3 Magnificent Stocks That I'm "Never" Selling


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I hate to say that I’ll never be selling a stock, because you never know what life will bring. However, there are some companies that I own that I can comfortably say I hope to hand them off to my daughter someday (hopefully many years from now).

Three of these forever-holds include Realty Income (NYSE: O), Procter & Gamble (NYSE: PG), and Hershey (NYSE: HSY). Here’s why I’m so fond of each of them.

1. Realty Income is a slow-growing giant

Realty Income has a dividend yield of around 5.6% at this writing, which is near its highest levels of the past decade. The shares look reasonably attractive right now. But there’s more to like than just a lofty yield, including the three decades’ worth of annual dividend increases and the real estate investment trust’s (REIT’s) investment-grade-rated balance sheet.

That said, it’s the core business that I really appreciate. Realty Income is the largest net lease REIT you can buy (a net lease requires the tenant to pay most property-level operating costs). It has a globally diversified portfolio of predominantly retail properties with a smattering of industrial assets.

Realty Income’s massive size (it owns more than 15,400 properties) and financial strength allow it advantaged access to capital markets, giving it a leg up on peers when it comes to raising capital. A low cost of capital, meanwhile, allows the company to bid aggressively for properties and still turn a profit. It can also take on larger deals than its peers, including acting as an industry consolidator.

All in, slow and steady growth is the norm here, and I’m happy to own it, collecting a big yield year in and year out.

2. Procter & Gamble proves its worth every day

Procter & Gamble has a yield of around 2.4%, which isn’t nearly as attractive as Realty Income’s yield. That said, I bought the consumer staples giant when it was out of favor and yielding closer to 4%, so I’m sitting on some nice capital gains. But I have no plans to sell the stock, noting that it is financially strong (investment grade) and a Dividend King, with 68 years of annual dividend increases behind it.

The big story for P&G, as most people call it, is that it focuses on innovation to support its portfolio of industry-leading and mostly high-end brands. Basically, the company works hard to ensure that the extra cost of its products is justified by the value they offer. And, given its vast scale, it has the ability to invest heavily in the research and development, distribution, and advertising needed to ensure that customers are getting the best product.

In short, it is a valuable partner to the retailers it serves because P&G products get customers in the doors. As long as it keeps following this core approach, there’s no reason to sell.

3. Hershey is a beloved treat maker

I have spent years watching Hershey stock, hoping for a chance to buy it. Well, that chance just showed up thanks to concerns about new weight loss drugs and skyrocketing cocoa prices. The stock’s dividend yield is around 2.6%.

That may not sound exciting, but it happens to be near the high side of Hershey stock’s historical yield range. I wouldn’t call it a screaming buy, but I would say it is attractively priced. The dividend has been increased annually for 15 consecutive years, with a nearly 10% annualized rate of increase over the past decade.

The food company makes most of its money from chocolate products and other sweets, but it also makes salty snacks like popcorn and pretzels. There are two avenues for long-term growth as Hershey looks to increasingly expand its reach beyond the U.S. market in the confection space and grow its relatively new salty snacks platform.

As for cocoa, the prices are likely to stabilize over time, and so far, consumers have been willing to pay higher prices for their chocolate treats. New weight loss drugs are a bigger issue, but I believe this, too, will pass — people just like chocolate too much for me to believe this company’s most important business is in any long-term danger.

Two to buy and one to watch

If you are looking for a stock to buy right now, Procter & Gamble isn’t going to be the best option on this list. But it is an industry leader that you should probably put on your wish list just in case there’s a broad market sell-off. Realty Income and Hershey, on the other hand, both look attractive right now. Realty Income will be most attractive to yield seekers, while Hershey will probably please dividend growth investors.

Should you invest $1,000 in Realty Income right now?

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Reuben Gregg Brewer has positions in Hershey, Procter & Gamble, and Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Hershey. The Motley Fool has a disclosure policy.

3 Magnificent Stocks That I’m “Never” Selling was originally published by The Motley Fool



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