Building wealth is a marathon, not a sprint. It involves investing in a diverse range of solid companies and holding onto them for the long haul. By strategically selecting about 20 or more quality stocks and staying invested for a decade or longer, investors can potentially reap significant returns and foster financial independence along the way.
Don’t feel pressured to acquire all 20 stocks at once. Instead, gradually build your portfolio according to your financial capability. Investing is a lifelong journey, affording you ample time to construct a robust and profitable portfolio.
So, where to begin? Whether you’re a rookie or a seasoned player in the investment arena, identifying companies that could serve as uncomplicated wealth builders is always a prudent move. These are companies that have a proven track record of growing earnings and dividends over time, as well as exhibiting promising growth prospects. Let’s delve into three such potential gems to enhance your investment roster.
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Setting Sail with Carnival
Carnival (NYSE: CCL) (NYSE: CUK) faced turbulence at the onset of the pandemic as voyages came to a halt. However, the colossal cruise operator has displayed resilience and growth capabilities by implementing cost-cutting measures, operational streamlining, and initiatives aimed at bolstering profitability. For instance, Carnival phased out fuel-guzzling older ships and replaced them with a more fuel-efficient fleet.
Simultaneously, the resurgence of demand for cruising and travel in general has bolstered Carnival’s recent earnings performances. In the full-year 2023, Carnival reported record revenue of $21.6 billion, marking an all-time high. The company also kicked off the new year with its most robust booking position ever concerning pricing and occupancy.
Carnival has embarked on a debt-reduction journey, slashing debt by over $4 billion since its peak in the early stages of the health crisis. Furthermore, Carnival’s consistent growth in adjusted free cash flow underscores its ability to further diminish the debt incurred during the past turbulent times.
Currently, Carnival’s shares are trading near their historical lows relative to sales, presenting a compelling investment opportunity in a company likely to deliver robust earnings and share performance over time.
CCL PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.
Refreshing Wealth with Coca-Cola
Coca-Cola (NYSE: KO) has been a stalwart in delivering consistent share price appreciation over time. However, the allure of Coca-Cola magnifies when we factor in the impact of dividend payments on overall returns. The 62% share price growth over a decade transforms into a 123% increase when factoring in the passive income component.
Coca-Cola’s ability to fuel wealth accumulation lies in its annual dividend disbursements, irrespective of its year-to-year share performance. With a track record of increasing dividends annually for over 50 years as a Dividend King, Coca-Cola demonstrates its commitment to shareholder rewards, setting the stage for continued dividend growth.
As the world’s largest nonalcoholic beverage manufacturer with a robust presence in over 200 countries and territories, Coca-Cola’s brand resilience augurs well for sustained earnings growth, even in challenging economic climates like the one witnessed last year.
Trading at 21x forward earnings estimates, Coca-Cola stands as an attractive value proposition in the current investment landscape.
Shopping for Wealth at Costco
Costco (NASDAQ: COST) has seen its shares surge over 40% in the past year, signifying an opportune entry point for investors eyeing a steadfast wealth-building asset. Costco’s distinctive business model, centered on a membership system, ensures revenue generation even before customers step foot inside its warehouses to shop.
The high-margin nature of Costco’s membership fees, devoid of procurement, transportation, and stocking costs, translates into more substantial profits derived from memberships compared to merchandise sales within its stores. Furthermore, Costco boasts a remarkable membership renewal rate exceeding 90%, both domestically and internationally.
Notably, Costco continues to witness an uptick in executive- and higher-level memberships, accounting for about 46% of total memberships and over 73% of global sales.
Member-driven earnings growth in the billions annually, along with the provision of dividends and five special dividends over the past 11 years, positions Costco as a premium pick, despite trading at 46x forward earnings for investors seeking a potential wealth generator.
Should you invest $1,000 in Carnival Corp. right now?
Before diving into Carnival Corp., ponder this:
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Adria Cimino holds no positions in any of the stocks mentioned. The Motley Fool has positions in and endorses Costco Wholesale. The Motley Fool recommends Carnival Corp. The Motley Fool has a transparency policy.
The views and opinions expressed here reflect the author’s perspective and do not necessarily align with those of Nasdaq, Inc.
