I hate to say that I will never sell a stock because you never know what life will bring. However, there are some businesses that I own that I can safely say that I hope to one day (hopefully many years from now) pass them on to my daughter.
Three of these forever-holds include Real estate income (NYSE:O), Procter & Gamble (NYSE:PG)And Hershey (NYSE:HSY). This is why I love each of them so much.
1. Realty Income is a slow-growing giant
Realty Income currently has a dividend yield of about 5.6%, which is close to the highest level in the past decade. The shares look quite attractive at the moment. But there’s more to enjoy than just high returns, including its three decades of annual dividend increases and its investment-grade Real Estate Investment Trust (REIT) balance sheet.
That said, it’s the core business that I really value. Realty Income is the largest net lease REIT you can buy (a net lease requires the tenant to pay most of the property-level operating expenses). It has a globally diversified portfolio of mainly retail properties with a few industrial assets.
Realty Income’s sheer size (it owns more than 15,400 properties) and financial strength give it privileged access to the capital markets, giving it an edge over its peers when it comes to raising capital. The low cost of capital allows the company to bid aggressively for real estate and still make a profit. It can also make larger deals than its peers, including acting as an industry consolidator.
All in all, slow and steady growth is the norm here, and I’m happy to own it and bring in big returns year in and year out.
2. Procter & Gamble proves its worth every day
Procter & Gamble has a yield of about 2.4%, which isn’t nearly as attractive as Realty Income’s yield. That said, I bought the consumer goods giant when it was out of favor and was returning almost 4%, so I’m sitting on some nice capital gains. But I have no plans to sell the stock as it is financially strong (investment grade) and a Dividend King, with 68 years of annual dividend increases behind it.
The big story for P&G, as most people call it, is that it is focusing on innovation to support its portfolio of leading and mostly high-quality brands. In short, the company works hard to ensure that the extra cost of its products is justified by the value they provide. And given its enormous size, it has the opportunity to invest heavily in the research and development, distribution and advertising necessary to ensure customers get the best product.
In short, it’s a valuable partner to the retailers it serves because P&G’s products bring in customers. As long as it continues to follow this core approach, there is no reason to sell.
3. Hershey is a beloved treat maker
I’ve been eyeing Hershey stock for years, hoping for an opportunity to buy it. Well, that opportunity just presented itself thanks to concerns about new weight loss drugs and skyrocketing cocoa prices. The dividend yield of the share is around 2.6%.
That may not sound exciting, but it’s at the high end of Hershey stock’s historical return range. I wouldn’t call it a screaming purchase, but I would say it’s attractively priced. The dividend has been increased annually for fifteen consecutive years, with an annualized increase of almost 10% over the past ten years.
The food company makes most of its money from chocolate products and other sweets, but also makes salty snacks like popcorn and pretzels. There are two opportunities for long-term growth as Hershey continues to expand its reach in the confectionery market beyond the U.S. market and grow its relatively new salty snacks platform.
As for cocoa, prices are likely to stabilize over time, and so far consumers are willing to pay higher prices for their chocolate treats. New weight loss medications are a bigger problem, but I think this too shall pass. People love chocolate too much to believe that this company’s core business is in jeopardy in the longer term.
Two to buy and one to view
If you’re looking for a stock to buy right now, Procter & Gamble isn’t the best option on this list. But it’s an industry leader that you should probably put on your wish list in case there’s a broad market sell-off. Realty Income and Hershey, on the other hand, both look attractive. Realty Income will be most attractive to yield seekers, while Hershey will likely please dividend growth investors.
Should you invest €1,000 in real estate income now?
Consider the following before purchasing shares in Realty Income:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $578,143!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns May 13, 2024
Reuben Gregg Brewer has positions in Hershey, Procter & Gamble and Realty Income. The Motley Fool holds positions in and recommends Realty Income. The Motley Fool recommends Hershey. The Motley Fool has a disclosure policy.
3 Great Stocks I’ll “Never” Sell was originally published by The Motley Fool
