There are plenty of things to buy with $200. But what about investing in a company that can grow your capital for years? Though some people believe they need millions, or at least thousands, to invest in quality stocks for the long term, there are some companies whose shares are trading for less than $200.
Let's consider two examples: Medtronic(NYSE: MDT) and Abbott Laboratories(NYSE: ABT). The former is changing hands for just $83 per share as of writing, while the latter's shares are about $110. Here's why these two healthcare companies are solid "forever" stocks.
Incredible track records
To find stocks worth holding on to for the long term, it's a good idea to start by considering companies that have been successful for a long time. Though the past isn't a guarantee of anything, in a world where a significant percentage of businesses don't last even five years, those that can keep the lights on for several decades are doing something right.
Medtronic and Abbott Laboratories have been leading medical device companies for quite a while -- and over the long run, both have delivered market-crushing returns.
MDT total return level, data by YCharts.
One of the keys to these companies' success is innovation. They have made a habit of continually developing newer and better medical technologies.
Both have vast and diversified portfolios that allow them to navigate downturns within specific business segments. Consider the earlier days of the pandemic, when Abbott's medical device business suffered due to a significant decline in elective procedures. The company kept afloat by developing and marketing COVID diagnostic tests.
Medtronic encountered similar business disruptions but countered them somewhat by selling ventilators that were crucial in helping many COVID patients. Abbott Laboratories' and Medtronic's ability to pivot their operations quickly and smooth out unexpected losses is impressive.
Over the years, these companies have developed solid reputations in the healthcare industry and the expertise to navigate this highly regulated business. These factors have also been -- and should continue to be -- important in Abbott and Medtronic's success.
Strong long-term tailwinds
Besides their robust underlying operations, Abbott and Medtronic have excellent growth prospects. As the world's population ages, there will be a growing need for medical services. More specifically, both companies are increasingly pinning their hopes on the large worldwide diabetes market.
Abbott is doing so with its FreeStyle Libre, a continuous glucose monitoring (CGM) system that has been its most significant growth driver in recent years. It's far more versatile than blood glucose meters in that it can help diabetes patients track their blood sugar throughout the day and night (including during sleep), allowing them to make better health decisions. CGMs have been associated with better outcomes for diabetes patients.
Yet, just 1% of the more than a half-billion adults worldwide with diabetes use CGM technology. So this market opportunity is vast.
Medtronic's approach to helping diabetics is different, with its insulin pumps, including its most sophisticated yet, the MiniMed 780G, which was approved in the U.S. last year. This pump has several advantages, including the ability to deliver automatic sugar-level corrections up to every five minutes.
Both companies will likely continue innovating in this area and have many other growth avenues, meaning they will keep delivering solid financial results over the long run.
Excellent dividend payers
Dividend-paying companies tend to outperform non-dividend peers over long periods. These two stocks have outstanding dividend records. Abbott is on its 52nd consecutive year of payout increases, which makes it a Dividend King. Medtronic isn't part of this elite group yet, but it isn't far off. It has hiked its payouts for 46 years in a row.
This is more evidence that these healthcare companies can deliver outsize returns, especially for those who reinvest their dividends. Anyone looking for forever stocks can't go wrong with Abbott Laboratories and Medtronic.
Should you invest $1,000 in Medtronic right now?
Before you buy stock in Medtronic, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medtronic wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 8, 2024
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Medtronic. The Motley Fool has a disclosure policy.
