When you decide to marry, your wedding vow may go something like this: “I take you to have and to hold from this day forward, for better, for worse, for richer, for poorer, in sickness and in health, to love and to cherish, until we are parted by death.”
That's not a bad way to commit to your stocks, too, because buying and holding through up markets and down markets is a great way to build long-term wealth.
Here are three stocks to consider taking for better, for worse, in sickness and in health, and to love and cherish:
1. Tractor Supply
Depending on where you live and how you live, you may not be too familiar with Tractor Supply (NASDAQ: TSCO), but it's been around since 1938, and has grown into (in its own words) “the largest rural lifestyle retailer in the United States.” If you're looking for a lawn mower, weed killer, a chicken coop, horse feed, or a kayak, you'll find it at Tractor Supply. With a market value near $21 billion, it recently boasted 1,923 stores in 49 states, along with an active online store.
The company has been growing well for many years, with its stock advancing by more than 550% over the past decade — which is an average of 20.6% annually. In fiscal 2020, Tractor Supply generated a record $10.6 billion in revenue — while increasing both traffic to its stores and average customer spending per visit by double digits year over year. Its e-commerce business grew by triple digits. Between 2019 and 2020, Tractor Supply's net income grew by a whopping 43%.
Tractor Supply even pays a dividend. It's not huge, recently yielding around 1.15%, but it's growing very quickly, and that's important. Over the past five years, the payout has grown by an annual average of 21%, and it's spending less than a third of its earnings on dividends, suggesting there's plenty of room for further growth.
2. American Water Works
American Water Works (NYSE: AWK) is another company with a modest but growing dividend. Its payout recently sported a dividend yield of 1.4%, and it has been increasing at an average annual rate of 10% over the past five years. In its own words, the company is “the largest investor-owned United States water and wastewater utility company, as measured both by operating revenue and population served. Our 7,100 employees provide approximately 14 million people with drinking water, wastewater and other water-related services in 46 states.”
As you can imagine, delivering water and related infrastructure services to consumers is a dependable business that's not likely to be disrupted by some alternative to water. The company expects to grow its earnings per share by 7% to 10% annually through 2025, in part via acquisitions. Since 2015, it has made 106 water and wastewater acquisitions, adding more than 211,000 customer acquisitions, and it has more than 1.2 million customer connections in its pipeline. In the meantime, the company is increasing its efficiency and looking to upgrade its infrastructure.
3. Intuitive Surgical
Intuitive Surgical (NASDAQ: ISRG) is arguably the most exciting among these three businesses. It's all about robotic surgical equipment, and it has a rather beautiful business model. Most of its da Vinci systems cost around $1 million to $2 million — and once purchased, generate recurring revenue indefinitely, as purchasers of the systems have to buy supplies for surgeries and pay for service contracts.
The company is performing well, reporting that in 2020, about 1.25 million procedures were performed. That was up only 1% over 2019 levels, but 2020 was a challenging year because of the pandemic, and the company managed to deliver a (small) increase in earnings per share in the year, despite the added challenge. There are already nearly 6,000 da Vinci systems installed worldwide, and international sales are likely to be a significant growth driver — with the company having begun selling in India and Taiwan only in 2018 and in China in 2019. Another avenue for growth is getting the systems cleared for a wider range of surgeries. And then there are new products that can also drive growth. For example, in 2019, Intuitive's Ion endoluminal system was approved by the Food and Drug Administration (FDA) to enable minimally invasive biopsies in the peripheral lung.
These are only three of many stocks that you might buy and hold for a decade — or decades — after taking a closer look at them to make sure you like what you see. If you buy any, remember that sticking to your investments over a long time can make you much wealthier.
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Selena Maranjian owns shares of Intuitive Surgical. The Motley Fool owns shares of and recommends Intuitive Surgical and Tractor Supply. The Motley Fool recommends the following options: long January 2022 $580.0 calls on Intuitive Surgical and short January 2022 $600.0 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.