Why I'll likely hold GlaxoSmithKline plc and Diageo plc forever

When it comes to seeking stocks to hold for the long term, two things I look for are long-term 'secular' trends, and sustainable dividend payouts. Secular trends are those that play out over a long period of time. When working in a company's favour, they can drive revenue growth over the long term, generating powerful investment returns for shareholders. Dividends are also important, as it's been shown time and time again, that in the long run, dividends when reinvested, make up a significant proportion of total investment returns.

///>

GlaxoSmithKline(LSE: GSK) and Diageo(LSE: DGE) are two stocks I own that fit this criteria. Here's why.

GlaxoSmithKline

The world is ageing with global average life expectancy having increased significantly in recent decades. This trend is showing no signs of stopping, with the number of people aged 65 or older across the world set to double by 2050, and the over-80 age group set to triple in the same time.

What's the one thing that almost all people require more of as they age? Healthcare.

That's why I like GlaxoSmithKline, because in my opinion, the healthcare giant is well-placed to capitalise on the world's ageing population theme. It provides diversified exposure to the healthcare sector, with revenues split over three divisions - pharmaceuticals, vaccines and consumer healthcare.

With the company currently undergoing a transition period after 2015's asset swap with Novartis, management is in the process of building a more balanced business, which is capable of delivering "sustainable sales and earnings growth and improved returns to shareholders." That sounds appealing to me from a long-term shareholder point of view.

It also fulfils my dividend criteria with a current yield of an attractive 4.8%. Although dividend coverage has been low in recent years, it looks set to improve with earnings forecast to rise 16% this year, meaning the dividend should be sustainable.

Diageo

Drinks manufacturer Diageo is also in my portfolio as a long-term holding, with the secular theme here being the demand for premium alcoholic beverages from the emerging markets.

Diageo CEO Ivan Menezes has said that "the future growth driver of the industry is the aspirational nature of the consumers in the emerging markets as their disposable income increases." And with the company having simplified its portfolio in recent years to focus on more premium products such as Johnnie Walker and Haig Club, Diageo looks well-placed to capitalise on this theme.

Diageo believes that in the coming years, over a billion more consumers from the emerging markets will be in a position to afford its premium brands, and with the company targeting 50% of sales from emerging markets, this should support future revenue growth.

While Diageo's dividend yield is lower than GlaxoSmithKline's at 2.7%, the company does have an excellent track record of dividend growth, raising its payout by 7.8% per year over the last five years. For this reason, Diageo is a core holding in my portfolio and I expect to hold the stock for the long term, if not forever.

Five high-quality dividend stocks to hold forever

Analysts at The Motley Fool recently published the exclusive wealth management report called Five stocks to retire on.

And if you're looking for high-quality dividend stocks that could grow your wealth exponentially over the long term, I would recommend finding out the names of the five stocks.

The report is FREE, comes with no obligation, and can be downloaded within seconds right here.

Edward Sheldon owns shares in GlaxoSmithKline and Diageo. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.