For multi-billionaire and investing wizard Warren Buffett, his perfect holding time is “forever” for well-chosen quality stocks. He once said investors should imagine they have a “ticket” that has space for only 20 stocks over their investing years. How carefully would you judge and choose companies if your ticket got clipped?
You’d pass up seemingly hot stocks because once they cool down or fizzle out, it will cost you another ticket clip to replace it. It’s not about whether the stock is up 10% this week or 50% over the past year. The quality of the company and the probability it will continue performing for decades are the factors you weigh.
30 years from now in 2044, how old will you be? Will you have entered retirement or be closing in on it? Imagine what things might be like in 30 years. What businesses do you think would still be around?
The largest bank in Australia, Commonwealth Bank of Australia (ASX: CBA), has given shareholders a steady total shareholder return greater than the other “Big Four” banks over the past 10 years. Its dividend yield is 4.6% fully franked.
It will still keep on serving customers, lending money and attracting fees for the next 30 years and beyond. By the way, when a big correction comes, it would probably be the best time to load up on the stock. In the GFC, the stock fell more than 50%, only to rebound from about $25 to about $81. Save yourself a ticket clip – buy this quality stock in good times and in bad.
Private hospital operator Ramsay Health Care Limited (ASX: RHC) has grown its number of hospitals and medical centres at a quick rate, generating revenue and earnings through a series of acquisitions. It offers a 1.7% dividend yield, but its dividend payment has risen roughly a compound annual 17% in the last 10 years. That’s fantastic growth potential, which could help pay for your retirement years.
It is expanding into Europe and Asia currently. China may offer the greatest growth prospects with such a large population and rising average age. Healthcare needs will grow at a steady rate accordingly, so in 30 years imagine how many more hospitals it could buy, develop and operate. Investors adding Ramsay Health Care to their long-term portfolio won’t be displeased.