One of the main ways to invest Foolishly is to invest for the long term. Warren Buffett?s favourite holding period for a stock is forever.
One of Warren Buffett?s pearls of advice is to ask yourself if you would be happy holding the stock for five years if the stock market closed during this time. I think that’s a good way to test your resolve about a stock.
There aren’t too many stocks that I’d be comfortable holding forever, but below are two that I?d hold for the ultra-long term.
InvoCare Limited (ASX: IVC)
InvoCare is Australia?s largest operator of funerals and cemetery…
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One of the main ways to invest Foolishly is to invest for the long term. Warren Buffett’s favourite holding period for a stock is forever.
One of Warren Buffett’s pearls of advice is to ask yourself if you would be happy holding the stock for five years if the stock market closed during this time. I think that’s a good way to test your resolve about a stock.
There aren’t too many stocks that I’d be comfortable holding forever, but below are two that I’d hold for the ultra-long term.
InvoCare Limited (ASX: IVC)
InvoCare is Australia’s largest operator of funerals and cemetery services with around 33% market share.
The sad reality is that the bigger Australia’s population becomes the more potential deaths there are down the road. The death rate is expected to keep increasing until 2034, meaning InvoCare should see increasing numbers of funerals until then.
InvoCare has a number of initiatives to grow revenue including having just launched in the USA, planning on starting a funeral aggregator website and continuing to make small acquisitions in Australian states where it doesn’t have as much market share.
The funeral operator has been growing its dividend every year since 2005, which is a nice streak.
There will always be a certain amount of deaths each year, so InvoCare can count on a certain amount of revenue each year as long as it maintains market share.
InvoCare has a grossed up dividend yield of 4.37% and is currently trading with a price/earnings ratio of 25. Although it’s not the cheapest stock out there, I think it’s one of the most defensive. I’m happy to hold onto my InvoCare shares for a long time to come.
Rural Funds Group (ASX: RFF)
Rural Funds Group is the only listed real estate investment trust that focuses on agricultural property. Farmland has been in demand for thousands of years and it’s probably safe to assume it will continue to be needed for many generations to come.
Rural Funds Group has a diverse portfolio of farms including almond, macadamia, vineyards, cattle and poultry.
There is a lot of potential growth because only around 5% of farmland is leased in Australia compared with 30% to 40% in other western countries.
Rural Funds Group is currently trading with a dividend yield of 5.6% and it pays dividends quarterly. Management have announced an increase of the quarterly distribution (dividend) by 8% this year before returning to 4% increases after that. It’s currently trading with a price/earnings ratio of 8.
As long as humans use farmland to produce food then there should be demand for Rural Fund Group’s farms.
Whether it’s a bull or a bear market I’d be happy to hold these two stocks potentially forever. Solid stocks that you can count on will give Foolish investors that peace of mind and the freedom to invest in growth stocks too.
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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited and RURALFUNDS STAPLED. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.