Got $5,000? 3 Stocks to Hold for the Next 20 Years
You don’t need much to get started investing. A stash of $5,000 is more than enough, and even $500 can work. Ideally — if you’re not opting for the simplest stock investing strategy of index funds — aim to spread your dollars across 25 or more stocks, planning to hang on for at least five years. Even better, aim to hang on for 20 or more years, because your portfolio might grow much more over that longer period.
Here are three solid contenders to consider.
Here’s a big number for you: 635 million. That’s the approximate population of Latin America — and it’s almost twice the U.S. population of about 330 million. Many investors focus on China because of the great sales potential there, with its massive population, but it’s not the only populous region. If you’re looking for a company growing powerfully in Latin America, and you like the prospects for e-commerce and fintech businesses, take a look at MercadoLibre (NASDAQ: MELI).
MercadoLibre runs the major online marketplace in the region, operating in Argentina, Brazil, Mexico, Colombia, Chile, Venezuela, Peru, and more than 10 other countries. It also boasts a major asset in its Mercado Pago digital payment platform, operating in Brazil, Argentina, Mexico, Colombia, Chile, Peru, and more.
In its recently reported first quarter, MercadoLibre posted 67.4% growth in net revenue year over year, to $2.2 billion (on a currency-neutral basis), and total payment volume up 81.2%. The stock, though, hasn’t been immune to the greater sell-off in many growth stocks lately, and it was recently down some 60% from its 52-week high. The stock certainly looks appealing at these levels, with its recent price-to-sales ratio of 4.55 well below its five-year average of 14.06. Its forward-looking price-to-earnings (P/E) ratio looks steep at a recent 101, but that’s well below its five-year average of 525.
2. NextEra Energy
NextEra Energy (NYSE: NEE) doesn’t seem as undervalued as MercadoLibre, but it’s still another strong company deserving consideration. It’s an energy powerhouse, with a strong focus on renewable energy. Indeed, it bills itself as “the world’s largest producer of wind and solar energy,” and notes that it’s aiming for much more: “As one of America’s largest capital investors in infrastructure, with between $50 and $55 billion in new infrastructure investments planned through 2022, we’re helping ensure that the next energy to power our dreams will be American energy.” It has reduced its dependency on foreign oil by 98% since 2001, can generate some 45,500 Megawatts, and boasts a total shareholder return over the last 15 years of 945%.
The company is also a leader in battery storage, has some subsidiaries producing energy from nuclear plants, and is innovative in the renewable realm, such as via green hydrogen projects that convert water into hydrogen and oxygen without creating harmful emissions.
NextEra Energy’s stock was recently down about 25% from its 52-week highs, and its dividend yielded 2.31%. The company has upped its payout by an annual average of 12% over the past five years, too. (Don’t underestimate the power of dividend-paying stocks.)
NextEra Energy is well poised to profit in the years to come, and no matter how the economy is doing, people (and businesses) will always need power.
3. Berkshire Hathaway
Finally, there’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the company run by Warren Buffett for more than 50 years. Its stock isn’t a screaming bargain right now, but it’s down some 14% from its 52-week high as of this writing.
The company is built to last, as it owns dozens of companies in defensive industries and holds a range of stock investments, as well. Its businesses are largely (but not solely) focused on insurance, energy, and transportation — services that tend to be required in any kind of environment (though transportation can see demand fall during downturns). Berkshire’s subsidiaries include Benjamin Moore, Brooks, International Dairy Queen, Johns Manville, Justin Brands, McLane, Business Wire, Clayton Homes, Forest River, Fruit of the Loom, GEICO, Nebraska Furniture Mart, NetJets, Pampered Chef, See’s Candies, Shaw Industries, and the entire BNSF railroad. Major holdings in the Berkshire stock portfolio include Apple, American Express, Bank of America, Coca-Cola, and Occidental Petroleum, among many others.
Warren Buffett himself may be considered a risk for the company, as he’s 91 years old, but his brain is still working well, and he has long had a succession plan in place.
These three companies appear well positioned to grow and prosper over the decades to come, and you might consider learning more about any or all of them, possibly deciding to add shares of them to your long-term portfolio.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian has positions in American Express, Apple, Berkshire Hathaway (B shares), and MercadoLibre. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway (B shares), MercadoLibre, and NextEra Energy. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.