3 stocks that are great long-term choices

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Market volatility and falling stock prices can distract investors from the winning formula for wealth building: owning quality companies for long periods of time. It can be tough, and we’re all human, but investors could possibly see this year as a golden opportunity that only comes so often.

Buying blue chip stocks, stocks of the most trusted and dominant companies in the world is like planting money trees. These three big moves could give you years of financial shadow from now.

1. A King of Retail

walmart (WMT 0.06%) is arguably the most famous retail store in the world. The company has grown from a small store in Arkansas to a multinational juggernaut with more than $576 billion in sales annually. Today, 90% of Americans live within 10 miles of a Walmart store, and the company has also built a thriving e-commerce business.

The company’s enormous size gives it buying power with suppliers, allowing it to offer some of the lowest prices for its goods. Walmart also likes to share profits with shareholders; it has paid and increased its dividend over the past 49 years and repurchased 19% of its outstanding shares over the past decade.

The shareholders got rich as a result. A $10,000 investment in Walmart’s IPO would be worth over $29 million today. Replicating that success will be difficult due to Walmart’s massive size today, but its steady growth is fertile ground for long-term returns. Analysts estimate that the company will increase its earnings per share (EPS) by an average of 5-6% per year over the next three to five years.

2. A Buffett classic

The Coca-Cola Company (KO 0.37%) is one of the largest beverage companies in the world. Home to over 200 brands, its products have likely found their way into the hands of just about every consumer on the planet. Warren Buffett has been a longtime fan of the stock, first buying stocks in 1988 and owning them to this day.

The company’s roots go back to the invention of Coca-Cola in the late 1800s, and the stock has made fortunes for shareholders for generations. The secret ingredient to continued success is its extensive distribution network. Stores provide Coca-Cola products with the best storage space due to its many leading brands, which can keep competitors at bay and help it develop new products.

Coca-Cola is one of the world’s most famous dividend stocks and a dividend king with 60 years of increases. About $0.29 of every dollar of revenue turns into free cash flow for management to play with, and slow, steady growth is all it needs to keep growing that dividend. Analysts are feeling good about Coca-Cola, predicting annual EPS growth of 7% over the next three to five years.

3. A leader in home improvement

The reception deposit (HD -0.08%) is a mecca for owners. A home is the biggest purchase most people make in their lifetime, and there’s an endless list of home projects, upgrades, and maintenance. The Home Depot generates more than $152 billion in annual revenue, selling appliances, materials, plants and tools to homeowners and professional contractors.

The stock is an all-time hit; a $10,000 investment when it went public would be worth more than $225 million today. Home Depot has also become a strong dividend stock, increasing its payout over the past 13 years and using massive stock buybacks to reduce its stock count by 32% over the past decade.

Rising interest rates could slow the housing market, but there is plenty of good long-term news for shareholders. Real estate has historically appreciated over time, and homes will constantly need maintenance, a fresh coat of paint, or a new set of appliances. Home Depot has also built an efficient e-commerce business to keep pace. Analysts expect EPS to grow 10% annually over the next three to five years, so investors can own Home Depot with confidence that owners will continue to put money in their pockets.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool fills positions and recommends Home Depot. The Motley Fool recommends the following options: Long Calls $47.50 in January 2024 on Coca-Cola. The Motley Fool has a disclosure policy.

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