Top Performing Long-Term Stocks

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Long-term stock investing can help individuals reach their financial goals sooner. Stocks can appreciate significantly if you hold onto them for a few years. The S&P 500 has gained 61% over the past five years, and the Nasdaq 100 has exceeded that growth with a 112% gain in the same amount of time. You can’t achieve those types of returns by keeping your money in the bank, but some assets are riskier than others. This guide will walk you through some of the top stock picks and what to keep in mind before investing in long-term stocks.

Quick Look at the Top Long Term Stocks:

Deep Dive

Diversifying your portfolio can increase your potential returns while minimizing your risk. These top stocks look promising for long-term investors.

1. Broadcom Inc. (NASDAQ: AVGO)

Broadcom produces semiconductors chips that you can find in smartphones, computers, video game consoles, cars and appliances. The company enjoys a healthy profit margin that has helped it become a top dividend growth stock. 

2. Perion Network (NASDAQ: PERI)

Perion is a smaller player in the ad industry with a market cap of a little over $1 billion. The company regularly posts year-over-year revenue and earnings growth. Perion’s earnings numbers look like a slowdown never hit, putting it in a good position to report desirable numbers moving forward. 

3. Stag Industrial Inc. (NYSE: STAG)

Stag Industrials is a real estate investment trust (REIT) that specializes in industrial properties. The REIT owns 558 buildings in 41 states and pays out a monthly dividend. Industrial properties tend to be more resistant to recessions than other types of assets.

4. Fortinet Inc. (NASDAQ: FTNT)

Fortinet is one of the leaders in the cybersecurity industry. Unlike many of its peers, Fortinet is a profitable company that has maintained GAAP profitability every quarter since its 2009 IPO.

5. Visa Inc. (NYSE: V)

Visa issues credit and debit cards that allow it to collect transaction fees. The company has several income streams that translate into higher revenue and earnings if the economy remains strong. Some investors view Visa as a bellwether stock that can indicate where the economy is heading. Visa has better profit margins than Mastercard and American Express. The company’s revenue and net income increased by double digits year-over-year in the first quarter.

6. Bank of America Corp. (NYSE: BAC)

Bank of America is the second largest bank by assets under management. While regional bank issues caused many bank stocks to lose value, not all of those drops were justified. Bank of America and other large financial institutions actually benefit from the regional bank issues because consumers and businesses put their money into established names.

7. Amazon.com Inc. (NASDAQ: AMZN)

Amazon is an e-commerce titan that has delivered long-term returns for investors. While the company got started with e-commerce, Amazon has expanded into several verticals, such as streaming, groceries and advertising. Amazon Web Services is the company’s main profit engine.

8. Exxon Mobil Corp. (NYSE: XOM)

Exxon Mobil shares fluctuate based on changes to oil prices. Rising oil prices can help the company generate pristine returns while declining oil prices can spell short-term trouble for the company.

9. United Parcel Service Inc. (NYSE: UPS)

People will need mail and package delivery, and the rising demand for e-commerce is likely to keep UPS busy. The company is a critical component of the supply chain.

10. ASML Holding (NASDAQ: ASML)

ASML is a semiconductor giant with advanced technology that puts it ahead of its peers. The company goes to great lengths to protect this technology to ensure no other companies or governments can create replicas. The company reported 27.1% year-over-year revenue growth and 11.7% year-over-year net income growth in the second quarter. Shares have gained 30% year-to-date and are up by 234% over the past five years. ASML has a 1% dividend yield and a 35 P/E ratio. 

Pros

Investing in long-term stocks can increase your portfolio returns and strengthen your diversification. A focus on long-term returns can make you spend less time in your portfolio and more time on other opportunities, such as growing your income. Long-term investing also minimizes short-term capital gains. Short-term gains get taxed less favorably than long-term capital gains.

Where to Buy

Investors can choose from many stocks and brokers. Once you have decided on a few stocks, you can compare brokers and see which ones have the best fees and features. These are some of the best brokers to consider.

How to Choose

Buying long-term stocks can set you up for a prosperous future. These assets can appreciate over time, but long-term stocks also have risks. You should consider these factors before buying long-term stocks to increase your likelihood of success.

Company’s Financial Performance and Stability

A company’s financial performance indicates how the company is currently growing. High revenue growth can lead to more market share in the future, but mounting losses can indicate the model is unsustainable. 

Industry Growth Potential and Market Trends

Some stocks are outliers within their respective industries, but a rising wave tends to lift all boats. Corporations that find themselves in high-growth industries can potentially generate more revenue and earnings growth than stocks in other industries.

Dividend History and Future Potential

Dividend stocks should raise their dividends every year. High dividend hikes signal confidence in the business model, and it’s something companies can’t fake. Dividends get distributed, and if companies are financially struggling, they have to cut the dividend. Investors should also consider non-dividend-paying stocks that may pay them in the future. Companies with high profit margins and growing financials may have the capacity to support dividend payments in the future.

Management Expertise and Track Record

When you buy a stock, you don’t just buy a company. You also buy the leadership involved with turning the company into a success. Corporations with strong management may have a better time navigating through challenges and capitalizing on opportunities.

Competitive Advantage and Market Positioning

A company’s competitive advantage can help it gain more market share. If the corporation has advanced technology or extensive partnerships, the stock can benefit over the long run.

Frequently Asked Questions 

Best Long-Term Stocks Methodology

The best methodology for long-term stocks involved selecting companies in various industries that are profitable. Most of the companies on this list have large market caps, which tend to be less risky than small-cap stocks.