2 Must-Have Stocks to Buy and Hold Forever
Key Points
Ferrari and Ford operate at different ends of the automotive spectrum, but both offer value to investors.
Ferrari has built a world-class luxury brand and has rewarded long-term investors with big gains.
Ford's dividend remains a key reason investors want to own the stock for the long term.
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Must-have stocks generally feature several quality attributes. For instance, must-have stocks sport strong balance sheets with little debt, or they have consistent earnings growth, or they demonstrate durable competitive advantages. Some do all three.
The two companies featured here operate in the same broader industry, but they are incredibly different businesses and are must-have stocks for unique reasons. Here's why Ferrari (NYSE: RACE) and Ford Motor Company (NYSE: F) are must-have stocks to buy and hold forever.
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1. Ferrari: Unmatched pricing power
Ferrari is arguably the best automotive stock out there at the moment and possesses a long list of desirable business qualities. Ferrari's operating margins outshine traditional automotive rivals, and its stock trades more like a luxury stock than an automotive stock. But that doesn't mean it can't be discounted on occasion. Ferrari's 2030 guidance wasn't as strong as analysts would have liked, and the stock is giving investors a rare opportunity to start a position at a lower valuation.
Data by YCharts.
Ferrari is a must-have stock because of its immense pricing power. This is driven by multiple aspects of its business, including racing vehicle technology in its luxury supercars that's tied to its Formula 1 racing team. Its pricing power is also tied to exclusivity, because Ferrari limits its order books and limits its total sales volume to make sure demand always exceeds supply.
Ferrari's F80 is a perfect example of this, and is one of the company's "once-in-a-decade" hypercars or halo cars. The F80 is priced at nearly $4 million, but its order book is limited to 799 units (which sold out almost immediately). Margins are likely to be so juicy that the F80 could account for only 2% of Ferrari's units sold but could generate 20% of all profit.
Ferraris are fine-tuned machines, and Ferrari is a fine-tuned business. Its pricing power is unmistakable and makes it a must-have stock for investors.
2. Ford: The power of dividends
Ford won't match Ferrari's pricing power or sell vehicles for $4 million a pop, but it does offer something the Italian rival doesn't: a lucrative dividend. Ford's $0.15 per share quarterly dividend offers a juicy 5% dividend yield, but not the only thing to like about the veteran auto maker.
Image source: Ford Motor Company.
Ford returns value to shareholders when profits are high, generally aiming to distribute 40% to 50% of annual free cash flow. When times are good, Ford dishes out supplemental dividends that can offer great value to investors.
In March 2025, Ford announced a $0.15 per share supplemental dividend, essentially an extra quarterly payment, and Ford's supplemental dividend was an extra $0.18 per share in 2024. Once in a while, Ford will have a big splash, such as in 2023, when the automaker dished out a special dividend of $0.65 per share, largely driven by the sale of Ford's stake in Rivian.
Ford's pro-dividend stance is tied to ownership. The Ford family owns a special class of shares that gives outsized voting control, as well as the common stock dividend. It's a significant source of income for the Ford family and assures investors that the company's strategy will likely maintain its dividend spending habits. This dividend is a difference maker for long-term returns, even if the share price underperforms.
Data by YCharts.
Must-have stocks
Ford and Ferrari, while operating in the same industry, are must-have stocks for completely separate reasons. Ferrari generates unmatched margins in the auto industry, has a powerful brand image, pricing power, and an uber-wealthy loyal customer base. Ferrari will power investor gains for years to come.
Ford offers investors a way to offset the cyclical nature of the automotive industry via its stable and valuable high-yield dividend and the occasional supplemental dividend. It also has significant upside in the near term as it reverses warranty costs and quality issues that have dinged earnings in the past, and turns its money-losing EV business into earnings. Ford's dividend is an incredible way to build long-term wealth slowly, and points to why it's also a must-have stock.
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Daniel Miller has positions in Ford Motor Company. The Motley Fool has positions in and recommends Ferrari. The Motley Fool has a disclosure policy.
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