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Over the long term, stocks are a winning proposition.

The world is loaded with a variety of investments—you can buy anything from shoes to wine to land, and years down the road, someone might want to buy them for more than you paid. But it’s difficult to argue with holding stocks, which are ridiculously simple to buy and generate fantastic returns over the long haul.

Just consider how stocks have performed across more than half a century compared to a few other popular investment assets:

AssetAverage Annual Return, 1970-2022
S&P 500 Index (Stocks)10.4%
Gold7.7%
Bloomberg U.S. Aggregate Bond Index (Bonds)6.8%
90-day Treasury bill (Short-term government debt)4.7%
Source: Securian Asset Management

Practically speaking, stock investors who plunked a mere $1,000 in the S&P 500 back in 1970, and didn’t contribute another cent, would still be sitting on $171,550 as of the end of 2022 (and even more today). That compares to just $47,338 for gold, $30,598 for bonds, and a mere $9,895 for short-term Treasuries!

Yes, past performance has no bearing on future returns. But by their very nature, stocks have the potential for higher returns than many other assets, now and in the future—and the longer you hold, the more compounding can do the wealth-building work for you!

If you’re looking for a starting point for your own portfolio, look no further. Today, we’re going to examine some of the best long-term stocks that you can buy and hold for years and even decades down the road. We’ll also talk to you about a few stock-investing basics, and answer a few common questions about stocks.

Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

Why You Should Invest in the Stock Market


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As even novice investors probably know, funds—whether they’re mutual funds or exchange-traded funds (ETFs)—are the simplest and easiest ways to invest in the stock market.

But the best long-term stocks also offer many investors a way to stay “invested” intellectually—by following companies they believe in. They also provide investors with the potential for outperformance.

But the bottom line is that, whether you invest in stock mutual funds, stock ETFs, or a few stocks individually, these assets are among the best long-term investments for several reasons. Among them:

  • They have higher rates of returns than just about any other asset class.
  • They can be held in numerous types of investment accounts.
  • They’re easier to understand than many other types of investments.

A stock is simply a piece of ownership in a company. It allows you to profit from a company’s success—most commonly, from price appreciation in shares of the stock, but in several cases, also from cash distributions (dividends) the company makes to shareholders.

Growth Stocks or Value Stocks?

Growth stocks are companies that are expanding their profits and sales at a steady clip. Typically, growth stocks are firms that have either an attractive product they are bringing to new markets or a steady drumbeat of new items they can sell to existing customers to open up new revenue streams.

Technology companies are typically the most common example of growth stocks, as they bring new gadgets to market that are better or faster than previous products.

Value stocks, on the other hand, are companies that might not be expanding rapidly but have a strong underlying business. Think of a local bank or a utility company that might have trouble doubling in size over the next few years, but doesn’t face a lot of competition or disruption to its business model. These kinds of companies are often more stable thanks to the underlying value of their businesses.

The best long-term stocks cover both camps. Reliable growth can result in significant gains over many years, but alternatively, a rock-solid value stock will most commonly weather any market disruptions much better than a company that relies on enterprise spending trends or consumer confidence to drive its sales.

What About Dividend Stocks?

Dividend stocks (which commonly are value stocks, but can be growth stocks) are great ways to drive long-term performance of your portfolio. These companies pay a regular flow of their profits directly back to shareholders, meaning you receive some sort of return regardless of the ebb and flow of share prices.

Stocks that can both grow and pay dividends are the ultimate long-term stocks given just how much in additional returns they can generate over the long term.

Here’s a look at the return someone could expect if they received just the price returns from the S&P 500 over the past 25 years:

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Morningstar

Now look at how much better the return is when you factor in dividends had you had reinvested those dividends back into the S&P 500 (returns illustrated by an S&P 500-tracking ETF; note that expenses are included in performance):

spx spy chart feb 2024 reg
Morningstar

The price return is a little more than 300%. The total return (price plus dividends) is 528%!

The best long-term stocks tend to be companies that aren’t overly dependent on specific trends in the global economy, and companies that can deliver returns in any environment. Dividend growth stocks (companies that pay larger dividends over time) tend to check both those boxes, proving they have operations that generate significant profits, and are growing those profits enough to deliver larger paydays to shareholders each year.

Related: Best Dividend King Stocks for Royally Resilient Income

Stock picking help by Motley Fool Stock Advisor

Related: 15 Best Investing Research & Stock Analysis Websites

What’s a Diversified Portfolio?


The best long-term stocks are part of an investment strategy that prioritizes stability and risk management over risky short-term bets that might pay off—or leave you in tears.

There are plenty of investment strategies that, after the fact, look wise simply because they worked out. But your personal financial situation matters. Ask yourself this: Would you bet $10,000 on a 50/50 chance of either doubling that money or losing every penny instantly?

If your answer is “no,” then there are certain strategies you should never consider in your toolkit, and others you should stick with even if it means your returns are not as dramatic.

One low-risk strategy that many investors deploy is the notion of a diversified portfolio that spreads your risk around in multiple vehicles. The easiest way to do that is through mutual funds and ETFs, which hold dozens if not hundreds or even thousands of stocks, bonds, and other assets. And you can keep your costs down by purchasing index funds—mutual funds or ETFs managed not by humans, but effectively a rules-based algorithm.

However, you can also look beyond the typical offerings out there and build your own diversified portfolio by hand-picking a basket of long-term stocks.

If you want more control or customization in your portfolio, there’s nothing wrong with picking individual stocks—in fact, it often makes sense to put a few individual stocks alongside the mutual funds and/or ETFs in your portfolio.

Just make sure you’re doing your research to ensure you have the best stocks available, and that you are keeping an eye on diversification.

Related: How to Get Free Stocks for Signing Up: 15 Apps w/Free Shares

The Best Long-Term Stocks to Buy and Hold


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If you’re looking beyond mutual funds and ETFs to build your own portfolio of the best long-term stocks, it’s crucial to both understand your personal investing goals as well as to do your own homework before buying (and selling!) an individual company’s shares.

That includes looking at stocks for specific strengths, like their market share or their annual earnings trends compared with their peers, as well as how a given stock performs against the broader market at large.

There’s no one-size-fits-all approach to anything on Wall Street, so you should always look at the latest numbers and do your own personal analysis before making any trades. But to get you started, here are a few standout companies that are among the best long-term stocks to buy based on share performance, earnings trends, staying power, and other factors.

Best Long-Term Stock #1: Johnson & Johnson


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  • Market cap: $366.6 billion
  • Dividend yield: 3.1%
  • Sector: Health care

If you’re after the best long-term stocks, Johnson & Johnson (JNJ) is a great place to start—if not to buy the stock itself, then at least as an illustration of what you should be looking for.

Johnson & Johnson is a massive, diversified health care company that was founded back in 1886. JNJ has for decades been referred to as a “widow-and-orphan” stock because its defensive, income-generating characteristics make investors feel like they can buy shares almost as an insurance policy to ensure their family’s wealth for many years to come.

That’s in part because of its dominance and size; J&J typically finds itself among the 20 or so largest stocks on Wall Street. That’s also because of the general resilience of the health care sector, which enjoys reliable sales regardless of macroeconomic pressures or consumer sentiment—after all, regardless of what the economy’s doing, people still have to buy medicine.

That reliability fuels consistent JNJ dividends. The health care giant has raised its payouts for 61 years running—one of the longest track records on Wall Street. And Johnson & Johnson is spending less than half of its profits on dividends, which is a healthy ratio that signals more potential for dividend increases going forward.

Many investors have held JNJ stock for their entire lives, and the company continues to appear worthy as a long-term buy-and-hold stock. If nothing else, it’s a representative example of the kinds of companies investors should consider when their holding time is measured in years, and not just a few months.

Related: The 13 Best Investment Apps for Beginners

Best Long-Term Stock #2: DaVita


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  • Market cap: $11.6 billion
  • Dividend yield: N/A
  • Sector: Health care

One of the most durable long-term growth investments you can make is to bank on the continued expansion of the healthcare sector as demographics both at home and abroad are fueling a tailwind that will last for decades to come.

DaVita (DVA) illustrates that point perfectly, with a business focused on dialysis treatment for patients with chronic kidney conditions. With more than half a million dialysis patients in the U.S. needed regular care, DVA has a big pool of patients that depend on it.

DaVita also has the backing of Warren Buffett’s Berkshire Hathaway, which first took a stake in the stock back in 2011 and has increased its position steadily to account for more than 35% ownership in the firm. That will provide a strong foundation for shares, as institutional investors like the so-called “Oracle of Omaha” are far more likely to buy and hold than churn their shares based on short-term trends.

With a big tailwind for the underlying business and long-term investors that will provide a firm floor for shares, there’s a lot of structural reasons to like DaVita.

Related: 7 Best High-Dividend ETFs for Income-Minded Investors

Best Long-Term Stock #3: Alphabet


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  • Market cap: $1.9 trillion
  • Dividend yield: N/A
  • Sector: Communication services

A very different example of a long-term stock to buy and hold is Google and YouTube parent Alphabet (GOOGL). One of just a handful of trillion-dollar tech stocks, and a member of the Magnificent Seven, Alphabet is a digital advertising powerhouse that not only provides the go-to search engine for most Americans, but also the infrastructure to serve display ads across all manner of content.

Alphabet is not just resting on its laurels, either. Alphabet has seen its sales gains pick up in each of the past four quarters. Q4 revenues, reported at the end of January, were up by double digits, and analysts project a roughly 11% gain in 2024 sales. Amid this tailwind of top-line growth, Alphabet also has gotten serious about efficiencies and the bottom line, too. Last January, Alphabet laid off about 12,000 workers, roughly 6% of its workforce total, claiming a “different economic reality” in 2023 after a pandemic-driven boom in hiring. (It has announced smaller rounds of additional layoffs since then.)

Admittedly, 2023 was a good year for many stocks, with the S&P 500 Index up 24%. But GOOGL more than doubled that figure with a 58% gain in the same time frame thanks to both strong top-line performance and a more scrutinizing eye on profitability.

Beyond the core digital ads biz, Alphabet is also embarking on some game-changing technology, including its Gemini AI chatbot, a Google Fiber high-speed internet service that is challenging traditional telecoms in select markets, and other ambitious efforts.

There’s no dividend to speak of, but growth is fundamentally in the DNA of this Silicon Valley leader—as evidenced by the fact shares are up 150% or so in the past five years, and more than 600% since 2013.

Related: 8 Best Stock Portfolio Tracking Apps [Stock Portfolio Trackers]

Best Long-Term Stock #4: Microsoft


best long term stocks to buy and hold forever Microsoft HQ
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  • Market cap: $3.2 trillion
  • Dividend yield: 0.7%
  • Sector: Information technology

When it comes to a stock with scale and staying power, tech giant Microsoft (MSFT) is another tech giant that immediately springs to mind. The technology firm is synonymous with workplace productivity, with its Windows and Office 365 software products the gold standard for businesses around the world.

Microsoft isn’t without growth plans despite its already impressive scale, however. Its Azure cloud computing business continues to gather steam, its remote workplace tools like Teams have now become hardwired into enterprise operations in the wake of the pandemic, and its Xbox video game arm is a juggernaut in its own right after closing a $69 billion acquisition of software giant Activision Blizzard in October.

With long-term investing, it’s all about trying to find certainty in an uncertain world. And the dominance of Microsoft seems incredibly likely regardless of geopolitics, economic cycles, or anything else.

Microsoft is one of the 25 largest corporations in the world as measured by revenue, and it’s the largest in market capitalization right now. And despite being a still-“growthy” tech company, it also offers a modest but rising dividend.

If you want stability and scale in a long-term stock investment, Microsoft is it.

Related: 17 Best Stock Research & Analysis Apps, Tools and Sites

Best Long-Term Stock #5: United Parcel Service


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  • Market cap: $128.6 billion
  • Dividend yield: 4.3%
  • Sector: Industrials

Cyclical businesses—companies that are heavily tied to the ups and downs of economic activity—are more difficult stocks to hold for the long term because of the inevitable swings. United Parcel Service (UPS) fits this mold, and has seen shares slump by double digits in 2023 thanks to fears of a consumer slowdown. But these short-term headwinds aside, it’s still an excellent buy-and-hold candidate.

Yes, UPS’s logistics business is cyclical, as package volume tends to rise and fall based on broader spending trends. But there’s a long-term megatrend lifting this stock that cannot be overlooked. And if you look around the front porches in your neighborhood, you’ll probably find proof of this trend yourself via all the boxes lying around.

In the age of Amazon.com (AMZN) and e-commerce, UPS is about as safe a bet as you can make. It’s a valuable part of the global supply chain, and it comes in at twice the size of competitor FedEx (FDX).

United Parcel Service has been around for more than 100 years. Relatively recently, it has made a more concerted effort to begin sharing its success with stockholders. UPS has provided shareholders with 15 years of annual dividend increases. Payouts are around 80% of 2024’s projected earnings; it doesn’t leave much room for hikes down the road without additional profit growth, but it’s a sustainable figure.

What’s more, UPS also announced a new $5 billion share repurchase plan in early 2023. By reducing the amount of publicly traded shares on the market, that naturally tips the supply-demand dynamics in favor of higher UPS stock going forward.

That’s just one more reason UPS is among the best long-term stocks to buy now.

Related: 7 Best Stock Portfolio Management Software Tools + Apps

Best Long-Term Stock #6: Prologis


best long term stocks to buy and hold forever prologis boxes warehouse forklift
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  • Market cap: $116.5 billion
  • Dividend yield: 3.1%
  • Sector: Real estate

Real estate is often seen as a store of value for many long-term investors, and for good reason. In the words of Mark Twain, “Buy land, they’re not making it anymore.”

That simple truth makes Prologis (PLD) a great long-term stock to consider because of its portfolio of specialized properties in key markets around the world. The global leader in logistics real estate with a focus on high-barrier, high-growth markets, PLD and its warehouses are a key part of the world’s supply chain.

Prologis owns and/or operates 1.2 billion square feet across 19 different countries. Top clients include Amazon and FedEx, making these properties must-have hubs for distribution, but they’re just part of a diverse base of roughly 6,700 customers largely in business-to-business distribution and retail fulfillment.

With projected revenue growth in the low double digits for both 2024 and 2025, PLD is ramping up operations to become even more dominant in the years ahead. Dividends are now about three times what they were a decade ago; the company has increased its payout during the first quarter for years, so now’s a great time to buy into Prologis in anticipation of even higher dividends in 2024.

It’s hard to imagine any upstart firm acquiring enough property quickly enough to compete with Prologis in the years ahead. And while spending trends wax and wane, the long-term nature of PLD leases with first-class corporations means its finances (and its dividend) are very secure for the foreseeable future.

Related: 11 Best Stock Screeners & Stock Scanners

Best Long-Term Stock #7: Moody’s


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  • Market cap: $72.4 billion
  • Dividend yield: 0.9%
  • Sector: Financial services

Moody’s (MCO) is a global risk management firm that is best known for providing credit ratings. That includes credit scores for individual consumers as well as “official” rankings for major corporations and governments—including the United States, via its rating on U.S. Treasury debts. Additionally, the company also offers investor services that includes research and data to arm investors with information to make the best decisions.

In February, Moody’s declared an 85-cent quarterly dividend for an increase of more than 10% from the prior payout. Consider that in 2014, it paid just 28 cents per share—meaning over the last decade, MCO has increased its payouts more than three-fold. That’s part of a broader long-term trend of growth and success, too, with revenue that has surged from $4.8 billion in fiscal 2019 to a projected $7.1 billion for fiscal 2025.

The structure of the current financial system all but guarantees that consumers and businesses will need to go through Moody’s to get their seal of approval for loans. And given the history of revenue expansion and dividend growth in recent years, there’s good reason to bank on Moody’s delivering in the year’s ahead.

Related: 5 Best Schwab Retirement Funds [High Quality, Low Costs]

Best Long-Term Stock #8: Constellation Energy


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  • Market cap: $60.4 billion
  • Dividend yield: 0.7%
  • Sector: Utilities

When it comes to the best long-term stocks, the utility sector stands out as a natural place to look.

For starters, utility companies always have “wide moats,” which is a way of saying they have significant, established advantages that make it difficult to compete. Utilities are exceedingly capital-intensive businesses that are highly regulated, and thus competition is very difficult to come by—in fact, in many cases, U.S. utilities are de facto regional monopolies. Furthermore, electricity is a necessity for businesses and consumers that sees strong baseline demand even in a rough economic environment. That creates a measure of certainty for the sector, regardless of broader uncertainty or economic cycles.

If you’re looking for long-term investments, then, utilities are a natural choice. And in this sector, Constellation Energy (CEG) stands out as one of the larger and better-performing options in the sector.

Constellation is among the largest utility stocks on Wall Street. Based out of Baltimore, it sells natural gas and electricity service, with about 32,400 megawatts of generating capacity—enough to power 16 million homes and businesses. Its facilities include nuclear, wind, solar, natural gas, and hydroelectric assets.

It might not have as generous a yield as other utility stocks out there, but keep in mind that Exelon (EXC) spun off Constellation Energy at the beginning of 2022, and the dust is still settling. Still, it’s incredibly encouraging to see that distributions doubled in 2023 over the prior year, and jumped another 25% so far in 2024. The fact that shares climbed 52% in 2023 to more than double the S&P 500 is also a big vote of confidence in favor of CEG stock.

Related: 11 Best Stock Trading Apps [Free + Paid]

Best Long-Term Stock #9: Costco Wholesale


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  • Market cap: $316.2 billion
  • Dividend yield: 0.6%
  • Sector: Consumer staples

Generally speaking, retailers are hard to rely on as buy-and-hold investments because they tend to be subject to broader spending trends and changing consumer tastes. It’s also worth noting that brick-and-mortar retailers are anything but a sure thing in this age of e-commerce.

However, warehouse retailer Costco Wholesale (COST) is still worth a look as a long-term holding, since its unique model sidesteps most of these concerns. For starters, the chain operates more than 870 warehouses worldwide, with about three-quarters here in the U.S. It It appeals to bargain shoppers and the staples it sells typically have low margins, but it also has a regular membership fee that generates a ton of baseline cash every year. Costco boasts nearly 130 million cardholders in the U.S. alone—and at $60 per household and business memberships even pricier, that creates a tremendous foundation for this retailer.

What’s more, the company’s customers are true believers in its value-conscious offerings, and there’s a veritable cult of followers behind Costco’s Kirkland store brand. And if times get tough, even more customers might end up walking through the warehouse looking to save on their groceries and household goods as they pass over Costco’s competitors.

A low-cost approach might not set the world on fire, but providing affordable offerings to loyal customers is a pretty consistent business model.

Related: How to Invest Money: 5 Steps to Start Investing w/Little Money

Best Long-Term Stock #10: Lockheed Martin


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  • Market cap: $109.2 billion
  • Dividend yield: 2.8%
  • Sector: Industrials

For better or for worse, defense giant Lockheed Martin (LMT) seems like one of those companies that will always have a sound financial foundation thanks to its focus on military matters and close relations with the U.S. Department of Defense.

Lockheed and its iconic “Skunk Works” developed many of the Cold War-era jets and missile systems that have become synonymous with modern military might. And more recently, conflicts like those in Ukraine and Gaza have sparked an increase in spending on its drone and missile defense operations.

The for-profit nature of our military industrial complex might not sit well with some investors. But presuming you have no moral qualms about the kind of business LMT is in, this is definitely a long-term investment to consider because its business isn’t driven by consumer spending or even enterprise spending the way tech companies or apparel companies are. Instead, it’s driven by long-term contracts—and the long-term need for security amid geopolitical unrest.

Lately, LMT stock has been struggling. But its long-term performance is stellar, with a 10-year total return (price plus dividends) of 280% that tops the roughly 240% for the S&P 500 Index in the same period.

Related: 11 Best Stock Advisor Websites & Services to Seize Alpha

Best Long-Term Stock #11: Plains All American Pipeline, LP


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  • Market cap: $13.2 billion
  • Distribution yield: 6.8%*
  • Sector: Energy

It’s no easy task to identify energy stocks with staying power in this age of climate change. However, one of the most stable stocks in the space is “midstream” energy company Plains All American Pipeline, LP (PAA).

Though one of the smaller stocks on this list, and much smaller than multinational Big Oil leaders, it’s important to point out that PAA isn’t an explorer drilling for crude. Instead, it’s an energy infrastructure company—one that’s operated as a partnership—that is focused on the capital-intensive nature of building pipelines, terminals, and storage facilities. This business model makes the company less volatile than energy exploration-and-production firms, or the various other energy stocks that are sensitive to market prices for petroleum products.

Plains All American Pipeline has been running terminaling, storage, and transportation infrastructure since its founding in 1981. It’s not a glamorous business, but it provides consistency that has helped to fuel a current distribution yield that’s well more than four times the S&P 500 right now. That distribution is growing, too; the company kicked off 2024 by announcing a roughly 19% increase in the payout.

If you want to make a swing trade on oil prices, PAA is not for you. But if you’re looking to invest in a low-risk, income-oriented fashion across 2024 and well beyond, this energy infrastructure player might have a place in your portfolio.

* Distribution yield is calculated by annualizing the most recent distribution and dividing by share price. Distributions are like dividends, but they are treated as tax-deferred returns of capital and require different tax paperwork.

Related: 11 Best Alternative Investments [Options to Consider]

Best Long-Term Stock #12: BHP Group


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  • Market cap: $150.9 billion
  • Dividend yield: 5.3%
  • Sector: Materials

Generally speaking, materials stocks don’t make the cut for most lists of long-term investments. Like energy stocks, they are cyclical investments that tend to rise and fall based on broad-based economic trends and industrial demand.

That said, with a little bit of research and a lot of patience, investors can still find good companies in this space that look like they can withstand the test of time.

Case in point: Australia’s BHP Group (BHP).

This is one of the largest materials and mining companies on the planet—a multinational company that operates on every continent and extracts everything from copper to iron ore to gold to coal.

BHP is also a leader in so-called “green metals,” a term that refers to a metal with lowest total carbon emissions over its lifespan. For instance, stainless steel is widely considered one of the most environmentally friendly metals out there because it is 100% recyclable. In fact, more than half of all the stainless steel materials in use today have actually been sourced from scrap materials rather than fresh ore.

With an unrivaled scale and operations that are increasingly taking into account the modern sustainability concerns of the global economy, it’s hard to imagine a world where BHP is not supplying raw materials to companies worldwide. And while BHP’s dividends can be irregular and volatile (and also paid twice a year instead of a fixed quarterly cadence), the massive yield of more than 5% makes it worth a closer look.

Related: 5 Best Vanguard Dividend Funds [Low-Cost Income]

Frequently Asked Questions (FAQs)


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Should I only invest in individual stocks?

Statistically speaking, it’s difficult for even professional investors to beat the market with their own stock picks. So as you’d imagine, it’s extremely difficult for everyday people to do the same. Typically, then, you’re best off holding a few individual stocks that interest you, and putting most of the rest of your investment money into diversified funds, such as mutual funds and exchange-traded funds (ETFs).

Mutual funds

When you buy a mutual fund, you’re giving money to a fund company that in turn buys investments—usually stocks and/or bonds. And when you want to sell, the company sells off whatever investments it must to raise the funds to make you whole.

These mutual fund companies typically charge fees (that pay for management and other expenses) that are taken straight out of the fund’s performance. And unless you’re buying the mutual fund within a 401(k), you’ll likely have to invest a certain minimum dollar amount at first—say, $1,000, $2,000, maybe even more.

Where mutual funds are a little odd is that, unlike stocks, they don’t trade throughout the day. Instead, all buying and selling of a mutual fund happens once per day, after the trading day is over.

Exchange-traded funds (ETFs)

Exchange-traded funds (ETFs) are similar to mutual funds in that they’re a pool of money that’s invested in various assets—stocks, bonds, commodities, and/or other types of investments.

But unlike mutual funds, ETFs trade just like stocks, on major exchanges, all throughout normal trading hours. That provides them with liquidity, which is great for traders or just anyone who wants to exit their investment immediately.

ETFs also have other advantages, including better tax-efficiency, and a wider selection of niche strategies compared to mutual funds. ETFs do have annual expenses, like mutual funds, but they don’t have sales loads and many other “extra” fees. And unlike mutual funds, there are no investment minimums—you can buy as little as one share (or less than one share, if your brokerage offers fractional shares).

Lastly, ETF fees—on average—tend to be cheaper than mutual funds, but that’s because most ETFs are index funds. Whereas actively managed funds are run by one or more humans that select stocks, index funds pick investments based on a set of rules and are effectively run by an algorithm. Because there aren’t human managers, index funds tend to cost lest to operate, and thus their expenses are typically lower.

Just remember: There are index mutual funds and actively managed ETFs, too. Always know what you’re buying.

Do all companies pay dividends?

Not all companies pay dividends. Some companies choose not to, while other companies cannot afford to.

As you can tell by this list, the best dividend stocks are normally slow-and-steady companies that have consistent operations. While it might be possible for a small software company or biotech firm to double its share price overnight, these companies rarely pay dividends because they don’t have much in the way of profits—and what they do have, they want to spend on other things, like research and development to continue growing.

How often do companies pay dividends?

The cycle of paying dividends is always different depending on the company. While it’s generally true that most U.S. corporations opt to pay their shareholders a dividend once per quarter, the dates aren’t fixed.

Specifically, one company might pay you on a January-April-July-October payment cycle while another opts for February-May-August-November.

Complicating things further, some companies pay dividends twice a year, some pay once a year, and some even pay “special” unscheduled dividends.

Related: Best Monthly Dividend Stocks for Regular, Frequent Income

Are stocks affected by interest rates?

Yes! In multiple ways!

For one, as interest rates rise, the amount of interest paid on newly issued bonds tends to rise. When that happens, bonds (which are fairly stable, reliable investments) start looking more attractive compared to stocks (which have more potential but are riskier investments).

For instance, an investor who owns a bunch of 3% yielding dividend stocks might not look twice at a Treasury bond yielding 1%. But if that same bond started yielding, say, 5%, that’s a much more attractive proposition—even if that bond doesn’t have the same growth potential.

Also, rising interest rates make it more expensive for companies to fund their growth. Many companies will issue bonds to bring in much-needed dollars to pay for things like new equipment, research, and personnel. The goal: Make enough in profits from that growth that you come out ahead even after not just paying back the loans, but all that interest. But the greater the interest rate a company has to pay on its bond, the more difficult it is to come out ahead.

That’s why you’ll see, when the Federal Reserve raises its benchmark federal funds rate, stocks of corporations that borrow a lot to grow tend to take it on the chin.

What if I need help picking stocks?

Several stock picking services can help you build a portfolio, typically for an annual subscription cost. One of our favorites is Motley Fool Stock Advisor.

Motley Fool Stock Advisor


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Motley Fool

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Members have access to the service’s history of recommendations to see precisely how each of their suggestions has panned out.

The service targets stocks across a variety of industries, such as energy, industrials, transportation, financial services, technology, and healthcare.

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Jeff Reeves is a veteran journalist with extensive capital markets experience, Jeff has written about the investing world since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money.

Jeff began his career in print, working at local newspapers in Virginia, Ohio, Arizona and North Carolina. In 2008, he joined InvestorPlace Media to edit monthly stock advisory newsletters and ultimately lead its digital news service for individual investors.