Preferred Buy and Hold Stocks

I am currently deciding whether to pursue Index Fund investing or to pursue investing in a diversified portfolio of individual stocks. Index fund investing has the advantage of being boring but reliable, while individual stocks have the advantage of being more exciting but riskier with a greater potential both for higher returns and for greater losses.

The following list consists of individual stocks that I am considering buying if I decide to go the route of buying individual stocks:

Alcoa, Inc. (NYSE: AA)

Alcoa has long been one of my favorite companies, since I used to do business with Alcoa when I was making a living recycling metals such as aluminum and copper. Alcoa's stock took a hit near the end of 2008, but I believe that Alcoa's business remains strong and that Alcoa stock will be a sound investment in the long term.

Ball Corporation (NYSE: BLL)

Ball is one of the major manufacturers of beverage containers and aerospace products. My family has had a longstanding relationship with Ball, since my dad has worked for them for many years. The beverage can business is in no danger of slowing down, and Ball has regularly expanded their business into new markets. In addition, Ball has been a very steady stock paying a dividend that increases moderately but consistently over time.

Bank of Marin Bancorp (NASDAQ: BMRC)

Bank of Marin is a local bank in northern California. The recent banking crisis for larger banks got me thinking about investing in financial companies that are more local and who have a greater vested interest in the strength of their communities. Bank of Marin seems to be a strong organization that pays out a consistent dividend that increases over time.

H. J. Heinz Company (NYSE: HNZ)

Can you imagine a time when the leading manufacturer of ketchup will not be in a strong position relative to its competitors? H.J. Heinz is a company whose products are a staple of nearly every American household, and their market share seems more than secure enough to alleviate any concerns about the risk of investing in Heinz. Like the stocks mentioned above, HNZ demonstrates its stability with consistent dividends paid back to shareholders.

Medtronic (NYSE: MDT)

As baby boomers age, and as our general health as Americans declines, there will be an increasing need for medical devices such as those produced by Medtronic. I have a preference for companies that have a potential for growth but that also return profits to shareholders through dividends, and Medtronic seems to meet both of these criteria.

PG&E Corporation (NYSE: PCG)

Utilities are known for their stability and for their reliable dividends, so utilities have obvious appeal to dividend investors who prefer a buy and hold strategy. I prefer PG&E over other stocks because it is local and I am trying to invest in local companies with strong earning potential. California is always an innovative region when it comes to the forefront of alternative energy technologies, and PG&E actively engages in the quest for alternative energies. As the largest utility in California, I expect that PG&E will be at the forefront of innovation in alternative energies. Moreover, its market share and resources will allow PG&E to render new technologies practical better than smaller competitors.

RadioShack Corporation (NYSE: RSH)

As a former employee, I have personal history with Radio Shack that makes RSH an attractive investment to me. Radio Shack runs a profitable business that relies on residual income to supplement its already profitable sales of consumer electronics and components. Much wind has been blown about the possibility of Radio Shack being bought out by competitors such as Best Buy. But Radio Shack has had some crises before, and it has always managed to reinvent itself and find a niche that allows it not only to stay afloat but to flourish. Just when you think Radio Shack might be down for the count, I instead look for Radio Shack to rise from the ashes like a phoenix.

Union Pacific Corporation (NYSE: UNP)

I could not invest in individual stocks in earnest without investing in a railroad company such as Union Pacific. Although Union Pacific has never been one of my favorite railroads, my truly favorite railroad, Burlington Northern Santa Fe, was recently acquired in full by Warren Buffet. Since Union Pacific is the next major railway company, and since it is local to me, I am considering investing in UNP if I decide to invest in individual stocks. Railroads, despite the fact that they are old technology, are an essential part of our consumer society. The vast majority of anything you will or have bought has been transported at some point by rail. And since there is no sign of consumerism declining in our society, railroads should produce steady income and business for decades to come.