No one wants to go into retirement. However, at some point, everyone, including investors, has to think about retirement and long-term stocks. The trio of stocks we will dive into—Home Depot (NYSE:HD), Walt Disney (NYSE:DIS), and Essential Utilities (NYSE:WTRG)—are all income plays with plenty of upside. These are the stocks to buy and hold are all solid picks.
Our first pick is known for 15 years of consecutive dividend increases, remarkable considering what COVID-19 did to physical stores. The allure of visiting the local Home Depot and picking out your own hardware is still there. Add e-commerce growth thanks to the pandemic, and HD is looking strong.
Meanwhile, Disney is in an exciting period after CEO Bob Iger came back to revamp its streaming business and focus on the parks division. A crackdown on password sharing, AI-powered robots in Disney theme parks, and ESPN’s digital evolution illustrate his vision.
Finally, WTRG stands out among utilities, with its “boring” yet incredibly stable operating model and an industry-beating yield of 3.4%.
Home Depot (HD)
Home Depot (NYSE:HD) will make it on most lists of long-term stocks thanks to an industry-beating yield of 2.5%. Add to that 15 years of consecutive dividend increases, and you can understand why investors value HD stock highly.
However, to make a name for itself among long-term stocks, a company needs to demonstrate resilience above all else. Home Depot certainly has demonstrated resilience, having withstood the pandemic, particularly brutal on home improvement.
I believe HD is able to do this because of two critical factors: its e-commerce sales and business model. In 2019, around the start of the pandemic, e-commerce sales clocked in at just under 10%, but the figure rose to 14.2% by 2022. The business does not revolve around e-commerce; the bulk still serves professional contractors and subcontractors.
However, each quarter, revenue moves online by a certain percentage point, and that’s good news if Home Depot wants to compete with Amazon (NASDAQ:AMZN). Despite a revenue drop in the latest quarter, digital sales increased 2%.
In addition, due to the nature of house repair and restoration, which frequently necessitates in-person consultations and purchases, visiting your local Home Depot is an essential physical experience that will not face too much digital disruption. That gives Home Depot a double advantage. You can see why this made our list of stocks to buy and hold.
Disney (DIS)
Walt Disney (NYSE:DIS) is slightly different from Home Depot because it does not quite have a similar industry-beating yield. However, when you mix in some very healthy capital appreciation, the stock is up over 29% this year, and you begin to see the logic of picking this one from a sea of long-term stocks.
When discussing Disney, it’s important to understand that when you purchase this stock, changing hands for around $117, you are actually getting a basket of businesses, including television networks, major studios, and theme parks. The great thing about buying into a company like Disney, therefore, is diversification. If one part of the business is not doing well, another unit can compensate.
We all saw that during the pandemic, the theme park business suffered an immense blow after shutdowns. However, Disney did not blink an eye and promptly shifted its focus to streaming. Now, the pandemic is over, and last year, DIS made $32.6 billion from its parks and experiences, up 16% from the previous year. Moreover, the streaming business built up during the pandemic brought in $8 billion for the media behemoth, a 13% rise.
The return of Bob Iger as CEO is also worth mentioning; his impact is beyond numbers and is more strategy-related. At the annual shareholders meeting, CEO Bob Iger delivered a message of ‘Renewed Strength,’ focusing on innovation. Disney is already materializing the vision, with innovations in how baseball programming is taking place, ESPN’s two-part streaming plan, and the use of AI in Disney parks.
Not to be outshone, the experiences segment alone will get $60 billion over the next 10 years, demonstrating Disney knows where the money is.
Essential Utilities (WTRG)
Essential Utilities (NYSE:WTRG) will often be overlooked because of its rather boring operating model. But boring operating models are what retirement portfolios are all about, and with an industry-beating yield of 3.4%, I don’t think many will complain about this utilities play.
After acquiring Peoples, a natural gas distribution firm, in 2020, Essential Utilities—previously known as Aqua America—changed to WTRG. Across ten states, it serves around 5.5 million customers, making it the second-largest publicly-listed water utility in the US. Competition faces significant obstacles to entrance due to its extremely capital-intensive business model and regulatory framework, insulating WTRG.
Another element distinguishing Essential Utilities is its dividend history. It has paid a consecutive quarterly cash dividend for over 79 years, with more than 30 years of rate hikes, putting it in line for Dividend King status.
The timing is also great with WTRG since it’s coming off a slightly lackluster earnings report, missing earnings by 1.5%. Nevertheless, record infrastructure investments totaling $1.19 billion set it up well for the future.
Additionally, WTRG added more than 11,000 subscribers in 2023 by acquiring seven systems. It is in the process of signing deals to purchase more systems, which should service around 215,000 users and cost about $380 million. It’s actively looking to acquire businesses that account for more than 400,000 clients overall.
WTRG has set a range of $1.96 to $2.00 for the 2024 EPS projection. Through 2028, it expects the regulated water segment and natural gas segment to grow at around 8% and 10%, respectively. These stocks to buy and hold are essential to a healthy portfolio.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines