Investing in stocks for the long haul is an appealing strategy, yet it requires careful selection. The ultimate goal is to identify companies with the potential to grow and generate consistent dividends, allowing investors to enjoy passive income over decades. However, with the rapidly changing economic landscape, not every company can provide this level of security. Here, we highlight two stocks that have established robust foundations, demonstrating the strength needed to endure market fluctuations.
First on the list is ExxonMobil (NYSE: XOM), a leading entity in the oil industry. As an integrated oil supermajor, ExxonMobil is involved in every stage of the oil and gas supply chain—from exploration to production, refining, and distribution. Such diversification helps the company weather significant variations in commodity prices. For instance, a decline in oil prices may negatively impact the exploration sector but simultaneously enhance profitability in refining operations. With annual revenues exceeding $340 billion, ExxonMobil commands a formidable presence in the global market.
ExxonMobil’s asset portfolio is another feather in its cap. Valued at around half a trillion dollars, it includes valuable land and advanced equipment. The company showcases impressive agility in managing its assets, making strategic acquisitions such as the recent $60 billion purchase of Pioneer Energy, which expanded its footprint in resource-rich areas like the Permian Basin and Guyana.
Furthermore, ExxonMobil boasts a commendable balance sheet with an AA- credit rating from Standard & Poor’s and a debt-to-equity ratio of only 0.16—its most favorable in a decade. This solid financial management instills confidence among investors. Moreover, ExxonMobil has a well-documented history of raising its dividend for 42 consecutive years, showcasing resiliency even during economic downturns, such as the global pandemic that drastically impacted oil prices.
While the world grapples with renewable energy and climate change challenges, the demand for oil and gas isn’t expected to vanish anytime soon. Therefore, ExxonMobil presents a stable investment option with a current yield of approximately 3%, allowing shareholders the opportunity to reap dividends while enjoying long-term capital appreciation.
The second stock worth considering is Deere & Company (NYSE: DE), renowned for its agricultural, forestry, and construction equipment. The distinct John Deere brand, recognized worldwide, not only resonates with farmers but also translates into robust customer loyalty. With annual revenues surpassing $54 billion, Deere capitalizes on growing global agricultural needs.
As the demand for food continues to rise globally, driven by population growth projected to reach 9.7 billion by 2050, the importance of efficient agricultural practices becomes paramount. Deere plays a crucial role in this ecosystem by offering cutting-edge technologies like autonomous machinery and cloud-based software that empower farmers to optimize productivity.
While Deere carries some risk through its financing of equipment purchased by farmers, it maintains a solid investment-grade balance sheet, with an A credit rating from Standard & Poor’s. Moreover, despite fluctuations in the agricultural sector, the company hasn’t reduced its dividend since the 1980s, making it a reliable choice for income-focused investors. Over the past decade, Deere’s dividend has surged by an impressive 145%, and analysts project a substantial earnings growth rate of about 12% annually in the coming years.
Investors looking for passive income should take a closer look at these two powerhouses—ExxonMobil and Deere & Company. With their well-established market positions, proven management strategies, and commitment to shareholder returns, both present compelling options for those seeking an investment with the potential for long-term profitability.
In a world where economic uncertainties are prevalent, having these stocks in one’s portfolio could provide not only security but also the opportunity for significant returns over time. As always, it’s vital for investors to perform their own due diligence before making investment decisions.