The idea that day trading is an instant way to get rich is constantly advertised to the public across the financial news media. Advertisements on websites or business television constantly encourage investors to use high-frequency online trading systems or platforms for instant riches. Sure you can make short-term profits, but over the long term you’re likely to be out of pocket.
Indeed, there’s nothing the brokers and online trading providers want more than you to repeatedly use their services, as repetitive trading is making money for them at your own expense. The odds are against you, just as they are when you place a bet on a sports match or at a casino. This is because systems, fees and prices have been carefully calibrated to ensure the house wins, despite the much-advertised idea that this is your ticket to riches!
Buying and holding quality companies for the long term is the key to putting the odds firmly in your favour, although this won’t make much money for the brokers! Here are three companies to grow your own wealth.
Over time air travel is only going to get more popular and Sydney Airport Holdings Ltd (ASX: SYD) looks to have few obstacles on its growth horizon. Technological advances mean it should be able to grow top line revenues while saving on costs to increase its bottom line profits. With few competitive pressures and some fundamental tailwinds, including increasing international travellers, the business should steadily grow. The revenue base means the year-on-year income streams paid out to shareholders are about as guaranteed as you can get for a business, with the estimated forward dividend yield at more than 6%.
Coca-Cola Amatil Limited is another business with defensive earnings streams perfectly suited to the long-term investor. In Australia Coca-Cola is set to re-enter the beer marker while it continues to push its soft drink products in the mega-populous and mainly tea-total Indonesian market. The coke brand is so strong as to be virtually unbeatable and with a suite of other products to benefit from one of the world’s best marketing operations, steady long-term growth looks a safe bet. In addition, a dividend yield around 4.5% will put investors comfortably ahead of cash for a long while yet.
Sonic Healthcare Limited (ASX: SHL) is an expanding healthcare business with a truly global footprint. It provides laboratory and medical services (x-rays, ultrasounds, CT scans and other radiology for example) to the collective patients of medical practitioners, hospitals and community health centres. It’s now among the top 50 ASX companies with revenues of more than $3.5 billion in financial-year 2013. It’s also the largest pathology company in Australia and Germany, and the third largest in the huge US market. The dividend yield is about 3.5% at today’s price and with highly-dependable revenues and room to grow both organically and through acquisition, it looks a sound investment.
All three companies look to have excellent long-term prospects and any investor smart enough to recognise the power of reinvested dividends and compounded returns can generate some amazing wealth over the long run.
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Tom Richardson does not own shares in any company mentioned. You can find him on twitter @tommyr345.
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