Folks seeking the best long-term investment stocks to buy have a few ways to approach the task. One is to follow the advice of Benjamin Graham, the father of value investing, in his classic book, The Intelligent Investor.
In what is arguably one of the best books on investing, Graham suggests that a defensive investor should buy stocks of large, conservatively financed companies with good earnings power. The companies should also be some of the best dividend stocks, with low valuations and consistent histories of payouts.
However, in today's world, many tech stocks don't pay dividends. Instead, they often return capital to shareholders through large stock buybacks.
Therefore, applying Graham's criteria today, the idea is to find the best stocks to buy that return large amounts of capital to shareholders either through dividends and/or stock buybacks. Doing so allows a company to increase its earnings and dividends on a per-share basis. Moreover, the remaining shareholder's stakes rise over time. Both of these factors can push the stock price higher.
Additionally, we will stick with stocks that have market caps of $100 billion or higher. They must also have low debt ratios and enough cash flow to reduce their debt, as well as pay dividends and/or buybacks.
With this in mind, here are the nine of the best long-term investment stocks to buy now.
Data is as of November 29. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
- Market value: $3.39 trillion
- Dividend yield: 0.44%
Apple (AAPL) is the more than $3 trillion maker of iPhone smartphones, Mac computers, iPads and numerous other products and services.
iPhones still represent almost half of the company's sales, but recently, services, which includes the App Store, have started to increase as well. For example, in its latest fiscal year ending September 28, Apple's services revenue came in at almost $25 billion, or more than 26% of its $94.9 billion in sales. That's up from 22% the year prior.
So, this massive tech products company is slowly shedding its overreliance on the iPhone, whose models are all very highly priced. While this will take time, the market so far approves of this plan.
And why not? The company is generating massive amounts of free cash flow (FCF), which is the money left over after a company covers expenses to run, maintain and expand the business. In its recently completed fiscal year, Apple generated strong operating cash flow of $113.3 billion, while returning over $110 billion to shareholders.
Apple pays a small dividend of 0.44%, which costs the company just $15 billion, or 13% of its operating flow.
The rest of the $95 billion "returned" to shareholders was through stock buybacks. In fact, Apple raised the amount it says it will spend this year on share repurchases to $110 billion, which represents more than 3.0% of its total market value.
That approach benefits long-term shareholders in Apple stock. First, it will raise AAPL's earnings per share over time, because there will be a lower number of outstanding shares for the income produced.
In addition, the dividend per share can rise faster than it would otherwise since the dividend payments will be spread over fewer number of shares outstanding. And shares traded in the market will be absorbed, effectively acting as a buying source that will push the blue chip stock higher.
Keep in mind that AAPL stock is not overly cheap at the moment at 31.64 times forward earnings — above its five-year average of 26.7, according to Morningstar.
Nevertheless, Apple remains one of the best long-term investment stocks due to its consistent and powerful cash flow, dividends and buybacks.
- Market value: $276.8 billion
- Dividend yield: 4.2%
Chevron (CVX) is an integrated energy and chemicals company with both upstream and downstream operations in the U.S. and around the world.
CVX meets the criteria for a good long-term investment as it is conservatively financed, produces good profits and pays an attractive dividend it can afford. Moreover, CVX stock is not expensive, and the company is actively buying back shares, helping to push it higher.
For example, analysts expect Chevron to make $11.45 per share in fiscal 2025, which has the energy stock trading at 13.4 times forward earnings. This is just below the five-year average of 13.9 times.
Moreover, Chevron has 37 years of annual dividend hikes under its belt, because, despite vicissitudes in the prices of oil and gas and chemical industry cycles, the company has consistently produced large amounts of free cash flow.
For example, in Q3, Chevron generated $9.7 billion in operating cash flow before working capital changes and $5.6 billion in free cash flow. The company spent $2.9 billion on dividends and $4.7 billion on share buybacks, for $7.7 billion in total shareholder returns.
These figures show how Chevron manages a fair balance between investing in the future, as well as rewarding its own shareholders now with its cash flow. And it underscores why CVX is the kind of stock that long-term investors want to have in their portfolio.
- Market value: $3.08 trillion
- Dividend yield: 0.8%
Microsoft (MSFT) operates in every key software arena: operating systems, cloud, gaming, application software, and, even more notably these days, artificial intelligence (AI) with its Copilot chatbot and massive investment in OpenAI.
MSFT meets all the necessary qualities for being one of the best long-term investment stocks as it has consistent earnings, is conservatively financed and generates large amounts of free cash flow. Moreover, it pays a dividend and spends most of its FCF on share buybacks.
Just like Apple, however, MSFT stock is not necessarily cheap on a relative or even historical basis. For example, Microsoft is trading at 32.5 times forward earnings, which is above its five-year average of 29.8.
Still, long-term investors are likely to do quite well with MSFT. The reasons are quite simple: The company's massive cash flow, its products’ ubiquity and acceptance and its shareholder rewards all work in the stock's favor.
More importantly, the company has plenty of room to increase its shareholder-friendly initiatives over time. That's because it spends just about half its free cash flow on dividends and buybacks. It plows the rest back into the company, reducing debt and making investments and acquisitions.
So, in the long run, Microsoft shareholders can expect the company to typically grow profits and cash flow, while consistently hiking its dividends and buybacks. In fact, Microsoft has had 19 consecutive years of raising its dividend. That alone, not counting its buybacks and earnings power, makes the Dow Jones stock worthy of holding as a long-term investment.
- Market value: $146.8 billion
- Dividend yield: 1.2%
Charles Schwab (SCHW) is a well-known discount brokerage firm and investment banking company with which many folks are familiar.
SCHW meets all the best criteria for a long-term investment value strategy. For example, it is conservatively financed and pays a consistent dividend.
As for that dividend, Schwab has had 35 years of consistently paying its dividend each year. That is well over the 10-year average of the median in its sector.
Moreover, Schwab’s most recent return on equity was 16.9% in the third quarter ended September 30, up almost three percentage points from a year ago, indicating steadiness in its earnings power.
UBS Global Research analyst Brennan Hawken has a Buy rating on the financial stock . Hawken says that recent increases in Charles Schwab's cash sweep accounts suggest cash-sorting headwinds are abating. As a result, the analyst has "greater conviction in SCHW's organic growth profile and management's ability to achieve its operating profits."
- Market value: $108.98 billion
- Dividend yield: 3.2%
Medtronic (MDT) is an almost $109 billion medical device and therapies company that originally invented the pacemaker. Moreover, the company is extremely profitable, which allows it to pay generous dividends and do large share buybacks.
Right now, MDT stock has a 3.2% dividend yield that will likely continue to rise, given the company has reliably raised its dividend for 47 straight years, including a 1.4% hike in May.
Moreover, in the six months ending on October 25, Medtronic bought back $2.8 billion of its own shares. That works out to be a small portion of its $109 billion market cap, but every little bit helps towards allowing the company to keep raising its dividend.
In addition, at just 15.8 times forward earnings, the stock is inexpensive. What's more, this is well below MDT's five-year average of 17.7 times, according to Morningstar.
Meanwhile, Medtronic has about $28 billion in net debt on its balance sheet, which is below its $48.2 billion in shareholders' equity. Its cash flow should continue to recover from supply chain issues we've seen in the past few years, allowing Medtronic to reduce its debt reliance over time.
And given its powerful cash flow and shareholder returns, MDT is one of the best long-term investment stocks.
- Market value: $208.3 billion
- Dividend yield: 2.4%
McDonald's (MCD) is a company that just about every investor knows well, especially if they have children. But few realize that it's actually quite a good long-term investment stock to buy as well, because it generates large amounts of free cash flow. For example, in the last 12 months (LTM) ending September 30, MCD produced $6.58 billion in FCF. That represents 3.3% of its $208.3 billion market capitalization.
MCD uses its free cash flow to pay a very ample dividend, which now yields 2.4%. In addition, it bought back $3.2 billion of its shares over the last year.
While some folks might not like MCD's quick service restaurant food, plenty of others do. They love its menu, buy McDonald's fries and hamburgers and generally can't get enough of its food.
Moreover, it is conservatively financed as its $39 billion in long-term debt, $32 billion after cash, is well-managed by the company's ongoing FCF generation. In addition, shareholders have benefited by its history of annually raising its dividend over the last 48 years.
Along with its buybacks, MCD stock is attractively valued. For example, it trades for just 23.3 times earnings. While certainly not cheap, it is below the five-year average of 25.0.
The bottom line: Everyone is "lovin" MCD stock for the long term.
- Market value: $415.2 billion
- Dividend yield: 2.3%
Procter & Gamble (PG) is an approximately $415 billion consumer products giant with many iconic brand names – including Downy detergent, Mr. Clean cleaning supplies and Head & Shoulders shampoo – that produce large amounts of cash flow for the company.
Most everyone knows Procter & Gamble's brands and are familiar with their solid reputations. But few realize how incredibly profitable the company actually is and why PG is one of the best long-term investment stocks to buy.
For example, in the last 12 months ended June 30, PG generated $19.8 billion in operating cash and, after $3.3 billion in capex spending, $16.9 billion in free cash flow.
The FCF represents a massive 20.1% of P&G's $84 billion LTM sales, which is a very high free cash flow margin for a consumer products company. In fact, some software companies don't even make those kinds of margins.
Moreover, this FCF also funds massive dividends and buybacks for shareholders. The company has raised its dividend annually for the last 68 years. Moreover, in its recent earnings call, Procter and Gamble management said it expects to buy back $6 billion to $7 billion in common stock in fiscal 2025. That represents about 1.7% of its current market capitalization.
Nevertheless, PG is a little pricey at the moment relative to its historical valuation. It trades for 25.8 times earnings, which is slightly above its five-year average of 24.0.
Still, Procter & Gamble generates large amounts of cash flow from its brands and is working diligently to return value to shareholders. That makes it one of the best long-term investments value buyers can make.
- Market value: $275.4 billion
- Dividend yield: 3.0%
Coca-Cola (KO) is an iconic beverage company that generates large amounts of cash flow for its shareholders with its well-known brands such as Coke, Diet Coke, Fanta, Powerade and Minute Maid.
That makes it one of the best long-term investments a value buyer can make – just ask Warren Buffett, whose Berkshire Hathaway (BRK.B) holding company is KO's top shareholder. What makes KO so attractive is that it’s one of the best dividend stocks on Wall Street, having increased its payouts consistently for the last 63 years straight. Most recently, Coca-Cola hiked its dividend by 5.4% in February 2023.
Today, KO stock yields an attractive 3.0%, and investors can expect the dividend rate to keep increasing.
On top of that, Coca-Cola has a strong common stock buyback program. For example, in the first nine months of its fiscal year, it spent $511 million on share repurchases. That represents 0.2% of its current market value.
KO's dividends and share buybacks are more than covered by the $8.1 billion in FCF that analysts expect the company to generate in 2025.
So, for the long term-investor, this consumer staples stock looks like a good investment, given its strong cash flows and shareholder-friendly initiatives.
