Buy and hold forever stocks have a single unifying quality; they are always good companies even if now isn’t always a good time to buy them. Companies like United Parcel Service (NYSE: UPS), Whirlpool (NYSE: WHR) and V.F. Corporation (NYSE: VFC) have their ups and downs just like any business.
Still, they are also blue-chip operators that have withstood the test of time. In this light, these stocks should be on investors' watchlists to be scooped up when the time is right. When it comes to timing, the best time to buy these stocks is when no one else is very interested because that’s when you get the best prices. When it comes to long-term investing taking advantage of low-price entry points is critical to maximizing your total returns.
United Parcel Service Cash Flow Is Sound
United Parcel Service shares have been pulling back and paring the post-Q4-release pop in share prices, which is good. Trading at $183 this 3.5% yielding dividend achiever is valued at only 16X its earnings, and earnings are enough to power dividends, share repurchases and capital expenditures while only taking a small bite out of the company’s cash pile.
The guidance for 2023 was weak, but weak is relative to the analysts' consensus which was expecting just a little more than what was offered. The takeaway is the low end of the outlook for revenue and margin is more than enough to sustain this trend into 2023. At the high end, the company may be able to bank some cash while paying and increasing the dividend and buying back shares.
Turning to the chart, shares of UPS were pulling back within a trading range over the last year but that trend has ended. The bottom was hit in late fall 2022 and now the bias is upward. The Q4 results and 2023 guidance sparked a movement consistent with that bias and has the market on the verge of an uptrend. The 150-day EMA is supportive, assuming the market confirms that this stock should continue moving sideways at current levels if not edging higher.
Whirlpool, A Cheap 5% Yield
Whirlpool offers a good value relative to its yield provided investors understand this highly visible blue-chip stock may never see its multiple expand significantly. Investors should focus on this company’s market leader position and near-5% dividend. The 5% may be a red flag with some companies but not with this one. Whirlpool is not only a dividend achiever with 12 years of increases but also pays out a meager 35% of its earnings and has a sound balance sheet. Whirlpool has been increasing the payment at a double-digit CAGR as well and that should continue in 2023.
V.F. Corporation, A Fall From Grace Is Your Opportunity
V.F. Corporation issued some not-so-shocking news when it cut its dividend payment in early February. The company was on the verge of becoming a Dividend King but decided distribution safety and a better outlook for distribution growth was superior to the crown. Now, the stock is still paying out a nice 4.5% with a payout ratio of 58% at the low end of 2023 guidance.
The takeaway is that the stock was trending lower well before the cut was announced, and now there is potential for bottoming. The stock looks overextended at these levels and analysts are calling the bottom. Stieffel, for one, upgraded the stock to Buy from Hold citing dislocation in share prices, an apparently safe dividend and a favorable portfolio.