[Editor’s note: “9 Boring Stocks to Buy You Should Never Let Go Of” is regularly updated to include the most relevant information available.]
Change involves risk, and as we watch the markets swerve, for many it’s time to switch from loading up our portfolios with exciting names, and taking a good long look at boring stocks to buy.
Certainly, as a fan of several speculative industries, I’m in no position to lecture people about conservative investing habits. In order to grow your portfolio, you must take risks: that’s the nature of the game. However, whether you’re a speculator or a by-the-numbers type of investor, boring stocks such as blue-chip giants offer significant value.
For one thing, boring stocks typically pay dividends, rewarding you simply for holding the equity. Usually, you’re not going to get rich off dividends, unless you purchase an ungodly amount of shares. However, passive-income generating companies tend to weather market storms better than high-flying growth names.
Second and on a related note, this is a year full of drama. Obviously, the novel coronavirus has disrupted the entire global community. As well, we’re receiving sober reminders of the economic fallout. Since the crisis started, nearly 39 million Americans filed for unemployment benefits. Further, Federal Reserve Chair Jerome Powell has practically begged the government for more help. In this case, boring stocks to buy offer you relative stability – something that’s coming at a premium these days.
Finally, every portfolio, even for young investors, should have some exposure to boring stocks. You’re simply not going to win them all, and these established names should provide some downside mitigation.
So, without further ado, here are nine boring stocks to buy.
Chances are, if you’re thinking about technology names, IBM (NYSE:IBM) doesn’t come to mind; that is, unless you were discussing legacy names that were relevant in the pre-internet era. As a result, IBM stock has been among the most boring of boring stocks to buy.
Nevertheless, this is a situation where Big Blue’s (negative) reputation precedes it. True, IBM stock has failed to inspire investors despite many shifts in strategy. Further, more exciting tech firms have overshadowed the legacy company.
However, with IBM’s acquisition of Red Hat, management is making a credible push into cloud computing for large enterprises. Specifically, the company has invested heavily in Kubernetes, a container-based cloud protocol that allows unprecedented scale and efficiency.
With this Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)-developed innovation, end-users can share applications in self-contained data packages, thus eliminating the need for everyone to download the same system architecture. It’s a massive step forward in cloud technologies, thereby providing a long-term lift for IBM stock.
Best of all, Big Blue marshaled its technical acumen and resources for the betterment of society, partnering with the White House and other scientific institutions to help stem the spread of the coronavirus.
Additionally, the pandemic has breathed new life into the company’s artificial intelligence business, enabling client corporations to save costs and navigate this unprecedented crisis. It may be boring but I see big things ahead for IBM stock.
Crown Castle (CCI)
A real estate investment trust (REIT) specializing in communication towers and small cells, Crown Castle (NYSE:CCI) represents a vital cog in our digitalization initiatives.
But no matter what the industry, most folks rarely pay attention to the background players. Instead, they tend to focus on the front-facing action; in this case, smart device manufacturers.
Granted, the 5G rollout is a major paradigm shift in our telecommunications industries. Undoubtedly, those frontline companies will attract investor dollars. But for the astute buyer (that’s you!), CCI stock offers steady and viable capital growth and passive income opportunities. Obviously, none of the innovations associated with 5G can happen without the small cells that harness the telecom spectrums.
In addition, the transition from 4G to 5G will not happen overnight. Therefore, the big cell towers that facilitate 4G waves will still be relevant for many years. Plus, additional technologies may open new applications for cell towers. Therefore, this is a time to consider loading up on CCI stock despite its less-than-exciting reputation.
Raytheon Technologies (RTX)
Although most investors probably wouldn’t classify Raytheon Technologies (NYSE:RTX) as one of the boring stocks to buy, the defense sector has certainly lost significant buyer sentiment. Obviously, with the coronavirus infecting people throughout the world, attention has shifted from killing each other to saving ourselves.
Still, you wouldn’t want to ignore RTX stock during this crisis. Yes, Raytheon has seen its market value gutted relative to its pre-pandemic highs. But it’s also an opportunity to buy a long-term relevant company at a discount.
Not surprisingly, our adversaries – namely, Russia, China, Iran and North Korea – have tested our defensive response capacities during this crisis. Thus, while society is focused almost entirely on the coronavirus, our armed forces remain on high alert. Logically, this is a net positive for RTX stock.
Further, the devastation to the global economy has been felt more severely in developing countries or among nations that are levered mostly to one commodity. In this case, I’m talking about oil. With so much that can go wrong, Raytheon is currently one of the deceptively boring stocks to buy.
Xcel Energy (XEL)
As a utility firm specializing in electric and natural gas services, Xcel Energy (NASDAQ:XEL) benefits from perpetual demand. Advanced technology doesn’t mean much if you can’t turn it on. And through this terrible time, utility firms have represented a lifeline to many struggling households. Over time, I expect XEL stock to work its way out of its funk.
Another compelling reason for patience with Xcel is its coverage area. Concentrated in the Midwest and viable states like Texas and Colorado, the utility firm can take advantage of potential long-term migration trends.
Many Americans have taken extreme measures to protect themselves against Covid-19, including temporarily sheltering in rural areas. But I’d bet that a significant portion of these temporary movers will do so permanently.
Yes, there is a possibility of a second wave of coronavirus, which might push some fence-sitters to make a firm decision. More importantly, though, rural or countryside living is much more affordable than life in the big cities. Considering that we’re heading toward a very uncertain time, American families may be further incentivized to make the transition.
That would likely benefit XEL stock, given that the underlying company offers coverage in areas that big city dwellers, particularly millennials find attractive.
Iron Mountain (IRM)
A recognized brand in data storage and protection, Iron Mountain (NYSE:IRM) is probably the most dry investment in this list of boring stocks to buy.
Indeed, its physical paper-related businesses – including shredding services and document storage – seem anachronistic in this day and age. Ironically, though, digitalization makes IRM stock immeasurably viable.
Although companies like IBM are encouraging corporate clients to shift to the digital cloud, large enterprises will never stop using actual paper. That’s because digital data is too easy to exploit and compromise. And if something were to go wrong – data breach, infrastructural crisis, or an Act of God – a physical backup can help mitigate the overall damage. It’s one of the understated reasons why astute investors love IRM stock.
Furthermore, as a company grows, their paper record storage needs expand. Iron Mountain offers an easy solution, providing safe storage in an offsite location. Therefore, even if the target company is compromised, its documents will not be.
Unfortunately, being compromised is a very real threat. During this crisis, nefarious agents have wreaked havoc on unsuspecting victims, including those associated with critical infrastructures. Therefore, this pronounced need for security and safeguards is a huge, underappreciated catalyst for IRM stock.
Public Storage (PSA)
I love real estate. That said, this is a broad topic. Within this segment is perhaps one of the most boring categories of stocks to buy: self-storage units. Though reality TV shows have attempted to glitz up the industry, names like Public Storage (NYSE:PSA) simply represent a platform for people to store their stuff.
It’s hardly what would get you up in the morning. Nevertheless, PSA stock may have surprising upside later this year. According to a Wall Street Journal report, investors in 2019 were already eyeballing this sector. At the time, the Federal Reserve was lowering the benchmark interest rate to help cushion the blow of a possible global downturn.
With subterranean rates becoming the norm, PSA stock became a very attractive investment for its dividend yield. But how does the narrative change with the coronavirus pandemic?
Interestingly, if the Great Recession is a guide, the downturn may benefit Public Storage. As people downsize to more affordable homes, they need a place to store their extra stuff. Thus, while PSA may be one of the most boring stocks to buy now, it may eventually lose that title.
Putting Kellogg (NYSE:K) on a list of boring stocks to buy shouldn’t offend anyone’s sensibilities. Aside from our breakfast table, we really don’t think too much about the company. As a largely secular company, K stock is good for solid dividends and for holding the fort in a downturn.
But that’s not the reason why I’m interested in K stock this time around. Instead, it’s the hype machine surrounding Beyond Meat (NASDAQ:BYND) and the rejuvenated plant-based meat industry. Supposedly, BYND is a transformative investment that can convert meat-eaters toward alternative meat. However, the problem is that real meat is almost universally flavorful to carnivores. Fake meat, though, has sharp critics.
But a bigger problem is scale and competition. Beyond Meat only produces fake meats. But Kellogg can disrupt this space through its MorningStar Farms subsidiary while not skipping a beat in its core markets.
Furthermore, the meat-shortage crisis may force some consumers to consider protein alternatives. Theoretically, this benefits BYND. However, I believe Kellogg’s superior scale will help give K stock the edge.
One last note – as food prices rise, hard-hit consumers will likely gravitate toward products that they can afford. Given Kellogg’s brand name appeal, this crisis may give the company a new lease on life.
Philip Morris International (PM)
For many years, electronic-cigarette smoking or vaping occurred as a niche practice. But in the latter half of 2019, everybody was talking about vaping, and not for good reasons. The public blamed a rash of illnesses and deaths on flavored vape devices, creating a panic.
When the outbreak occurred, Philip Morris International (NYSE:PM) shares took a hit in the markets. Although PM stock is primarily levered to traditional tobacco products, the underlying company invested heavily in heat-not-burn devices called IQOS. Similar to vaporizers, IQOS mimics the experience of “analog” smoking but in a cleaner and arguably healthier platform.
Despite the ugliness of the vaping crisis, PM stock has skyrocketed since late September of 2019. I firmly believe that this was because the hysteria over vape devices was substantially exaggerated. In December, the Centers for Disease Control and Prevention pointed to vitamin E acetate as the main culprit.
Since vitamin E acetate is not a substance found in legal vaping products, the crisis was really about risky behaviors. And while the coronavirus is a concern, cynically, the pressures on mental health due to shelter-in-place orders may increase cigarette and vaping usage.
Interestingly, Philip Morris’ recent earnings report indicated that while the company sold fewer cigarettes, price hikes boosted earnings by 30%. This suggests that consumers are willing to pay a premium to get their fix, which is a dubious but still viable long-term tailwind for PM stock.
CVS Health (CVS)
When e-commerce behemoth Amazon (NASDAQ:AMZN) wants to disrupt your industry, it’s almost always bad news for you. Retail pharmacy specialist CVS Health (NYSE:CVS) learned this the hard way last year. Combined with fiscal concerns such as a worrying debt load, CVS stock bled out.
Though Amazon’s encroachment is a serious challenge, CVS stock may have a moat. Like many other boring stocks to buy, CVS has a powerful brand identity. Additionally, the pharmacy has a vast physical footprint, with many locations open 24 hours.
Unless Amazon can offer immediate shipment, it simply can’t compete with CVS without investing onerous amounts of money. Additionally, the Covid-19 pandemic has bolstered the demand for on-the-spot purchases. Therefore, the underlying company likely has many years to mount a counteroffensive.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.