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4 Top Stocks to Buy and Hold for the Next Decade | The Motley Fool

If you have a major life goal in mind through 2030 that’ll require substantial sums of money, investing in stocks is perhaps the best way to build that wealth. Just buy shares in compelling companies and hold them — it’s really that easy. What may not be easy, though, is choosing what stocks to buy.

My idea is, when you’re putting money into stocks for 10 years or more, build a balanced portfolio of all-weather and disruptive growth stocks. Here are four such strong-conviction stocks that could grow manifold over the next decade.

A silent multi-bagger in the making

American Water Works (NYSE:AWK) is the largest water stock in the U.S. It’s also the most diversified water utility, with 15 million customers across 46 states. Pennsylvania and New Jersey are its largest markets.

Fulfilling an essential need like water for such a huge number of people is, in itself, one of the biggest reasons why you should own American Water Works shares. No matter how the economy is faring, this company will never run out of business.

Image source: Getty Images.

Notably, American Water Works isn’t resting on its laurels, and is consistently looking for acquisition opportunities to expand its customer count. Its earnings per share could grow at compound annual growth rate (CAGR) of 7% to 10% through at least 2025, driven by its plans to invest $22 billion to $25 billion on existing infrastructure and acquisitions over the next decade. As of Aug. 1, the company was already in talks to acquire 86,900 customer connections.

Those numbers indicate American Water Works has already secured future growth, and we aren’t even counting the potential spending on water infrastructure under President Joe Biden’s infrastructure plan yet. With management also targeting 7% to 10% annual dividend growth in the long term, this all-weather stock could definitely be a multi-bagger over the next decade, just like it’s been in the past one.

Chart showing upward trend for AWK's price percent change and total return.

AWK data by YCharts

COVID-19 vaccine could be a shot in the arm for this Dividend King

Johnson & Johnson (NYSE:JNJ) stock has proven to be a stellar performer for patient investors over the years, and that’s unlikely to change.

Johnson & Johnson is a leader in the healthcare space with an exemplary mix of businesses — while its globally renowned consumer health brands generate steady cash flows, its larger pharmaceuticals and medical devices businesses offer unending growth opportunities.

Just to give you some examples, several of Johnson & Johnson’s products received regulatory approvals last quarter, including drugs for lung cancer, sclerosis, and myeloma, and a next-generation treatment procedure for cataract.

Johnson & Johnson’s growth strategy has clicked so far because it has always prioritized organic growth via consistent spending on research and development (R&D), and spent remaining free cash flows on acquisitions, dividends, and share repurchases. So in 2020, it invested $12.2 billion in R&D, and paid out $10.5 billion in dividends.

In fact, Johnson & Johnson mainly lures investors with its dividends — it’s one of the best Dividend Kings to own, having increased dividends every year for 59 consecutive years. The stock yields a respectable 2.4%.

Now that Johnson & Johnson’s single-shot COVID-19 vaccine could also potentially generate big sales, it’s a stock you’d want to own for decades.

Don’t miss out on opportunities in this trillion-dollar industry

Even those who never owned energy stocks can’t help but notice the sector’s changing landscape. There’s no way you don’t want to be part of the transition — there’s a lot of money to be made from it.

Economies across the world are pledging to reduce greenhouse gas emissions, and the only way to do that is to cut down consumption of fossil fuels and switch to cleaner energy sources. One company helping the world make the switch is Brookfield Renewable (NYSE:BEP)(NYSE:BEPC).

Brookfield Renewable is one of the best renewable energy stocks to buy and hold for several reasons. Here are just some of them:

  • Geographic footprint: Operations in North America, South America, Europe, and Asia.
  • Diversity: Operates hydropower, wind, solar, and storage.
  • Swelling pipeline: Existing capacity of 21 gigawatts (GW), pipeline of 27 GW.
  • Cash flows: 85% cash flows are contracted, and therefore stable and predictable.
  • Robust balance sheet: $3.3 billion liquidity as of June 30, with no near-term debt maturity.
  • Dividend growth: Target annual growth of 5% to 9%.
  • Investing option: Option to buy units of limited partnership (BEP) or security (BEPC).

That makes for a compelling investing proposition, and when you factor in the growth potential in renewable energy and Brookfield Renewable’s dividends, you know you’ve found a winner stock in the making. 

Chart showing upward trend in BEP's price percent change and total return.

BEP data by YCharts

This industry could explode in 10 years

Teladoc Health (NYSE:TDOC) is one of my highest conviction stocks right now. Teladoc’s core service — that of a videoconferencing platform that connects patients with medical professionals — undeniably has gotten a huge lift during the COVID-19 pandemic. But virtual care could explode in the coming years, and Teladoc is primed to make a killing out of it.

Research and Markets projects the telehealth market to grow at a CAGR of 17.7% to hit $70 billion through 2026. Elsewhere, Allied Market Research estimates the global telehealth industry could grow at a CAGR of 25.9% through 2030. Remember, these predictions are primarily for telehealth, and Teladoc’s reach goes far beyond just that — it provides end-to-end virtual care, including chronic disease management.

A double-digit growth in virtual care looks almost inevitable, and Teladoc is already giving us a glimpse of the shape of things to come. In its last quarter, Teladoc’s revenue surged 109% and patient visits topped 3.5 million, up 28% from the year-ago period. This year, Teladoc expects to generate revenue worth more than $2 billion. It reported sales worth only $553 million in 2019.

Competition is, of course, heating up in the virtual care space, but first-movers making efforts to ensure they remain the leader are hard to displace. Big-ticket acquisitions like Livongo Health have given Teladoc significant headway into chronic care, and it’s now looking to build an integrated data platform and expand its global footprint. There’s a lot of money to be made from aggressive growth moves like these, for the company and investors alike. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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