We love talking about the hot stocks here
on the channel but what about the stocks you
can buy and know they’ll produce solid returns
How do you find those forever stocks you can
buy and just sit back and collect the checks?
In this video, I’ll reveal the three factors
I look for when buying stocks for the long-term
and five stocks to buy right now.
We’re talking best investments to make money
today on Let’s Talk Money.
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Let’s talk money.
Joseph Hogue with the Let’s Talk Money channel
here on YouTube.
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Now I love to buy deep-value stocks and benefit
from that near-term rebound.
Perfect example is the Hanesbrands position
in our 2019 Stock Market Challenge.
I saw rising online sales and strength in
the activewear segment ahead of a 52% surge
in the shares.
But you also need to be investing for the
We want to be building a portfolio that benefits
from quick wins but one where our stocks are
going to withstand the test of time.
Fortunately, there is a way to get both.
Get that short-term pop plus the long-term
returns that will beat your investing goals,
or as I call them, forever stocks.
That’s exactly what we’re going to be
In this video, I’ll show you the three factors
I look for when picking stocks to buy for
I’ll cover each factor then I’m going
to be revealing five stocks to buy right now
that I think will produce those double-digit
returns over the next 30 years.
The first factor I’m looking for in forever
stocks is a dividend yield and there are a
few reasons for that.First is that, stocks
that pay dividends just tend to do better.
Now this graphic is a little jumbled but groups
of stocks paying dividends and those with
a history of growing their dividends are the
blue lines at the top while no-dividend stocks
and those cutting their cash payouts are the
two bottom lines.
The research this was based on has been sliced
and diced every way but the simple truth is
that dividend-paying companies beat the market.
One of the reasons for this is because that
dividend payout acts as cash discipline on
It’s harder to spend on those questionable
projects if you know you’ve got to meet
that $400 million dividend payment at the
end of the quarter.
That dividend payment is like having some
of your paycheck automatically invested instead
of it sitting in your checking account tempting
you to spend it on whatever commercial you
If you just don’t have the money sitting
around, you’re less likely to spend it on
stupid crap you don’t need.
Another reason I want to be investing in dividend
stocks is because it’s always a positive
This chart shows the percentage of return
from dividends and price in each decade.
Dividends might be a small part of your return
when the market is booming like in the 90s
but when the stock market crashes, that dividend
return may be all you collect.
Thirty years is a lot of bear markets so having
those dividend stocks is going to be a lot
Now when I’m looking for dividend stocks,
I want a company paying a yield of at least
That’s the average dividend yield on the
S&P 500 so I like to look for stocks paying
maybe a little above average.
I also want to look at the payout ratio though
and this is something we’ve talked about
The payout ratio is the percentage of profits
paid out to cover the dividend.
I like to see a payout ratio of 60% or less
so I know the company is keeping enough money
back for growth as well as making those cash
So obviously you know I’m all about dividend
stocks but there’s another side of investing,
looking at companies with the fastest growth.
Think names like Tesla, Netflix and Amazon.
This growth investing can be just as profitable
or more than dividend investing so I need
Which do you want to see more videos about,
dividend or growth investing.
Just scroll down below the video and let me
know in the comments.
The second factor I’m looking for in these
long-term stocks to buy is going to take advantage
of big macro trends.
This means finding companies that will benefit
from those large, universal trends like aging
populations, food demand, automation.
We’re talking the massive, unstoppable forces
that will unfold over decades.
This kind of long-term investing is the best
thing you can do for your portfolio and it’s
really how some of these hedge funds managers
like Seth Klarman make their billions.
This is one of my favorite ways to invest
because it makes it so easy.
You’re looking at these big trends and thinking,
OK which sectors or industries of the economy
Those forces are going to drive demand for
every company in that sector and industries
so once you answer that question, you just
look for the leaders in the group.
The best part is, you don’t have to pick
that one best company because all the players
in the group will benefit from these massive
Some of the biggest macro trends I’m watching
include aging populations, so the fact that
10,000 Americans are reaching retirement age
everyday and that’s going to affect everything
from government services to consumer spending.
Food demand, global agricultural production
just isn’t keeping up with demand, obviously
automation and artificial intelligence will
bring huge shifts in work and other areas.
Big data, and especially with the coming 5G
networks I think will bring a wave of changes.
Finally the shift in economic and political
strength to Asia and here we’re not only
talking about China which is the big one but
also India and other parts of the region.
The third factor I’m looking for in long-term
stocks is going to be just as important and
that’s companies safe from the destruction
in those macro trends.
Just as a lot of opportunities are created
from those massive trends, there’s also
going to be that creative destruction that
is the hallmark of capitalism.
With this one, think of entire industries
like newspapers and magazines.
Think of once hugely successful companies
like Kodak that, while it’s survived, it’s
hard to argue that the company is the giant
it used to be.
Here I’m thinking about industries at risk
from automation and AI and we’re not just
talking about making the industry obsolete
but the kind of change that will be hard for
companies to keep up with.
There will always be a need for banking but
the evolution to online banking, peer-to-peer
lending and even digital currencies is making
it very difficult for banks to keep up.
You could have a best-of-breed bank stock
but if they aren’t constantly adapting to
these changes, it’s not going to last the
I’m also looking at companies at risk to
big regulatory concerns and what we’ll just
So here I want to stay away from pharmacy
retail and drug makers, not because I think
those industries won’t be around but because
these big risks are evolving so quickly that
a lot of companies won’t be able to keep
So those three factors are guiding my long-term
investments but of course, I’m still doing
that deep fundamental analysis when I pick
I’m looking at cash flows and profitability
like we’ve talked about in other videos
and finding companies with a distinct advantage
I know it’s a lot but nobody said finding
the best stocks for the next 30 years would
Now I’m going to reveal five names that
I think could make the cut.
Some of these are going to be pretty safe
bets while others could be a little more risky.
First though, if you’re liking the video
and think it might help you be a better investor,
me a favor and tap that thumbs up button below
or let me know in the comments.
Our first stock is an anchor for a lot of
portfolios, Campbells Soup, ticker CPB.
The $10 billion leader in packaged foods controls
60% of the canned soup market and a strong
position in snacks and beverages.
That kind of market share and size gives it
negotiating power against retailers in shelf-space
Management has made some missteps over the
last couple of years but has also been the
victim of some bad economics in food packaging.
Food costs have been rising at around 3% annually
but companies haven’t been able to pass
these increases on to customers so profitability
Shares have fallen about 45% since mid-2016
but represent some great value right now.
Management has already driven $550 million
in cost savings and expects another $400 million
through 2022 which should rekindle some profitability.
They’re also expecting to announce buyers
for the international business and Bolthouse
Farms Fresh segment by the end of the year.
The two segments represent about $2.1 billion
in revenue so I’m modeling around $4 billion
from buyers that will significantly help to
pay down some of that debt that’s acting
as an overhang on the shares.
Earnings are expected 0.8% lower over the
next four quarters but the company has a strong
history of beating expectations.
I’m forecasting $2.55 in earnings per share
on stronger profitability which would put
the shares around 14-times on a price-to-earnings
The shares trade at a price of just 1.1-times
sales which is a 40% discount to the five-year
average and almost half the two-times average
price-to-sales multiple in the industry so
some good value here.
Besides a great valuation, solid dividend
and just the strength of the company’s business,
I love Campbells here for a potential catalyst.
Activist hedge fund Third Point has been battling
the company for years to unlock shareholder
value and take control from the Dorrance family.
The hedge fund owns about 7% of the shares
and finally won an agreement last November
to add two of its nominees to the board of
That means shareholders have a strong voice
on the board that is expert in increasing
The hedge fund has said everything is on the
table including a breakup of the company or
asset sales to unlock value and investors
get paid a 3.9% dividend while they wait.
So I like Campbells but you’re thinking,
mmmm I just don’t see soup as a growth market
that’s going to jump over the next 30 years.
What else ya got for me?
China Mobile, ticker CHL, hits our list of
stocks to buy for the long-term next.
Just about every U.S. company has a ‘china’
plan to break into some part of the world’s
second largest economy.
Even though the U.S. economy is still about
twice as big, China’s economy is adding
almost twice the value to its economy every
year because it’s growing so fast.
Getting exposure to that growth through U.S.
companies with sales in China just isn’t
EVERY SINGLE INVESTOR needs to own some Chinese
domestic stocks and China Mobile is one of
my top picks.
The telecom company controls 61% of the 4G
market and 60% of the total wireless market.
With 916 million subscribers, it’s the largest
telecom in the world and despite this ginormous
size already, it’s still posting some astonishing
China Mobile also became the country’s largest
fixed broadband provider last year, controlling
42% of the market and accounting for 73% of
all new broadband customers versus the other
two telecoms China Unicom and China Telecom.
China is determined to be the leader in 5G,
it’s said so publicly and this is one of
the first tech evolutions where it really
has a chance to set the pace and it’s going
to do it.
That’s going to open up a lot of opportunity
for telecoms and the broader economy.
IoT smart connections among corporate clients
increased 154% in the first half of last year
to 384 million, that’s already more than
the entire population of the United States.
Behind all this growth is also one of the
strongest balance sheets I’ve seen with
$70 billion in cash, that’s more than 30%
of the company’s stock market value.
For comparison, Apple’s cash stock pile
is less than 10% of its market value and China
Mobile is generating over $7.6 billion in
free cash flow every year.
Shares pay a 3.9% dividend yield and the company
pays out 48% of profits to the dividend which
is solid but still obviously leaves lots of
money for growth.
At a price-to-sales ratio of two-times which
is just under the 2.15-times average over
the last five years, the shares aren’t a
bargain here but the long-term potential is
There is one major drawback to China Mobile,
the controlling ownership by the Chinese government.
As the controlling shareholder and regulator
of all three domestic telecom operators, the
government is a limiting force on how powerful
any one company can become.
In fact, over the last decade, it’s swapped
out the CEOs of the companies twice to try
distributing management experience and knowledge.
The upside to all of this is that the Chinese
market will continue to grow and the government
wouldn’t consider letting anyone else play
beyond the three established companies so
you basically have an implicit guarantee for
ConAgra Foods, ticker CAG, is one I added
to our 2019 Dividend Portfolio in February.
The company is a U.S. powerhouse in prepared
meals where it’s the second-largest in the
It has a 40% market share in canned tomatoes
and more than a fifth of the meat snacks market
with Slim Jim.
The company has some solid brands in that
relatively safer consumer staples sector so
we’re talking dividends as well as a recession-proof
Management fumbled big time with last year’s
Pinnacle acquisition and had to lower the
profit outlook by 20% late last year.
The problems were centered around Pinnacle’s
distribution business so a little harder to
read but management has been very transparent
since December about its plans going forward.
I think they’re being overly conservative
on estimates for a 5% sales decline and margin
loss on the Pinnacle assets so the next surprise
could be on the upside when things come out
better than expected.
Despite the missteps, the Pinnacle deal still
brought a lot of opportunity to the company
with a position in the faster-growing frozen
Consumer data is showing millennials are adopting
frozen meals at a higher rate than previous
generations and it’s hard to imagine a tech
shift that could put this industry in jeopardy.
Shares of ConAgra pay a 3.9% dividend which
management has affirmed with its new 2019
outlook and trade for just 9.9-times trailing
earnings, that’s a 41% discount to the price
multiple where it was trading in November.
Cash flow is still solid and management is
expecting $215 million in cost savings through
2022 on the acquisition.
The average analyst price target is 50% higher
than the current price and even the lowest
price target is 8% higher.
Next we have the Vanguard Real Estate ETF,
ticker VNQ, which is probably my favorite
exchange traded fund and another in our 2019
It holds shares of 187 real estate companies
spread across all the property types and across
the United States.
Everyone in the community knows I’m a huge
believer in real estate.
I got my first professional job as a commercial
property analyst while in college, I’ve
managed my own rental properties and have
seen real estate create more fortunes than
any other asset.
Real estate is truly a generational wealth-builder
and will always be in demand.
The fund pays a 4.2% dividend yield and has
returned 14.7% annually over the last decade.
Beyond the solid cash yield and return, this
is a great opportunity to take a little risk
out of the stock market and have it in a real
physical asset like property.
The fund has been under pressure over the
last couple of years because of those rising
Obviously with the leverage used in real estate,
any time you have rising rates, that’s going
to weigh on returns but the Fed has signaled
no more rate hikes this year and that could
unleash a lot of value in real estate.
We saw the real estate fund in blue here outperforming
stocks through 2017 when rates started heading
Looking more recently with that market crash
last year and we’re seeing real estate outperform
Now I know I said I wanted to stay away from
pharmaceutical stocks because of that potential
for regulatory problems over drug prices but
I think Cardinal Health, ticker CAH, deserves
a spot on the list.
The $15 billion leader in medical supplies
and pharmaceutical distribution to hospitals
and pharmacies is diversified enough that
I think it can withstand some of that regulatory
The biggest reason I’d overlook that risk
of problems with drug pricing is the company’s
position in one of the biggest and surest
demographic trends, the aging population.
The very middle of the Baby Boomer generation,
those born in 1955, turn 64 years old this
That still puts a tidal wave of people over
the next two decades that will be increasing
the demand for healthcare.
Between AmerisourceBergen, Cardinal Health
and McKesson, these three companies control
90% of the pharmaceutical wholesale market
in the country.
Even if we do see true enthusiasm for drug
price controls from the government, which
is a long-shot to start, then I think it’s
likely the industry can negotiate a compromise
that still maintains solid profits while moderating
Management has identified over $300 million
in cost savings it can drive this year and
next which could rocket free cash flow.
Shares pay a 3.8% dividend yield and the payout
has grown at an 8% annualized clip over the
last five years.
Analysts are only expecting 2.4% earnings
growth to $5.10 per share over the next year
but the company has a history of thrashing
Over the last two years, management has surprised
on the upside by 14% over expectations with
even stronger results lately.
Even the estimate though puts the shares at
10-times earnings so definitely some value
in this one.
If you want to see the rest of the stocks
in our 2019 Dividend Portfolio, I’m linking
to it in the video description below and I’ll
put a clickable card in the corner of the
It’s got some great long-term stocks to
buy for both dividends and deep value.
The portfolio is already up over 20% on the
year and about two-times the return on the
overall stock market.
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