BIFL Stocks

[slowtraveler]

Hello,

I've been researching stocks to purchase and I like the idea of stocks that I buy and then "sit on my ass" for a few decades while the economic engine of the company does its thing. I've got a list and I'm wondering if my thinking is too far off or if there are any obvious companies I'm missing. I'm specifically seeking companies that have been around for at least a century and are likely to be around in 100 years with a good chance of beating the market by then. Here's my list:
Ticker: Product
NESN Food/Drink
GIS Food
HSY Chocolate
PG Cons Goods
UN Cons Goods
KO Sodas
PEP Sodas
PM Tobacco
MO Tobacco
BTI Tobacco
RAI Tobacco
CLX Cleaning
MKC Spices
XOM Oil
RDS.B Oil
PSX Oil
TOT Oil
DEO Alcohol
BF.B Alcohol
JNJ Health Care
GSK Pharmaceutical
BMY Pharmaceutical
PFE Pharmaceutical
MRK Pharmaceutical
ABT Pharmaceutical
NVS Pharmaceutical
VTX:ROG Pharmaceutical
CL Hygiene
GE Conglomerate
UNP RailRoad
MMM Conglomerate

[Chris]

I don't think RAI is going to be around in 1 year, much less 100. Check the news (-:

[slowtraveler]

Thanks for the heads up Chris. I think missing 1 is pretty good for being in my first few years of investing.

If it gets bought out by British American Tobacco, doesn't it survive as a subsidiary to BTI? So stock I had in RAI would likely be bought out with cash or BTI stock.

I'd add Brown Foreman to the list now.

[George the original one]

PG will be around, but it's not a grower. CLX is the choice for growth & being around in the future. Both are dividend growth, but if PG can't up its game, the dividends won't keep up with inflation.

[Eureka]

I would not bet anything on any tobacco company being around 100 years from now.

[vezkor]

https://finviz.com/map.ashx

This map might help jog your memory about large institutions that you may have a blind spot for.

Personally, I am a berkshire hathaway fanboy and would absolutely have BRK as a part of any "BIFL" portfolio. DE is another company that I have in permanent portfolios because... well... people eat food (I don't see this practice going away any time soon quite frankly).

edit: at current valuations (depending on when this is read) these corporations may be overpriced for a value-oriented investor. I recommend doing your own research and deploying funds only if you deem the company to be properly priced.

[Dragline]

On my list of "Big Dow Stocks that have survived well in the past few downturns", I have HD, MO (no longer in Dow), BA, MMM, MSFT, JNJ, CAT, XOM and MCD. But I wouldn't buy them unless they are looking bad at the moment. Only XOM really fits that bill right now (JNJ next closest), although MCD is just snapping out of a funk.

L2's "Four Horsemen of the Digital Age", AAPL, GOOGL, FB, AMZN, will probably do well, although they are too expensive for my tastes right now.

If I were looking in more detail, I would look at the 100 best brands in the world as a jumping off point: http://interbrand.com/best-brands/best- ... 6/ranking/

Lot of familiar names there.

[ThisDinosaur]

If you're not filtering out the expensive stocks, what is the benefit of doing this over just buying the S&P500? Or even the dividend aristocrats?

[slowtraveler]

Thanks for all the recommendations. I also index so I have the tech and financials taken care of through that. I'm hesitant to pick those up directly unless they look dirt cheap due to the only 2 bubbles I lived through.

Tobacco is interesting because it might actually be taken out if an effective cure comes along - recently, Gilead plummeted once it found a hepatitis C cure.

@Vezkor- I thought DE was a machine/equipment manufacturer?

@ThisDinosaur- I want to build a portfolio of quality stocks with no expenses or float/market-capitalization adjustments. I'll eventually live off these dividends and won't want to think much about the companies or pay someone else to manage this for me. This is a preliminary list to filter from so I can pick up the high quality companies at a decent price.

I've read a lot of Jeremy Siegel's work lately and his research on the best performers shows that the best long term companies aren't the cheapest but those that are fairly priced and of high quality. JNJ and BMY seem fairly priced slightly below 20 times earnings. GE or ABT seem expensive for me at above 30 times earnings.

I like Charlie Munger's quote: "A great business at a fair price is better than a fair business at a great price."

[slowtraveler]

Oil is interesting. In 2016 each share of Exxon Mobile earned $1.86 and at $88.52/share that translates to around $44 paid per dollar of earnings but earnings are suppressed for oil companies at the moment with the cheap oil. Trump's policies will likely prolong this cheap oil environment.

http://cdn.exxonmobil.com/~/media/globa ... s_4q16.pdf

[cmonkey]

I don't think I'd feel comfortable saying any stock is BIFL, but if you are looking for a lazy man approach to buying individual stocks, just go with Dogs of the Dow.

[slowtraveler]

I keep forgetting about Dogs of the Dow. That is one consideration that'd work but it seems less tax-efficient with the annual turnover.

Obviously, nothing is certain but Jonhson and Johnson or Diageo will likely be here in some form or another at the end of a lifetime, helping their stock holders get rich all the while.

[KevinW]

I don't think I'd feel comfortable saying any stock is BIFL

+1

See the "Nifty Fifty" for an attempt at making this kind of list circa the 1960s: https://en.wikipedia.org/wiki/Nifty_Fifty

Many of them are either distressed, or have already gone out of business.

If you want to lock something in for life, instead of a specific set of stocks, I would lock in a specific screening criterion, i.e. use the Dogs of the Dow, or really any index that captures what you want. It sounds like your screen is "long-lived large cap consumer staples." Personally, if I weren't using the permanent porfolio, I would hold an ETF that screens for high yield, value, and reasonable payout ratio, such as VYM.

[slowtraveler]

I looked into the Nifty Fifty and it seems these stocks have outperformed the market if one actually held rather than sold.

http://www.aaii.com/journal/article/val ... ifty-fifty

I agree that consumer staples and health care are the primary focus for my list here. These groups are more resistant to commodification and tend to return higher earnings back to investors.