Mention Coca-Cola, Wal-Mart and Johnson & Johnson and the first thing that might come to mind is…
They're some of the biggest and leading companies in the world.
They're popular brands around most parts of the world.
And they've made plenty of savvy investors very wealthy.
For example, A R10,000 investment into J&J shares in 1970 would be worth in the millions today.
And if you bought 100 shares of Wal-Mart Stores on Oct 1 1970, after stocks-splits, your investment would be worth over R10 million today.
But there's no secret here. Almost everyone knows this. But these companies share another unique quality. An investment quality that only a handful of companies can boast about.
Let me explain…
The Warren Buffett – Johnson & Johnson, Wal-Mart and Coca-Cola “connection”
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The Rite Of Wealth
Over half a century ago, in New York City, three young men walked into a room.
90 minutes later, the door opened
The men emerged, shook hands, headed their separate ways and set about making stock market history.
The three men didn't stumble upon this room by chance.
They'd heard about it from other investors who were also using its secret to grow their wealth exponentially.
Since 1927 this room has held the key to banking huge returns from the stock market, because any investor who enters it goes through what I call the "Rite of Wealth".
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They’re what Warren Buffett called a “buy and hold forever” stock.
Warren Buffett said it best when he said, “The best holding period for a stock is…forever.”
Warren Buffett regarded, “ONLY outstanding businesses with outstanding management”
as “buy and hold forever”
stocks - Companies like Coca-Cola, Wal-Mart and Johnson & Johnson.
And they’re the type of stocks you want to own in your portfolio to build wealth.
The four best qualities that set “buy and hold forever” stocks apart from the rest
#1: Staying power/Stability – The ability to thrive in every single market condition
Coca-Cola has been around since 1886. It started with a market cap of around $30 million. Now its market cap is over $180 billion.
Johnson & Johnson:
J&J has been around for more than a century with a market cap of $329 billion. The company generates $70 billion in sales a year and around $15 billion in profits.
The first Walmart store was opened in 1962. By 1967, Wal-Mart had 24 stores, ringing up $12.7 million in sales. Today, nearly 260 million customers visit more than 11,500 stores under 63 banners. Wal-Mart has also grown its market cap from $21 million to $221 billion today.
#2: A strong brand value attracts customers all of the world
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Coca Cola is the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks, employing around 700,000 people. Not to mention, it held the No. 1 spot on Interbrand's Annual Ranking of global brands for 13 consecutive years.
Johnson & Johnson:
J&J produces, supplies and sells a portfolio of profitable brands like Listerine, Neutrogena, Rogaine in 60 countries. As a result, 70% of their sales are from products that are #1 or #2 in global market share. And because of this, for more than a decade, Johnson & Johnson has built sustainable customer loyalty and shareholder value through its three profitable divisions…
#3: A solid competitive advantage boosts profits and provides new opportunities
Coca Cola’s global reach expands in more than 200 countries at a rate of 1.9 billion servings a day. This had made Coca Cola’s market share of carbonated beverages worldwide around 48%, while its closest competitor, Pepsi has a market share of only 20%.
Johnson & Johnson:
J&J isn't just one company, or even three business segments. It's comprised of more than 265 subsidiaries. J&J also operates in more than 60 countries worldwide so that it can take advantage of high-margin profit opportunities in developed countries, while also solidifying a strong position in developing and emerging markets.
Walmart operates over 11,500 retail units in 28 countries. It employs 2.3 million associates around the world –1.5 million in the US alone.
#4: Consistent dividend pay-outs promotes shareholder value and loyalty
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Coca-Cola has paid a quarterly dividend since 1920 and has increased dividends in each of the last 54 years.
Johnson & Johnson:
J&J has achieved 31 consecutive years of earnings increases and 53 consecutive years of dividend increases.
Wal-Mart has paid a dividend since 1975 and has increased its dividend for 40 years.
So if you can identify a company that demonstrates the same innovation, brand value, growth prospects and profitability as a company like Johnson & Johnson, Wal-Mart and Coca-Cola, then in theory, you have an absolute winner.
Until next time,
Always remember, Knowledge brings you wealth,
Editor, Real Wealth
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