take the PP in a New York minute.