3 Stocks That Are Great Long-Term Picks

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Market volatility and falling share prices can distract investors from the winning formula of building wealth: holding quality companies for long periods. It can be challenging, and we’re all human, but investors could eventually look back on this year as a golden opportunity that only comes so often.

Buying blue chip stocks, shares of the world’s most dependable and dominant companies, is like planting money trees. These three great stocks could give you financial shade years from now.

1. A retail king

Walmart (WMT 0.06%) is arguably the world’s most famous retail store. The company has grown from a little shop in Arkansas to a multi-national juggernaut that does more than $576 billion in sales annually. Today, 90% of Americans live within 10 miles of a Walmart store, and the company’s also built a thriving e-commerce business.

The company’s enormous size gives it buying power with suppliers, enabling it to offer among the lowest prices for its goods. Walmart also enjoys sharing profits with shareholders; it’s paid and raised its dividend for the past 49 years and repurchased 19% of its outstanding shares over the past decade.

Shareholders have gotten rich as a result. A $10,000 investment into Walmart’s IPO would be worth more than $29 million today. Replicating that success will be challenging because of Walmart’s massive size today, but its steady growth is fertile ground for long-term investment returns. Analysts believe the company will grow earnings per share (EPS) by an average of 5% to 6% annually over the next three to five years.

2. A Buffett classic

The Coca-Cola Company (KO 0.37%) is one of the world’s largest beverage companies. Home to more than 200 brands, its products have likely found their way into the hands of just about every consumer on earth. Warren Buffett has been a longtime fan of the stock, first buying shares in 1988 and owning them to this day.

The company’s roots go back to the invention of Coca-Cola in the late 1800s, and the stock has made fortunes for shareholders for generations. The secret ingredient for continued success is its massive distribution network. Stores give Coca-Cola products the best shelf space because of its numerous leading brands, and this can keep competitors at bay and help it grow new products.

Coca-Cola is one of the world’s most famous dividend stocks and a Dividend King with 60 years of increases. About $0.29 of every revenue dollar turns into free cash flow for management to play with, and slow and steady growth is all it needs to keep raising that dividend. Analysts feel good about Coca-Cola, projecting annual EPS growth of 7% over the next three to five years.

3. A home improvement leader

The Home Depot (HD -0.08%) is a mecca for homeowners. A home is the largest purchase most people make in their lifetimes, and there’s a never-ending list of projects, improvements, and maintenance to do on a house. Home Depot brings in more than $152 billion in annual revenue, selling appliances, materials, plants, and tools to homeowners and professional contractors.

The stock is an all-time success; a $10,000 investment at its IPO would be worth more than $225 million today. Home Depot’s also become a solid dividend stock, raising its payout for the past 13 years and using massive share repurchases to shrink its share count by 32% in the past decade.

Rising interest rates might slow the housing market, but there’s a lot of good long-term news for shareholders. Real estate has historically appreciated over time, and homes will consistently need upkeep, a new coat of paint, or a new set of appliances. Home Depot has also built an effective e-commerce business to keep up with the times. Analysts expect EPS to grow 10% annually over the next three to five years, so investors can own Home Depot with confidence that homeowners will continue putting money in their pockets.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.