If I Could Only Buy and Hold a Single Stock, This Would Be It

Most investors understand the importance of a diversified portfolio. No single stock is guaranteed to perform well, but by holding several quality tickers, you'll dramatically improve your chances of achieving net growth.

Still, if only as a mental exercise, there's value in thinking about the name you would like to own if you were limited to only one buy-and-hold position. My top long-term pick with this limitation in mind? Walmart (NYSE: WMT). Here's why.

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Walmart, up close and personal

It's a respectable all-weather play, but let's face it: Walmart stock isn't winning any performance-based awards. It's not exactly an exciting holding, either, if you know you'll need a little help staying interested enough to remain patient.

Just bear in mind that this hypothetical long-term holding will be your only pick. As such, it will need to play a range of different roles within your portfolio, including keeping risk to a minimum. Few other options would be able to do all of this as well as Walmart could. But first things first.

Walmart is the world's biggest brick-and-mortar retailer, operating 10,771 stores worldwide. Over 4,600 of these are in the United States, plus another 600 domestic Sam's Club warehouse stores.

As for sales, a little more than half of last year's top line of $681 billion came from its grocery business, making it the biggest grocer in the United States, with roughly one-fifth of the market, according to market researcher Numerator.

Walmart.com has also become a respectably sized online shopping destination. Although its piece of North America's e-commerce market is still nowhere near the 40% that Digital Commerce 360 believes Amazon currently enjoys. At a little more than 10% share, Walmart is doing all right on this front.

Still, a one-and-only long-term pick? Keep reading.

The surprising rock-solid bullish argument

Again, it's far from a riveting investment, but you don't invest for entertainment. You do so to grow your money, or at least preserve it. It's just a question of how much growth you're hoping to achieve, and how much risk you're willing to take in exchange for a chance to meet your goal.

With that as the backdrop, the stock's chief draw obviously isn't enormous gains. Except that this slow-moving, massive company's stock reliably outpaces its own revenue growth. Shares are up an average of 16% per year for the past 20 years largely thanks to the company's generous stock repurchases funded by reliable -- and reliably growing -- earnings.

These buybacks seem to be slowing now, partly reflecting the stock's prolonged net gains, which don't allow the company to take as many shares out of circulation as it had been. There are also simple limitations: Owners of the 8 billion shares still outstanding are holding on to them pretty tightly.

The profits that have been funding these stock repurchases are still flowing, though, and increasingly adding value in the form of dividends. Not only has the retailer now raised its annual per-share dividend payout for 52 consecutive years, but for the past 10 years, it has also upped its yearly dividend by a healthy average of around 4%.

And since late 2023 (when inflation really took hold), these dividend raises kicked into a higher gear. Walmart's most recent increase, for instance, was a huge 13%. Assuming you're reinvesting these dividends, Walmart might actually beat the broad market.

WMT Revenue (TTM) data by YCharts; TTM = trailing 12 months.

The chief attraction for the stock, however, is arguably the safety it offers shareholders. Consumers might postpone the purchase of a new car when money gets tight. Or they might cancel a vacation. But they're always going to need to eat, and they're almost always going to need the non-food consumer goods that Walmart sells at some of the lowest possible prices.

And the retailer enjoys an unfair advantage over its competition that allows it to maintain its market dominance: its sheer physical reach. With 5,205 stores in the United States alone, the company not only dwarfs all comparable competitors, but also has at least one of its stores within 10 miles of 90% of the country's population. No retailer is better positioned to win -- and keep -- sales of consumer goods.

These stores are also in good position to be leveraged in other unconventional ways, including offering veterinarian services and at-home technology installation. The sky's the limit in this regard.

Simpler can clearly be better

There's no such thing as a perfect pick. Any stock brings risk to the table, and this one hasn't proved to be impervious to marketwide volatility. Its shares are down from February's peak as well.

As CEO Doug McMillon recently said, consumers are exhibiting "stressed behaviors" in the current economy, suggesting the company is seeing at least some impact on sales. That's relatively muted, though, and certainly not as problematic or long-lived as the impact on companies with far more cyclical businesses.

Bottom line? Don't make it complicated. There are few true all-around, all-weather picks worth owning for the long haul -- particularly if you could buy and hold only one name. This is one of the few, and arguably the best among them.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.