7 DEFENSIVE STOCKS TO ‘’BUY AND HOLD’’ FOREVER

It’s true that for investors to invest successfully in any market in the world, he or she must understand the big picture of the economy and stock market dynamics to succeed and grow wealth. The top wealthy men of today that had made fortunes in equity investment are those that recognize the long term nature of the stock market and also know the appropriate keys with which to play the game profitably.  The big picture gives an idea on how all the facet of the economy work together to influence the market and the share prices of quoted companies.  A blooming economy will have a strong and promising stock market which is the leading indicator that reveals a country’s economic prosperity.  

An economy consists of the sociopolitical and business environments that influence business activities which in turn, drive a nation’s development and growth.  The economy is sub-divided into market, sector, industry and company. It also has economic cycles that go through a boom to gloom. The boom stages are the early, middle and late expansion periods; while the gloomy stages are the early and late periods of contraction. 

For us to be successful investors we must identify the stage our economy is presently and which sector, industry and company can do well in all these stages by remaining in business and posting good earnings that can support its dividend payout in the future.  

On this note, we have to look at the nature of the company’s products and services, and try to determine whether the demand for them is inelastic in nature such that increase in prices will not have much effect on the demand for them. Is the company with a clear and simply business model that you understand; and lastly, a good management team with a succession plan intact?

Other factors used in identifying quality companies are consistent earnings growth, a profit margin that is above 10 percent,low debt, improved cash flow and good dividend payout ratio.  

This suggests that planning one’s financial freedom through equity investment is very possible if you are buying the right stocks towards your retirement.  These seven stocks selected below have shown strength in their earnings power on quarterly/yearly basis and consistent growth in dividend payout. Also, the nature of their products or services and business model support their future performance. 

Mobil Oil, Nestle, GTBank, Zenith Bank,7Up, Nigeria Breweries and Dangote Cement

These companies have shown the quality of a company with consistent factors mentioned above to consider in selecting defensive stocks. They are good and top set of stocks you can plan your saving and retirement with because their services or products are essential to living.

Look forward to the financial formula that will help you achieve your financial freedom.

Thanks and have a nice day.