In this article, we will take a look at the 12 Best Stocks to Buy for the Long Term.
Since markets first took shape, investors have tried to boost returns and limit losses by picking the right moments to get in and out. The idea sounds simple. Buy when prices feel low and rising, and sell when they seem high and ready to fall. In practice, market timing is harder than it looks. First, when you buy, and then again when you sell. Miss either step and the outcome changes quickly.
A report from U.S. Bank notes that sharp swings in the market can shake even disciplined, long-term investors. Periods of volatility often lead people to question a buy-and-hold approach. Still, history offers some perspective. While past results never guarantee future returns, the market has consistently recovered from downturns and rewarded patience over time. Over the last 35 years, the market delivered a positive return in nearly eight out of every 10 years. Much of the market’s gains and losses also tend to happen in just a handful of days each year, making short-term timing especially difficult. Monthly patterns simply are not predictable.
The report also points to dividends as a key part of long-term investing. Dividends are easy to overlook, especially early on, when the payments feel small. Over time, though, they add up. More than 40% of total gains in the S&P 500 have come from dividends. Many investors choose to reinvest those payouts automatically, using them to buy additional shares. Those extra shares then generate dividends of their own. Over years and decades, this steady reinvestment can quietly compound returns and play a meaningful role in building long-term wealth.
Given this, we will take a look at some of the best stocks for the long-term.
Our Methodology:
For this article, we screened for companies with market caps above $2 billion. From that list, we selected industry leaders across multiple sectors to give investors a more diversified set of choices rather than concentrating risk in one area. Next, we identified strong dividend companies with healthy balance sheets, positive 5-year revenue growth, and positive 5-year returns. Finally, we picked 12 companies that were most popular among hedge funds, as per Insider Monkey’s database of Q3 2025, and ranked them accordingly.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 68
5-Year Average Revenue Growth: 6.31%
5-Year Return: 12.49%
On January 16, BNP Paribas raised its rating on PepsiCo, Inc. (NASDAQ:PEP) to Outperform from Neutral. It set a $179 price target on the stock. The firm also lifted its FY27 EPS forecast by roughly 5%, arguing that recent activist involvement creates a “win-win” situation for the company, according to the analyst.
PepsiCo’s shares are down nearly 1.5% over the past 12 months, reflecting a tough operating backdrop. Demand has softened as consumers lean more toward health and wellness, while higher living costs, rising production expenses, and tariffs have added pressure. Management is guiding for low single-digit organic revenue growth in full-year 2025 and flat core EPS on a constant currency basis. While recent results have been weak, much of that disappointment already appears baked into the stock. The snack segment, in particular, has been hit as health trends intensify and the use of weight-loss drugs such as Ozempic becomes more widespread.
Because of its exposure to restaurants, PepsiCo remains tied to discretionary consumer spending. Even so, the strength of its brand portfolio has allowed the company to push through price increases during inflationary periods.
That said, tariffs and changing consumption habits have weighed on profitability. Through the first three quarters of 2025, organic revenue increased 1.5%, while core EPS declined 3.5%. The company has also leaned on acquisitions to drive growth. PepsiCo bought SodaStream in 2018, giving it a strong foothold in the at-home soda category. That was followed by the acquisition of Rockstar Energy in 2020. More recently, in early 2025, PepsiCo added Siete Foods, known for its grain-free tortillas and Mexican-American offerings, along with Poppi, a fast-growing prebiotic soda brand.
PepsiCo, Inc. (NASDAQ:PEP) is far more diversified than its flagship cola might suggest. Alongside its beverage lineup, the company owns Frito-Lay and Quaker and controls well-known drink brands such as Mountain Dew and Gatorade, giving it a broad presence across both snacks and beverages.
11. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 70
5-Year Average Revenue Growth: 6.49%
5-Year Return: 259.53%
On January 27, Jefferies raised its price target on Caterpillar to $750 from $700 and reiterated a Buy rating on the stock. The analyst said the setup for Q4 earnings “feels in line to potentially conservative,” pointing to steady volume trends and continued margin improvement across both business segments as support for the higher target. While Caterpillar’s power generation narrative is “now well appreciated,” Jefferies noted that faster growth in the rest of the portfolio could still lift the shares further.
Caterpillar Inc. (NYSE:CAT) is preparing to report its Q4 2025 results, and expectations are positive following a very strong prior quarter. In Q3 2025, revenue from the energy and transportation segment rose 17% year over year, helping drive total company revenue growth of 10%. CEO Joe Creed has told investors that the company’s backlog continues to grow as Caterpillar supplies critical power-generation solutions for AI data centers. The company also benefits from demand for its heavy equipment used in the construction of those facilities.
Caterpillar has been a dominant force in construction and industrial equipment for more than 100 years. While it has weathered countless boom-and-bust cycles, the current surge in AI-related demand could be the next major driver pushing the stock toward new all-time highs.
10. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 72
5-Year Average Revenue Growth: 7.87%
5-Year Return: 8.69%
On January 28, Argus raised its price target on NextEra Energy, Inc. (NYSE:NEE) to $92 from $90 and reaffirmed its Buy rating following the company’s Q4 earnings beat. In a research note, the firm highlighted confidence in NextEra’s long-term growth outlook and its ability to benefit from broader momentum across the utility sector. Argus also pointed to Florida as a key bright spot, citing the state’s strengthening economy and fast-growing population as supportive factors for future demand.
A January 27 Reuters report added another layer to that optimism. NextEra is weighing an expansion of its nuclear fleet to help meet rising electricity needs from data centers. The company said it is already in advanced talks to supply power for an additional 9 gigawatts of server facilities. Demand from Big Tech continues to push US power consumption higher, prompting utilities to strike major supply agreements and even bring previously shut nuclear plants back online.
Last year, NextEra announced plans to restart the Duane Arnold nuclear plant in Iowa to support Google’s data center operations. Management has since told investors that the company could add up to 6 gigawatts of new nuclear technologies at existing sites to serve data center customers. It is also exploring new locations to develop advanced nuclear facilities from the ground up.
The company narrowly topped Wall Street’s expectations for fourth-quarter profit, supported by steady growth at its regulated Florida utility and a record year for renewable energy and battery storage additions. As electricity demand rises nationwide, these businesses have become increasingly important drivers of performance.
Florida Power & Light, NextEra’s regulated utility, reported net income of $958 million, up 13.4% from a year earlier, largely due to higher capital investment. In Florida alone, the company has roughly 20 gigawatts of data center customers seeking to connect to its grid. Nearly half of that demand is already in advanced discussions, with several projects potentially coming online by 2028.
NextEra Energy, Inc. (NYSE:NEE) is a major player in electric power generation and energy infrastructure. Through its subsidiaries, including NextEra Energy Resources, NextEra Energy Transmission, and Florida Power & Light, the company operates across regulated utilities, renewables, transmission, and advanced energy solutions.
9. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 87
5-Year Average Revenue Growth: 3.55%
5-Year Return: 18.38%
On January 27, TD Cowen downgraded The Procter & Gamble Company (NYSE:PG) to Hold from Buy while raising its price target to $156 from $150. The firm cautioned that the company’s turnaround is “likely to drag.” According to the analyst, bullish investors have been holding the stock on the belief that Procter’s organic sales growth hit a low point in Q2 2025 at 0% and would pick up as comparisons ease and market share begins to recover. TD Cowen, however, expects growth to “remain subdued” at around 2% over the next two years, citing limited pricing power and continued pressure on the Hispanic consumer.
That cautious view follows a mixed second quarter. Revenue came in slightly below Wall Street expectations, as softer spending by US consumers and the impact of a government shutdown offset stronger growth in international markets. On the earnings side, adjusted profit exceeded forecasts, helped by solid demand for P&G’s higher-end haircare and beauty products. As a bellwether for the consumer goods industry, the company’s uneven results are closely watched as a signal of broader sector health.
The US government shutdown weighed heavily on P&G’s largest market. Delayed food assistance payments in October and November squeezed lower-income households already dealing with elevated prices and a sluggish job market. Finance chief Andre Schulten said in early December that sales declined across categories in the US due to the shutdown.
Sales volumes fell in three of P&G’s five reported categories and increased only in beauty, which has stood out over the past year as consumers continue to spend on self-care. Overall volumes ran well below the typical U.S. growth range of about 3% to 4% across categories, Schulten noted.
For the three months ended December 31, P&G reported net sales of about $22.21 billion, up roughly 1% year over year but slightly below the $22.28 billion analysts had expected, according to LSEG data. Core gross margin declined for a fifth consecutive quarter, pressured in part by tariffs and by investments in offering a wider range of pack sizes aimed at cost-conscious consumers.
The Procter & Gamble Company (NYSE:PG) is a global consumer staples company focused on selling branded packaged goods to consumers around the world.
8. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 92
5-Year Average Revenue Growth: 10.44%
5-Year Return: 50.05%
On January 27, Cantor Fitzgerald boosted its price target on Merck & Co., Inc. (NYSE:MRK) to $116 from $83 but kept its Neutral stance on the stock. The firm said near-term guidance is likely to come in below what Wall Street is expecting, which could create some pressure on the shares in the short run. Looking further out, Cantor believes Merck’s results in 2026 will hinge on whether the company can add to its business through deals and continue lowering risk in its late-stage pipeline. Those same themes were already a big reason the stock performed well in 2025.
At the same time, a Wall Street Journal report said Merck has stepped away from talks to acquire Revolution Medicines, according to people familiar with the situation. The discussions had centered on a potential deal that could have valued the cancer-focused biotech at around $30 billion. Earlier this month, the Journal reported that AbbVie was also in advanced talks with Revolution, though AbbVie later said it “is not in discussions” with the company.
Merck CEO Robert Davis spoke about the company’s deal-making approach at the J.P. Morgan Healthcare Conference earlier this month. He said Merck has been focusing mainly on transactions worth up to $15 billion, while remaining open to larger deals if they are the right strategic fit. In this case, people familiar with the talks said discussions with Revolution cooled after the two sides couldn’t agree on valuation.
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company with a wide-ranging portfolio that includes prescription drugs, biologic therapies, vaccines, and animal health products.
7. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 93
5-Year Average Revenue Growth: 11.15%
5-Year Return: 117.6%
On January 27, Citi modestly cut its price target on AbbVie Inc. (NYSE:ABBV) to $230 from $235 while leaving its Neutral rating unchanged. The adjustment was part of the firm’s broader Q4 review of the biopharma space. In its note, Citi said expectations across the sector look manageable, with earnings that could come in better than feared, and added that lower policy-related risk could create a more supportive backdrop for the group in 2026.
At the same time, AbbVie faced some disappointing clinical news. According to a January 16 Reuters report, AbbVie and its partner Genmab said their blood cancer drug epcoritamab failed to show a clear survival benefit in a late-stage study. The trial enrolled 483 patients with relapsed or refractory diffuse large B-cell lymphoma who had already been treated at least once and were not eligible for intensive chemotherapy followed by a stem cell transplant.
While patients on the drug did not live longer in a statistically meaningful way at the time of the analysis, the study did deliver some encouraging signals. The companies said more patients saw their cancer become undetectable, responses lasted longer, and the time before needing another treatment improved. AbbVie and Genmab said they plan to review the data with regulators and share additional results at upcoming medical conferences.
Epcoritamab is already approved in several countries for other lymphoma indications. It is sold as Epkinly in the U.S. and Japan, and as Tepkinly in the European Union.
AbbVie Inc. (NYSE:ABBV) is a global biopharmaceutical company focused on discovering, developing, and bringing new medicines to market.
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 93
5-Year Average Revenue Growth: 11.95%
5-Year Return: 215.3%
On January 28, BofA lifted its price target on Exxon Mobil Corporation (NYSE:XOM) to $135 from $129 while maintaining a Neutral rating. After comparing valuations across European and US integrated oil majors, the firm said the valuation gap favoring US companies is “still overdone.” Within the group of five supermajors, BofA said it prefers Buy-rated TotalEnergies and Chevron over Neutral-rated Exxon and Shell, as well as Underperform-rated BP, largely based on relative valuations.
In related news, a January 27 Reuters report said Exxon Mobil and China’s BYD plan to expand their partnership in hybrid vehicle technology. BYD said the two companies signed a long-term strategic Memorandum of Understanding on January 26, under which they will explore customized product research and development, potential collaboration in new materials, and other areas. Last year, BYD and Exxon jointly launched an engine oil specifically designed for BYD’s plug-in electric vehicles.
Exxon Mobil Corporation (NYSE:XOM) is one of the world’s largest integrated energy companies, with operations spanning oil and natural gas exploration, production, and refining. The company also manufactures fuels, petrochemicals, lubricants, and advanced plastics, while investing in lower-emission initiatives such as carbon capture and lithium production.
5. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 99
5-Year Average Revenue Growth: 3.61%
5-Year Return: 19.06%
On January 28, TD Cowen trimmed its price target on Union Pacific Corporation (NYSE:UNP) to $255 from $257 while maintaining a Buy rating. The firm updated its outlook after the company reported Q4 results that reflected steady execution, with guidance coming in largely in line with expectations.
Union Pacific reported fourth-quarter earnings on January 27 that came in slightly below analysts’ forecasts, as uneven freight demand and ongoing macroeconomic pressures weighed on performance. The results also arrive as regulators continue to review the company’s proposed acquisition of Norfolk Southern. Last year, Union Pacific announced an $85 billion bid for its smaller rival, a deal that would create the first coast-to-coast freight railroad in the US. The proposal has faced pushback from rail unions, which argue the merger could threaten jobs and lead to higher costs for shippers.
For the quarter ended December 31, Union Pacific posted adjusted earnings of $2.86 per share, just below the $2.87 analysts had expected, according to LSEG data. Operating revenue totaled $6.09 billion, also slightly under forecasts of $6.12 billion. Looking ahead, the company is guiding for mid-single-digit earnings growth in 2026.
Union Pacific Corporation (NYSE:UNP) operates one of the largest rail networks in the US, spanning more than 23 states across the western two-thirds of the country and playing a key role in keeping the global supply chain moving.
4. Walmart Inc. (NASDAQ:WMT)
Number of Hedge Fund Holders: 104
5-Year Average Revenue Growth: 5.17%
5-Year Return: 154.4%
On January 23, Tigress Financial raised its price target on Walmart Inc. (NASDAQ:WMT) to $135 from $130 while maintaining a Buy rating. The firm said Walmart is making greater use of artificial intelligence and automation to improve the customer experience and support faster revenue growth.
In a separate update, Walmart said on January 28 that it has promoted about 3,000 pharmacy technician roles into operations team lead positions as part of its push to expand digital and pharmacy-based healthcare services, according to Reuters. The move raises average hourly pay for those roles to $28 from $22. Walmart also said pharmacy technicians will now be eligible to earn as much as $40.50 an hour.
The changes are aimed at boosting staffing levels and strengthening local pharmacy teams across Walmart’s roughly 4,600 locations, as the company rolls out more digital health offerings. These include Better Care Services, access to Eli Lilly’s LillyDirect program, and expanded pharmacy delivery. Walmart said the new team leads will help manage day-to-day pharmacy operations and support pharmacy managers and pharmacists, with total pay potential reaching $42 an hour, excluding bonuses, depending on location.
The company also raised its full-year outlook for the second time in November after delivering another strong quarter, driven by a sharp increase in online sales. Faster delivery options have helped Walmart attract higher-income shoppers, adding to momentum across its digital business.
Walmart Inc. (NASDAQ:WMT) is a technology-driven omnichannel retailer, operating a vast network of retail and wholesale stores and clubs alongside its e-commerce platforms and mobile apps.
3. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 114
5-Year Average Revenue Growth: 18.28%
5-Year Return: 398.7%
According to a report by Reuters, Eli Lilly and Company (NYSE:LLY) has signed an agreement worth up to $1.12 billion with Seamless Therapeutics. The Germany-based startup announced the deal on January 28. The partnership focuses on developing and commercializing treatments for hearing loss using Seamless’ gene-editing platform.
The agreement gives Lilly access to proprietary technology that allows for the design of specially engineered enzymes aimed at correcting certain gene mutations linked to hearing loss. These enzymes, known as programmable recombinases, are built to make large, precise changes to DNA at specific locations. The approach does not rely on the cell’s own DNA repair pathway, which is a key distinction.
Lilly will oversee the program from early preclinical work through to commercialization. The $1.12 billion figure includes an upfront payment, research and development funding, and additional payments tied to development and commercial milestones.
This deal fits into a broader pattern. Lilly has been steadily building out a pipeline of genetic medicines across multiple diseases, using a mix of acquisitions and partnerships. The company is looking beyond its blockbuster weight-loss and diabetes drugs, Zepbound and Mounjaro, to fuel future growth.
Last year offers a clear example. Lilly spent $1.3 billion to acquire Verve Therapeutics, expanding its push into gene-editing therapies for heart-related conditions.
Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical firm that discovers, develops, manufactures, markets, and sells medicines worldwide.
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 136
5-Year Average Revenue Growth: 13.00%
5-Year Return: 70.35%
On January 27, Cantor Fitzgerald initiated coverage of Mastercard Incorporated (NYSE:MA) with an Overweight rating and a $650 price target. The firm pointed to the long-term global shift toward electronic payments as a key driver. In its view, MasterCard is positioned to deliver steady, incremental growth through pricing initiatives, the expansion of its VAS product suite, and the rising share of digital transactions. The analyst laid out these points in a research note to investors.
That same day, MasterCard announced a new set of services designed to help customers take practical steps toward using agentic AI in their daily operations. The goal is to move companies closer to what it sees as the next phase of digital transformation.
The Mastercard Agent Suite will combine technical support with customizable AI agents. It draws on the company’s payments expertise, data-driven insights, proprietary technology platforms, and a network of 4,000 global advisors.
Customers will be able to build, test, and deploy fit-for-purpose agents through the Agent Suite. Mastercard’s global advisory team will work alongside clients throughout the process, helping businesses adapt as technology changes. The opportunity is growing. According to eMarketer, a third of enterprise software applications will incorporate agentic AI by 2028. Mastercard also expects a meaningful share of customer interactions and operational tasks to be supported by AI agents by 2030.
Mastercard Incorporated (NYSE:MA) is a technology company operating in the global payments industry. The company connects consumers, financial institutions, merchants, and governments.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 179
5-Year Average Revenue Growth: 11.14%
5-Year Return: 66.5%
Piper Sandler lowered its price target on Visa Inc. (NYSE:V) to $160 from $165 while keeping an Overweight rating on the stock, as reported by TheFly on January 28. In its broader sector view, the firm said it expects strong Q4 results from gas equities. WAHA pricing, along with weak oil and NGL prices, weighed on oil-focused names. Looking ahead to FY26, Piper expects maintenance programs across much of its oil coverage, while several gas producers are leaning toward growth as LNG demand rises.
Over time, the economy grows alongside gross domestic product. As activity expands, spending tends to follow. The steady shift toward cashless and electronic payments has also played a role. These trends have supported Visa’s long-term growth.
Visa’s revenue grew at a compound annual rate of 12.9% between fiscal 2020 and fiscal 2025. Wall Street expects the company’s top line to continue growing at a double-digit rate over the next three years. Over a longer horizon, that level of growth does not look out of reach.
The U.S. remains Visa’s largest market. Faster growth is likely to come from emerging economies, including parts of Asia, Africa, and Latin America, where digital payments are still developing. Visa’s value-added services business is another driver. That segment includes analytics, consulting, and cybersecurity, areas that tend to see more demand as commerce becomes increasingly digital.
Visa Inc. (NYSE:V) is a global payments technology company that facilitates commerce and money movement across more than 200 countries and territories.
While we acknowledge the potential of V to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than V and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 13 Companies that Just Started Paying Dividends and 14 High Yield Dividend Stocks with Sustainable Payouts
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
