Waking up to the usual financial news and reports, I noticed there were no prices for my watchlist stocks. Confusing.
Switching over to a finance website, my curiosity turned to anxiety when I saw there was no price quoted for any stock….
Am I losing money? I can't even sell out of anything!
That would be a nightmare scenario for many investors and probably every trader. If you only invested in a stock for its price rather than gaining part-ownership of a good, stable company, you'd be stuck.
If you did your homework and picked only stocks that generate steadily growing earnings and have strong balance sheets, then you could rest easily.
Multi-billionaire investor Warren Buffett said that you should buy only companies you wouldn't mind owning if the stock market closed for 10 years. The companies still make profits and pay dividends – your dividend returns would be unaffected. 10 years later, the market starts back up and share prices would adjust to the current earnings at that time.
Focusing on the company first for investment decision making is probably the most predictable, reliable way to make sure returns will meet your expectations. I have three stocks that, if the ASX closed for 10 years with no share trading, I would be confident in owning.
BHP Billiton Limited (ASX: BHP)
This company may be recommended by many people, but that's because it has a rock-solid business profile. Mining is a cyclical industry. Despite that, BHP has grown and paid regular dividends for many years. You can readily imagine the company going another 10 years with its iron ore and copper mining, as well as an expanding oil and gas business in the US. It currently offers a 3.3% dividend yield fully franked.
Woolworths Limited (ASX: WOW)
The supermarket and general retailer operating Big W, Masters, BWS and Home Timber and Hardware is another of my choices for a strong balance sheet, very able management and a long-term growth profile that could even outlast me. If the ASX closed for 10 years, I could still see the many customers Woolworths has go shopping every day.
It has a fully franked 3.8% yield, but the great thing about Woolies is it has a strong track record for increasing dividends. In the past 10 years it has raised dividends over an average 10% annually.
Coca-Cola Amatil Ltd (ASX: CCL)
The bottler and distributor for Coca-Cola in Australia and four neighbouring countries is a classic stock pick. With the world's most famous brand name and strong popularity, the company will be bottling the brown fizzy water for many years to come. It distributes many other soft drinks and alcoholic beverages, but Coke is the driving force behind the company.
Its yield is a whopping 5.4% partially franked. The company is restructuring itself to cut costs and improve margins, so the benefits of that should be known in the short term. Take advantage of the current low price and look forward to the next 10 years of steady business.
