Stock market experts have been talking a great deal about stocks that you could hold forever. These are some of the stocks that you can buy, hold and then altogether forget all about them. After buying this specific class of stocks, you can leave them to grow year after year to raise your chances of earning great returns and drastically reduce the odds of you losing your hard earned money. This is a simple concept and it really works.

The Oppenheimer study that looked at the movement of Standard & Poor’s (S&P) 500 Index as far back as 1950 found out that the index has never ever suffered a loss in the 20-year periods. It is true that it is a challenging task to hold through the thick and thin of the 20-year periods as no one wants to see their portfolio lose money, even if it is for a very short period of time.

Making trading online on the smart phone. New ways to make economy and trading

However, it is not as difficult as you think when it comes to holding the right ‘forever’ stock for the longer term. This is because they exhibit a remarkable capability to hold on to gains, even if the market situation is not very conducive. A couple of years back, there was a time when the S&P 500 dropped as much as 11.2 percent, but some of these ‘forever’ stocks just shed about 5 percent of their value. In fact, one of them soared as much as 13 percent following the company’s encouraging earnings announcement. This, in turn, enabled investors survive the blow despite the fact that the Dow Jones Industrial Average also fell by over 500 points.

If you consider the gains over a longer time frame, you will be surprised to note that the difference is much higher than what you would believe it to be. It has been observed that over the years the average returns provided by the “forever” stocks has even gone up to 29.0 percent despite the S&P shedding nearly 10 percent. The idea of pointing this out is not to brag as to how the ‘forever’ stocks have outlived the market downturns wherein investors have suffered huge losses as trillions of dollars in market capitalization evaporated, but to help you make money by showing to you as to why these stocks survived the jolt. Actually, the aim is to you help you have a clear understanding as to what you should look for so that you are in a better position to spot out more of these “forever” stocks and manage things on your own.

Unfortunately, buying any stock that you want, holding it forever and expecting it to get you a great deal of returns does not just work. This is market is full of stocks of companies like the Enrons, Worldcoms, and even General Motors. Holding such stocks forever has not ever worked for investors. Therefore, here are the three key aspects too consider when looking for stocks that you can buy and hold for a long period of time:

#1: You should look out for companies that enjoy huge, as well as lasting, advantages over their competitors.
#2: Consider those companies that pay their investors each and every year fat dividends without fail.
#3: Shortlist for consideration those companies that buy back huge amounts of their own stock.

Researchers have observed that the companies that comply with key aspects listed above are those that are capable of fetching you a great deal of returns on your investment, more often than others, in the long run. Once you identify such stocks, your work becomes very simple and easy. You just have to buy these shares, hold them for a long period of time and enjoy great returns. Typically, it makes sense to assume that strong companies that take good care of the shareholders often tend to provide better returns over the long-run.

For example, take the case of the “forever” stock Philip Morris (NYSE: PM). It is a very dominant company. This company’s products are sold nearly 200 countries and it owns seven out of the top 15 global brands in the world in its niche sector. Over the last years, the price of the company’s stock has doubled despite the sub-prime mortgage crisis of 2007 to 2009 and the recessionary trend that prevailed in the recent past.

Philip Morris is a very shareholder-friendly company. The tobacco giant gave back over $5.25 billion through their share buyback program to shareholders in 2008. The company also paid out another $4.2 billion as regular dividends on common shares and a special dividend of $900 million. In the subsequent years, the company maintained as well as grew the returns for its investors. Share buybacks has continued to be above $5 billion consistently. Dividend payments also grew steadily. In 2014, Philip Morris pulled out of its share buyback program because of the huge drop in the valuation of foreign currencies around the world against the U.S. dollar.

Over the longer term, the currency swings usually do not have any impact. However, there will be short-term effects. It is the profits that are reported, and not currency adjustments, that give an idea of the cash coming into the company. It is this money that is redeployed for buying back shares and giving dividends. In the short term, there may not be buy recommendation on the stock given the 20x earnings valuation. However, you should hold if you already have PM shares in your portfolio. This is because the company is still earning more than 45 percent returns on its total capital. Further, trading volumes have been more or less steady, and their IQOS smokeless cigarettes have had a very strong early start in Japan. You will still get 4 percent in immediate dividends. You will also get high single digit earnings growth in the medium term. This is not bad at all.

In conclusion, look for the three signs discussed in the article to find out more stocks in which you can invest, hold and enjoy great returns in the longer term.