You’ll save yourself a lot of time and stress if you invest in stocks that you can buy and hold forever. However, it’s not always easy to find companies that you can rely on for many years into the future. The key here is to figure out which businesses have strong competitive positions within industries that are unlikely to be quickly disrupted. Companies with staying power in stable or growing industries can make fantastic investments.
Amazon (NASDAQ: AMZN) is a household name and a tech giant that has one of the most stable outlooks in the stock market. The company rose to prominence by dominating the rapidly growing e-commerce retail industry. Amazon currently holds 40% market share of online sales in the U.S. E-commerce has grown steadily over the past decade, and this trend accelerated last year with everyone staying home and shopping online. Amazon will experience competition from people returning to stores, other major retailers investing in their digital channels, and smaller upstart sellers. However, Amazon has a wide economic moat due to sheer scale, brand strength, and incredible logistical strength.
Importantly, Amazon has also positioned itself as a leader in other future growth categories. Amazon Web Services (AWS) is the company’s cloud computing service. This is another growth industry dominated by the tech giant, which holds a 32% share of that market. Investors might not realize just how much AWS contributes to overall results — the segment generates 12% of the company’s total revenue and 47% of operating profit in the most recent quarter.
Amazon also has a video streaming service through Prime and claims that 175 million people have streamed movies or shows through that platform. That volume places it among the major players in that industry. E-commerce, cloud computing, and streaming media aren’t going away anytime soon, and Amazon will remain a force in all three for the foreseeable future.
Sabra Health Care REIT
Sabra Health Care REIT (NASDAQ: SBRA) is a completely different investment opportunity from Amazon, but it shares some key characteristics. Sabra is a real estate income trust that owns 426 properties, including senior housing, skilled nursing facilities, and specialty hospitals.
Telehealth and home health are becoming more popular, reducing the demand for physical properties at which healthcare services are provided. Still, Sabra is specifically focused on services that are more difficult to provide remotely. Demographics are also firmly on its side as baby boomers age and even larger generations follow.
That long-term stability is encouraging, and there’s a reason to be excited today as well. Sabra pays nearly a 7% dividend yield right now, following a challenging pandemic period in which the company slashed its dividend. However, operations appear to be stabilizing, and the REIT is producing more than enough cash to support its distribution. Funds from operations were $0.39 per share in the most recent quarter, and Sabra issued guidance for a similar Q2. That 1.3 distribution coverage ratio is high enough for investors to feel comfortable that the dividend will be sustainable.
Essential Utilities (NYSE: WTRG) is a regulated water and natural gas utility provider with roughly 5 million customers in 10 states. This business isn’t very exciting, but it’s a stable cash-flow investment that should chug along comfortably for years.
The company grew substantially through a major acquisition last year, but it looks set to grow 5% to 7% annually through 2023. Essential Utilities operates in regulated markets, so the rates it can charge customers are visible to the public. Regulation and the nature of utility infrastructure also make it very difficult for competitors to disrupt incumbents. These characteristics make this a really stable and reliable stock, which is perfect for dividend investors.
Essential Utilities pays a 2.1% dividend yield, which is fairly attractive in today’s environment. That’s especially strong when you consider the additional risk assumed by higher-yield stocks in the energy or real estate sectors, for example. Essential Utilities is moving along with a 60% payout ratio, indicating that the company produces more than enough profit to sustain and grow its dividend. Given the reliable growth forecasts for the medium term, this is a stable income investment. It won’t deliver huge growth, but it will continue to kick off cash.
10 stocks we like better than Amazon
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ryan Downie owns shares of Amazon and Sabra Healthcare REIT. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.