3 stocks I’d buy and hold for the next 20 years

Couple relaxing on a beach in front of a sunset
Couple relaxing on a beach in front of a sunset

I’m finding it hard to believe that 20 years have passed since the Euro was agreed on, a little company called Google was founded and Titanic swept the board at the Oscars.

Given that the world has changed so much since 1998, it might seem odd to suggest that there are stocks out there that can be held in portfolios for decades. So long as investors are selective and opt for businesses whose products and/or services are likely to always be in demand, however, I believe this to be very much the case.

Here are three stocks I think can be relied on to grow with the times.

Always in demand

While it’s hard to say exactly where technology will take us in the next couple of decades, there are some things that are more predictable — the enduring popularity of alcohol, for example. That’s why I continue to see FTSE 100 drinks giant Diageo(LSE: DGE) as a great long-term buy.

In addition to boasting a portfolio of over 200 brands (including CaptainMorgan, Smirnoff and Guinness), Diageo has a presence in over 180 countries. That kind of geographical diversification is hugely appealing — just ask any business whose profits depend entirely on the health of the UK economy following Brexit.

Available to buy for almost 23 times expected earnings, Diageo won’t be of interest to value hunters. The 2.5% dividend yield is also unlikely to impress those investing for income. Nevertheless, for such dependable earnings, I reckon the stock is worth shelling out for.

With security becoming increasingly relevant in the prevailing political climate, defence juggernaut BAE Systems(LSE: BA) is another company that should appeal to those with long investment horizons.

Like Diageo, BAE’s reach is global with operations in 40 countries. In addition to designing and manufacturing combat vehicles, aircraft and surface ships, the firm is also a major player in providing cybersecurity to government agencies and commercial customers — a market that’s surely guaranteed to grow rapidly over the next 20 years.

Having fallen well over 20% since late September, BAE’s shares now trade on a forecast price-to-earnings (P/E) multiple of less than 11 for the next financial year (beginning in January) and come with a 4.7% yield.

In contrast to many firms in the FTSE 100, BAE’s dividends are also nicely covered by profits, suggesting that there’s little chance of payouts being cut any time soon.

My third pick is something of a wild card for the simple reason that it’s still to become a listed company. Nevertheless, I’m increasingly optimistic about the long-term outlook for investment platform AJ Bell after it joins the market in mid-December.

Earlier this week, it was revealed that the shares would go on sale for between 154p and 166p a pop, valuing the company at £626m to £675m — quite a bit more than the £500m valuation predicted by some analysts.

Whether it will be able to match the performance of larger peer Hargreaves Lansdown (currently valued at well over £9bn) is open to debate but a 31% rise in pre-tax profit in the year to the end of September certainly bodes well.

What’s surely less contentious is the ongoing need for services such as those offered by AJ Bell to help people take control of their finances and save for retirement.

For once, this is an IPO that I’m actually interested in.

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Paul Summers has no position in any of the shares mentioned. 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.