'Buy and Hold' investing is by no means the most exciting way to make money – more often than not it requires you to sit on your hands and do absolutely nothing!
And yet history has shown us time and time again that it is, by far, the greatest way to build your wealth over the long term – especially when any dividends received along the way are reinvested!
Unfortunately however, it's not as easy as throwing your money behind just any old company and hoping for the best. When we are investing for the long term, we need to consider the companies' competitive advantages, whether they can change with the times and whether they are an attractive buy at today's price.
Even though the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is sitting near a six-year high, there are a number of companies which still look very appealing…
I have said more than once that Coca-Cola Amatil Ltd (ASX: CCL) presents as one of the most attractive stocks on the ASX today. While it might not boast as strong growth prospects as some of the market's smaller companies, it has incredible brand strength and a strong management team to guide it over the coming years.
The shares are currently trading at $9.38 – nearly 40% below their March 2013 all-time high – thanks to a pricing war with Schweppes and pressures from the supermarket giants. However, Warren Buffett once described the Coca-Cola brand as a "forever brand" and while the short term may remain volatile, the long term is looking as appealing as ever.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is another company which offers investors safety, growth and fantastic diversification. In fact, the conglomerate company has a business approach which closely reflects that of Warren Buffett's Berkshire Hathaway. It has excellent exposure to Australia's construction industry thanks to its significant investment in Brickworks Limited (ASX: BKW) as well as to our booming telecommunications industry through its stake in TPG Telecom Ltd (ASX: TPM). While its investment in coal miner New Hope Corporation Limited (ASX: NHC) is currently acting as a drag on overall earnings, now would be an excellent time to buy.
Compared to Coca-Cola Amatil and Washington H. Soul Pattinson, Veda Group Ltd (ASX: VED) is a much smaller company and has only recently made its debut on the ASX. However, it has proven itself to be a consistent and resilient performer over the years, having grown revenue in every year since FY1993 at a compounded annual rate of 14.6%. Although Veda is not the cheapest stock on the market (with a projected P/E ratio of 22.2), it is a stock worthy of a position in your portfolio for the long term.
Another stock primed for serious growth
Coca-Cola Amatil, Veda Group and Soul Patts all represent strong businesses and a buy today could reap you incredible returns over the coming decades. However, there is another company early in its growth story which is also shaping up as a fantastic long-term buy and hold stock.
