The main principle for long-term investing is entrenched in the "stocks-go-up-in-the-long-run" axiom. It is a fundamental assumption welcomed by investors who regard stocks as more than a medium for quick capital gains and therefore opt to defer unloading shares until the foreseeable future.
However, not all stocks fit the criteria of this ownership investing approach -- even though the tenet is that stock prices appreciate invariably over time. Stocks that should qualify as solid long-term bets should be terrific businesses in the first place.
So, what we did in this article is we named the top ten best long-term stocks to buy right now in 2021. We believe that the companies we have picked out are perfectly positioned to stay around for years to come.
What Are Long-Term Shares?
Long-term stocks are those companies that hold a controlling market share, have a competitive advantage, and also maintain robust fundamentals. These are the kinds of businesses that are estimated to uphold their value for a long time.
Compared to other stock types, long-term shares add stability to an investment portfolio and possibly exponential growth. It can also provide a constant stream of income via dividends as the company stays profitable.
Billionaire investor Warren Buffett's investing principle is to find and buy such terrific businesses at low prices and have a holding period that typically lasts...well, in Buffett's own words, forever. This is because Buffet believes in becoming a long-time part-owner of such fantastic companies.
Where Can I Trade Long-Term Stocks?
So, as we mentioned, a brokerage account is needed before you can start investing in long-term stocks. However, there are other ways to buy shares of companies, which is either through a Dividend Reinvestment Plan (DRiP) or a Direct Stock Purchase Plan (DSPP). These options allow you to invest directly in the companies of your choice.
However if you're taking the DIY investing route, the one that affords you the most convenience and the lowest cost is still through an online broker. And a lot of this has to do with the fee reduction trend that's been going on in recent years. Brokers’ trading costs are now brought down to basically nothing, making trading a more level playing field for all investors.
We've shortlisted the best long-term stocks to buy right now in 2021 and you can start trading them in our recommended brokers by clicking on the buttons of the following table
Top 10 Long-Term Shares to Trade
The top 10 long-term shares to trade in 2021 are the following:
- Alphabet Inc.
- Berkshire Hathaway
Apple is the first American company to reach the trillion-dollar market value, and for a good reason. The iPhone-maker is not just known for its tech -- it's no Nokia. Customers who bought an iPhone didn't just buy Apple's product, but they also entered a religion.
A religion whose devotees are especially hard to deconvert once sucked into the faith. This is what makes Apple a solid business and, frankly, the reason why a company such as Berkshire Hathaway that avoided tech stocks for many years has a 5.95% stake in the company.
Just think of the top three things people do on the internet, and you'll probably name one or two of this company's numerous assets. Yes, Alphabet Inc. pretty much dominates internet and video searches with Google and YouTube. But apart from that, the company has also expanded in other tech territories, including artificial intelligence (AI), cybersecurity, cloud computing, and many others.
To challenge Alphabet's commanding position would be an uphill battle for any firm without the same size and experience.
From an online bookstore to the world's largest online retailer, Amazon has proven to be a disruptive force that affected not one but several industries, including music streaming, meal prep, grocery delivery, music content, tv content, and many others. And the scary part for its competitors is it has the capital to invest and is willing and continuing to invest in other areas.
Over the years, Amazon has put its capital to use in the fields of AI, entertainment, logistics, cloud services, financial services, and so much more. Right now, the company is starting to become a merchant for everything a consumer can think of, which is exactly why it may be hard to count this out as a long-term stock.
You can't go wrong with a company that beat the S&P 500 in 12 calendar years between 1999 and 2020. The multinational conglomerate holdings company led by Warren Buffett owns several profitable companies, including GEICO, Duracell, Dairy Queen, BNSF, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety International, and several others. And as mentioned, it is also a large holder of Apple shares (top 3 among institutional shareholders).
The stock has long been associated with a bet on Buffett. But even as the Oracle of Omaha turns 91 years old this year, the company is more than ready to press on without him.
Microsoft is the largest software company that derives most of its revenue from its Office suite sales and non-volume licensing of its operating system. But what makes it a market player to remain dominant in the future is its growing sales in its other businesses. In the past year, its cloud services (Azure) and gaming console business (Xbox) reported better growth than analysts' estimates.
When you think of coffee, you think of Starbucks. That's how synonymous the brand is to the morning staple. And when you see that green mermaid logo anywhere around your city, you already know what your experience is going to be like, more or less.
And if you turn into an investor, you'll be pleased to know that Starbucks is a great pick there as well. The company looks to add 22,000 more stores to its already impressive 33,000 outlets by 2030. At this point, it seems like the only thing Starbucks has left to do is to lodge its name next to the dictionary definition of coffee.
We already know that McDonald's is not just a fast-food chain. It's actually a real estate company in the guise of a fast-food company. Franchisees that enter into a franchise agreement with McDonald's don't just pay for the franchise fees and royalties, but they also pay the lease of the property where their franchise is located.
And guess who they pay that lease to? That's right, McDonald's. It's part of the agreement that the franchise location is where McDonald's stipulated it to be. So the more than $30 billion worth of properties that McDonald's own will continue to generate revenue as long as the company rules the fast-food scene -- and it has never failed at that yet.
Disney has been around for quite a while. Although its theme parks, cruise lines, and resorts were badly hurt due to the pandemic, it still has a lot to show for in terms of revenue generation with its other business segments.
Also, its blockbuster movies and film franchises make up for great entertainment content for its streaming service that it launched last year, Disney+. Once Disney+ expands to other countries, Netflix will have a tough rival in its hands.
Facebook is still the top social media site with 2.7 billion monthly active users. YouTube comes in at second with 2.4 billion. But what affixes Mark Zuckerberg's company from its throne is that Facebook also owns the sites after YouTube, which is Instagram, Whatsapp, and Facebook Messenger.
So, even if up-and-coming social media sites are looking to dethrone Facebook, Zuck's company can always resort to its notorious tactic: acquisition.
Tesla finally turned a profit for a full year, which happened amid a global health crisis. But apart from its impressive production goals and EV market share, Tesla's main strength is its brand. Its luxury vehicle options come with a mission to save the world through clean energy.
And of course, its CEO Elon Musk also has a lot to do in building the company's reputation. People consider him a maverick, one that doesn't conform to the rules set out by others, and for that, he established a legion of fans that treat his tweets as gospel.
Expert Tip on Investing in Long-Term Shares
One important thing to keep in mind when investing in long-term shares is that there are many challenges to a company's dominant spot. This can come in the form of technological shifts, growing competition, and even managerial changes (e.g., fallout, mismanagement). And a company's failure to keep up could kick them out of relevancy; perhaps even cause them to drive their business to the ground. When a company’s inadaptability becomes apparent and continues to disappoint based on a set fundamental or technical metric, you must not be afraid to sell that loser when necessary. This is a sort of stop-loss measure, which not only curtails potential losses but also leaves you ample time to reinvest in another asset.
Why Invest in Long-Term Shares?
Going back to the Warren Buffett approach, the main reason to invest in long-term shares is to own exceptional businesses. When the company continues to do well, you'll also continue to reap the rewards of being an investor via a piece of the company's profits through dividends or a rising stock price that boosts your holdings' value.
But as previously touched on, great companies can also fail, but before they do, you must take heed of the warning signs and get out before it's too late.
Frequently Asked Questions
Apple is the best long-term stock to buy right now because of how it positioned itself as a brand that could last for a very long time.
Yes. Long-term stocks are always an excellent investment as it provides dependable growth to an investment portfolio.
Alphabet has the most cash among long-term stocks with $103.7 billion, making it one of the strongest financially.
Apart from retail investors, a large chunk of long-term stock ownerships come from institutions like banks, investment funds, mutual funds, hedge funds, and others.
Long-term stocks are a much safer investment for beginners because they have a reliable business and a proven track record, which could help maintain or even grow their market value.
Long-term stocks are popular because they have excellent underlying businesses.
No. Long-term stocks follow the usual weekday trading hours, with the option to trade them pre-and post-market hours.