Investing in solid, well-run businesses can help to build wealth so that you’re better prepared for retirement. My philosophy is simple: When it comes to growth stocks, just buy and own a business that can increase its revenue, profit, and cash flow over the long term. The stock market will recognize the quality of the business and grant it a higher share price over time, allowing you to enjoy increasing capital gains.
The question you may ask is, what are the right types of stocks to buy and hold over years or even decades? I like companies that demonstrate steady growth in their top and bottom lines as it implies that the business has an edge that enables it to continue growing.
These businesses should, ideally, be churning out lots of free cash flow (what’s left of cash flow after capital investments) so they don’t need to rely on banks to finance growth. By generating large amounts of free cash flow, these companies can pay an increasing dividend, thus helping you secure a larger stream of passive income.
The following three stocks are great candidates to buy and hold for the rest of your life.
Image source: Getty images.
Accenture
Accenture (NYSE: ACN) offers consulting services to help its clients optimize their workplaces, improve productivity, and add value to their customers. The company reported strong and rising revenue, along with higher net income, during the past three fiscal years.
Revenue increased from $50.5 billion for fiscal 2021 to $64.1 billion for fiscal 2023 (ended Aug. 31). Net income climbed from $5.9 billion to $6.9 billion over the same period. The free cash flow generated was healthy and averaged $8.7 billion per year from the consultancy firm. Because of this consistent free-cash-flow generation, dividends increased from $3.52 per share to $4.48 from fiscal 2021 through 2023.
Accenture’s earnings momentum has carried over into the first nine months of fiscal 2024 (ended May 31). Revenue inched up 0.8% year over year to $48.5 billion, while net income rose 1.5% year over year to $5.6 billion. The business continued to generate copious…
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