The stocks that have richly rewarded their shareholders for several decades have some qualities in common. In particular, they offer products and services that people and businesses can hardly do without. There are certain everyday things that people are reluctant to spend less on, even in times of financial distress.
Investors can use history as a guide: The stocks that will be around to reward investors down the line probably share the qualities that allowed them to reward shareholders in the past — namely, strong brands, reliable cash flows, and a history of making dividend payments.
Stocks for the long run
Companies including PepsiCo, Inc. (NYSE:PEP), Johnson & Johnson (NYSE:JNJ), and 3M Co (NYSE:MMM) have churned out rising profits year in and year out for decades.
PepsiCo, Inc. (NYSE:PEP)’s namesake soda, as well as its many other consumer brands, can be found in nearly every home across America. PepsiCo, Inc. (NYSE:PEP) has taken steps to diversify its product portfolio outside of carbonated beverages, and its stable of offerings now includes Frito-Lay, Gatorade, and Quaker Oats. In all, Pepsi holds 22 brands that bring in at least $1 billion each in annual sales.
PepsiCo, Inc. (NYSE:PEP)’s diverse product portfolio contributed to 17% growth in second-quarter core earnings per share, along with 4% organic growth.
Johnson & Johnson (NYSE:JNJ), meanwhile, is one of the most recognizable companies in existence. Its operations are diversified between medical devices, pharmaceuticals, and consumer products. Some of its universally known consumer brands include Band-Aids and Listerine.
This helped Johnson & Johnson (NYSE:JNJ) post 8.5% sales growth in the second quarter — nearly $18 billion.
3M Co (NYSE:MMM) is an industrial giant and offers products to a wide range of industries, including transportation, health care, and technology. Its well-known products include Post-it and Scotch tape. 3M Co (NYSE:MMM) grew sales 3% year over year in the second quarter.
As a testament to the reliability of their respective businesses, each of these stocks has richly rewarded its investors with regular dividend payments. Even better, each of these stocks has been able to increase its payouts on a regular basis, too.
PepsiCo, Inc. (NYSE:PEP) has increased its dividend for 41 years in a row. Johnson & Johnson (NYSE:JNJ) does even better, having boosted its payout for an incredible 50 years in a row. Meanwhile, 3M Co (NYSE:MMM) is no slouch: This year marks the 55th consecutive year that 3M has increased its dividend, and it has paid uninterrupted dividends to shareholders for an amazing 96 years in a row.