Buying in a Bull Market: 3 Dow Stocks to Hold for the Long Run

It’s nice to make a big profit in a short time. But let’s be honest. This is not how investing should work. Smart investors understand that this is a long game that will be won by people who are able to find and then are willing to hold quality stocks for years. Slow and steady wins the race.

With that in mind, here’s a roundup of three great blue-chip stocks that not only have a strong record during the bull market, but should continue to do well in the years to come. Everyone is a part Dow Jones Industrial Averagein fact, which means they have already been proven for the long haul.

JPMorgan Chase

JPMorgan Chase (JPM -0.58%) it’s not just a big bank. It is the country’s largest company, with $3.5 trillion in assets on its books. While theoretically size shouldn’t matter, in reality it does. JPMorgan and its retail/consumer-focused Chase brand enjoy sufficient size to keep the company in front of potential customers while keeping competition in check.

Still, it’s hard to get excited about entering these days. While both results and earnings for the most recent quarter were up year-over-year, the cracks of economic lethargy are starting to show. For example, credit card charges nearly doubled in the first quarter, while 90-day delinquency rates increased.

Allowances for loan losses are also increasing, which ultimately reduces the efficiency of its operation. The rate of return on core capital dropped from 18% in Q1 2023 to 17% this time. Net interest income also declined in the three months to March, while net interest income forecasts for the rest of the year also disappointed.

As a result, shares fell. In the banking industry, it is these seemingly small things that can often turn into large transactions.

What’s largely lost in all the noise, however, is that none of what this bank or its peers are currently facing is unusual or sustainable. Rising interest rates, the resulting economic weakness and resulting loan losses are part of a highly predictable cycle that takes the same toll on banks over and over again. The best ones never seem to snap out of that funk.

This time will be no different, which is why – despite the post-earnings slump – JPMorgan Chase shares are still close to the record high they hit earlier this month.

Microsoft

You know Microsoft (MSFT -0.17%). Indeed, there is a very high probability that you are using this software.

There’s an equally good chance that you regularly use one of the productivity programs like Word or Excel. There’s also a good chance you’re a fan of the Xbox video game console or a user of the AI-powered Copilot assistant. There’s also Microsoft you don’t see. Research group Synergy, for example, suggests that Microsoft controls roughly a quarter of the global cloud computing market.

These are, of course, all good reasons to own Microsoft stock, made all the better by the fact that there are so many of them. But perhaps the main reason for Microsoft’s share price change, despite its record high this week, is the evolution of the company’s business model.

The software giant no longer just sells updated versions of its software in a box. Much of the software is now rented. This means that consumers and corporations alike can pay a nominal monthly fee for cloud access to tools like the aforementioned Word or Excel.

While the company itself is somewhat coy about exactly how much of its subscription-based business it currently has, Microsoft reported that it had $235 billion in “remaining commercial execution commitments” on its books at the end of last quarter, up 20% over compared to the previous year. These are goods and services that have already been contracted for future delivery but have not yet been delivered.

This gives you an idea of ​​the scope of the subscription-based business the company currently operates. More specifically, it’s insight into how many deals are already in the pipeline, setting the stage for reliable revenue growth as performance commitments are booked as revenue. By comparison, Microsoft made $212 billion in transactions in the fiscal year ending last June.

Microsoft still earns revenue from one-time purchases like an Xbox console or a video game, and even from selling software to customers who don’t want or need subscription-based access. Regardless of how it happens, the need for software, operating systems, and cloud computing technology is not going away any time soon – if ever.

Visa

Finally, add Visa (IN -0.12%) to the list of Dow stocks you want to own for the long term. Visa is the world’s largest credit card intermediary. More than 4 billion Visa cards are in the hands of cardholders, who use them in more than 130 million locations to make 276 billion purchases of goods and services worth approximately $15 trillion each year.

This is not a high growth company. Revenue growth in the most recent quarter of 10% is consistent with past and projected growth rates. Given the current saturation of the payments market with so many alternatives, Visa doesn’t have much business to steal from its rivals that would accelerate this growth.

However, Visa still has plenty of room for further growth in the distant future.

One aspect of this opportunity is the constant shift away from cash towards more convenient forms of payment. The US Federal Reserve reports that the use of cash in the US has fallen from 31% of transactions in 2016 to just 18% in 2022. However, this leaves another 18% that can be handled by card payments, plus another 13% of payments that Currently, they are processed via an automatic clearing house (ACH) transfer (directly from your bank account).

As cash becomes less convenient and even less necessary, expect this trend to continue. The same change is visible abroad. This evolution works to Visa’s advantage because the company takes a small percentage of each transaction it facilitates.

In that vein, the Merchants Payments Coalition reports that total swipe fees charged by credit card intermediaries rose from $160 billion in 2022 to a record $172 billion last year, reflecting the impact of this change. However, again, there is much more room for this trend to continue.

Another factor favoring Visa is the ever-growing population of the planet, as well as the growing number of companies accepting card payments. The latter is simply a result of the spread of technology.

All of this makes Visa stock a strong bull market performer – and the underlying momentum will remain in place for as long as there is trading.