Blue-chip forever stocks should always form the core of your portfolio. People have their tastes, and some like investing in penny stocks, dividend stocks, growth stocks or ETFs. On the other hand, many people these days stick to cryptos only. However, I think having some evergreen stocks form the core of your portfolio is the most reasonable idea.
No one has a crystal ball, and even the best investors fail when they go into risky assets. On the other hand, if you play too safe, you’ll risk being left behind in the long run. That’s why having most of your money parked into these forever stocks is a better idea than chasing riskier picks. In my opinion, it strikes the perfect balance between aggression and caution.
These stocks also have a track record of delivering stable and consistent returns over the decades. Investing in such time-tested companies allows you to compound your wealth steadily without exposing yourself to undue risks. Here are seven forever stocks to buy and hold.
Arthur J Gallagher (AJG)
Arthur J Gallagher (NYSE:AJG) is an insurance brokerage and risk management company. The stock has been one of the most stable and consistent and is up 202% in the past five years. It has also done very well this earnings season, beating EPS estimates by 2.5% and revenue estimates by nearly 1%. Revenue rose an impressive 20% YOY, marking its 13th consecutive quarter of double-digit increases.
The company’s segments focused on brokerage services and risk management solutions are clearly performing exceptionally well. Organic revenue grew a healthy 9.4%. The company has done a very good job at expanding.
However, what I find most notable is how skillfully Gallagher navigates the evolving price landscape faced by its insurance carrier clients. While some specialty lines like Directors and Officers liability and cybersecurity coverage seem to be leveling out, the majority of product lines continue benefiting from substantial premium boosts each renewal period. General liability is increasing around 7% on average, and personal lines policies are seeing a considerable 13% jump.
In my opinion, it is one of the most solid forever stocks you can buy right now. The stock also comes with a 0.95% dividend yield.
Aflac (AFL)
Aflac’s (NYSE:AFL) Q1 results were mixed, but I believe the insurance giant remains well-positioned for long-term growth. While sales in Japan faced challenges, the company’s expense control drove net profit margins to 34.5%, up 39.7% year-over-year (YOY). This is definitely not a stock to sleep on, even though it has seen big crashes during recessions. The long-term compounding here will not stop anytime soon, especially as you can sit the 2.3% dividend yield.
The diversification here is also very impressive.
Q1 results also beat top-line estimates by a massive 26.5% and EPS estimates by 5.2%. In the U.S., a 3.3% increase in net earned premiums and the 80 basis point improvement in how many customers kept their policies show this strategic change is already paying off.
The company reaffirmed its ambitious goal of $1.8 billion in worldwide sales by 2025. It’s hard not to be bullish here.
Booz Allen Hamilton (BAH)
Revenue from government sources is some of the stickiest out there. And these days, it would be a mistake not to have some top Federal partners in your portfolio. Booz Allen Hamilton (NYSE:BAH) appears to be thriving, delivering another quarter of double-digit revenue growth, up 12.9% YOY. The business has been securing important contracts, such as building the Navy’s 5G network in Guam. It definitely is one of my top picks regarding forever stocks.
The company claims itself as the largest provider of AI to the Federal government. It also has over 600 employees dedicated to understanding the “pacing challenge” of China, so the firm seems well placed to be a big beneficiary of geopolitical developments. Total backlog as of December 31st stands at $34.3 billion, up 14.2% YOY. Funded backlog grew 15.4% to $5.2 billion.
It also has a 1.35% dividend yield, and I am confident it can shrug off recessions and keep compounding. The dividends are also growing fast.
Nordson (NDSN)
Nordson (NASDAQ:NDSN) also has a dividend yield nearing 1% and has a long history of compounding steadily. It has had a very good start to the new year, with revenue and earnings both exceeding expectations.
While organic sales dipped slightly at 2%, Nordson’s focus on closely working with major customers and producing specialized products helped improve its product mix. This, combined with tight control over expenses, led to excellent growth in profits from additional sales and adjusted earnings per share of $2.21 per share — better than the guidance provided earlier. Total sales ended up growing at 3.7% YOY.
Notably, Nordson’s free cash flow reached a record high of $165 million. That was an impressive 150% of its net income. The acquisition of ARAG also contributed significantly here. The margins here are also very impressive.
However, the ongoing weakness in the electronics industry remains a concern. While sales to the medical and industrial sectors helped offset this challenge in the first quarter, any recovery in electronics could provide a substantial positive trigger for even better results. With management proven at executing strategies and a balanced business model resistant to downturns in certain sectors, I remain optimistic about Nordson capitalizing on new opportunities that may arise.
Nordson has been sustaining its operating performance while restarting sales growth across all segments, so I think the market is ready to hold the premium as time passes.
S&P Global (SPGI)
It is obvious why S&P Global (NYSE:SPGI) will likely compound with the rest of the market. Revenue increased 14% YOY, boosted by high levels of activity in both the stock and bond markets. That strong revenue growth, combined with careful cost management, led to much improved profits, with adjusted margins expanding over 350 basis points. Analysts are overwhelmingly bullish.
Plus, the company’s subscription services, which provide steady income through changing markets, grew a healthy 8%.
While increased market swings may slow new stock and bond issuances in the short run, S&P Global’s diverse offerings and pricing power should help offset weaker periods. The company appears well-set to continue steadily increasing value for long-term shareholders.
L’Air Liquide (AIQUY)
L’Air Liquide (OTCMKTS:AIQUY) is an industrial gas company based in France, quite similar to Air Products and Chemicals (NYSE:APD). However, the stock has been compounding much better and has been more consistent over the years. Gas & Services sales rose 2% compared to last year. While no major new opportunities emerged, L’Air Liquide executed well according to its strategy.
Notably, the company’s pricing in the Industrial Merchant sector increased by 4%, building on the 13% gain achieved last year even as energy costs fell. That ability to pass on price rises to customers, together with a 22% jump in efficiency savings to €112 million, has been boosting profits.
Furthermore, L’Air Liquide’s pipeline of €4 billion+ worth of future projects, though slightly lower than before, remained sizable and spread widely across industries and global regions. The geographical diversification here is very impressive as well.
Analysts do expect a slight revenue decline in 2024, but top-line growth should remain at mid-single digits in the coming years.
Southern Company (SO)
The Southern Company (NYSE:SO) is one of the largest electricity providers in the Southern U.S. It reported first-quarter results that exceeded estimates, with $1.03 in adjusted earnings per share, beating projections by 13 cents. The strong showing was driven by ongoing investments in their state-regulated electric utilities and more favorable weather compared to the mild conditions seen in the first quarter last year. AI is also having an impact here, as electricity sales to the data center industry saw an impressive rise of 12% YOY.
EPS expansion is also expected to be strong going forward.
This utility stock has been very stable and consistent, and I do not expect that to change anytime soon. The Southern U.S. is also seeing an inflow of people from the Northern and the Western parts of the U.S., which I think could lead to even better results in the long run.
Southern Co is just one year away from being a Dividend Aristocrat and has a forward dividend yield of 3.63%. It’s definitely one of the forever stocks to buy and hold!
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
