I’m going to keep it real with you folks: I’m not the best person to discuss safe stocks to buy for your 401k. If you’ve followed my work, you know that I have a penchant for the speculative flavors of the global markets. Some of these shots in the dark have yielded tremendous gains. Most of the time, though, they ended up in utter failure.
To be fair, one needs to take risks to get ahead in life. Additionally, the further we go along on this crazy road called life in America, the more risks you must take. Consider data from the Board of Governors of the Federal Reserve System, which states that almost one-third of wealth in this nation is concentrated in the hands of the top 1%.
Put another way, you’re not going to get far by exclusively banking on safe stocks. I’m sorry, that’s just reality.
However, you must know when to exit or take some off the table. While I have the reputation of being a gunslinger, I discovered something about myself that I didn’t previously realize. When the stakes get high – and they eventually will if you keep plugging away – arguably most people blink. Certainly, I know I did. And that’s what these safe stocks are, a form of safety net for your portfolio.
Here’s how I look at things following the show of support Elon Musk of Tesla (NASDAQ:TSLA) gave to the cryptocurrency complex: there’s no shame in taking profits, there’s no glory in empty pockets. You must dedicate at least a portion of your portfolio to safe stocks. These keep you in the game for the long haul, most critically, and they can offer surprising upside.
As former stockbroker Mark Hanna might say, “This is not a tip, this is a prescription. Trust me. If you don’t, you will fall out of balance, split your differential and tip [the flip] over.” Here are nine safe stocks to protect and bolster your retirement portfolio during this wild time.
- Berkshire Hathaway (NYSE:BRK.B)
- York Water (NASDAQ:YORW)
- Waste Management (NYSE:WM)
- AbbVie (NYSE:ABBV)
- Costco (NASDAQ:COST)
- Kimberly Clark (NYSE:KMB)
- Verizon Communications (NYSE:VZ)
- IBM (NYSE:IBM)
- Exxon Mobil (NYSE:XOM)
Finally, stay out of social media if you can. You’ll hear all kinds of advice about “diamond hands” and holding on to junk investments for dear life. You want to look out for yourself as you have no friends on Wall Street. So in that spirit, let’s dive into these safe stocks for your 401k.
Berkshire Hathaway (BRK.B)
What do you get for a person who has everything? I haven’t the foggiest clue. However, I do know that if you want to invest in everything, you go to Berkshire Hathaway. Easily, it’s one of the most viable safe stocks you can buy for your 401k.
Have you ever had a conversation with your significant other about what you wanted for dinner? If both of you happen to be noncommittal at the time, you can end up citing half the United Nations member list. While such discussions are nonconsequential, your retirement on the other hand is of significant consequence. BRK.B stock takes that guesswork out of the picture.
Never say never, but you probably won’t see me investing directly in Berkshire Hathaway anytime soon. But because BRK.B stock is levered to high-quality investments like Apple (NASDAQ:AAPL) or Coca-Cola (NYSE:KO), it’s perhaps the most appropriate for your 401K.
York Water (YORW)
Interestingly, just before the novel coronavirus upturned the entire world, one in five Americans had stashed cash due to fears of a potential recession. Of course, the pandemic initially reaffirmed those concerns. Perhaps that’s why the market tumbled so badly as it did in February and March 2020?
Personally, this is the reason why I’m hesitant about overly bullish prognostications for 2021 and beyond. If people were concerned about a recession before a once-in-a-century pandemic, why would this disaster alleviate those fears? It doesn’t make sense. But this environment is perfect for York Water and YORW stock.
If your goal was to seek out a few safe stocks to buffer whatever comes our way, York Water represents an ideal choice. Founded in 1816, York is the oldest investor-owned utility in the U.S. So while we’re fretting over the pandemic, YORW stock has endured through the Civil War, both World Wars and the 1918 influenza pandemic to boot!
Waste Management (WM)
Hopefully, you’ll forgive me for dropping a truth bomb, but much of the broader push for go-green initiatives sounds like useless virtue signaling. Yeah, OK, you drive a Prius, but if you’re a high-powered CEO taking private jets across the world, are you really helping the environment?
Here’s why it’s important to think holistically when discussing practices to address climate change: we can’t consume our way to a cleaner planet. This is evidenced by the fact that China and other developing nations won’t accept American and western trash. And with the animosity toward the Chinese government – which sometimes spills over into average everyday Chinese people, regrettably – the Asian juggernaut is not in a mood to play along.
That’s bad for geopolitical relations, perhaps. But it’s an opportunity for Waste Management. Cynically, WM stock could turn out to be one of the safest of safe stocks to buy.
Here’s another truth bomb: Americans are not going to stop consuming anytime soon. I mean, our average waistline has expanded – through the freaking Great Recession of all things! So take a look at WM stock. Chances are, it won’t let you down.
In the world of pharmaceuticals, the new normal presents an interesting conundrum. On one hand, an opportunity exists in pivoting to Covid-19 treatments and vaccines. However, I’ve always questioned the wisdom of some of these synergies. It seemed more desperation than anything. But on the flipside, with everyone concerned about infections, the pandemic hurt revenues for non-Covid-related pharmaceuticals.
Therefore, AbbVie didn’t move much on a net basis overall in 2020. However, that could start changing in 2021 and in the years ahead. Generally, as coronavirus infections come down and as people learn to live with this crisis, the medical narrative will shift toward non-pandemic health issues, which benefits ABBV stock.
Also, I’m excited about the prospects for the underlying Botox business. When people were stuck indoors due to Covid restrictions, there was little incentive to look good; hoodies and sweatpants replaced the suit and tie. But that will change upon a return to normal, which is why ABBV stock deserves long-term consideration.
I’ll just tell you straight off the top that Costco is not going to get you rich. Then again, this is a discussion about safe stocks for your 401k, so you shouldn’t be thinking about swinging for the fences. Instead, COST stock is a great example of playing “small” ball. Go for high-percentage singles and try to make something happen on base rather than sitting on the bench after striking out.
Primarily, I like COST stock because of its high-income user base. I’ve mentioned this countless times so yes, I’m repeating myself. But with the average Costco shopper bringing home six-figure earnings, a recession will impact this base the last. Let’s be real – if Costco shoppers are hurting from a downturn, we may have bigger problems.
But it’s not just affluent folks that shop at Costco. With more millennials settling down and starting families, the high-bulk nature of warehouse shopping augurs well for business. Therefore, this retailer deserves inclusion in your list of long-term safe stocks to buy.
Kimberly Clark (KMB)
One of the things we all learned from 2020 is that no matter who you are or how many toys you have, every human being has basic requirements. Of course, food and water are absolutely essential. Despite what my InvestorPlace colleague Louis Navellier might say, man cannot live on Lamborghinis alone.
However, when you eat, you also do something else. And depending on what you eat, you also do that something else a lot quicker than normal. That’s why I really like Kimberly Clark and KMB stock. Because if I learned anything from Covid-19, it’s that Americans spend a lot of time in the bathroom.
As you know, Kimberly Clark is one of the top manufacturers of toilet paper. While declining coronavirus cases makes the case for KMB stock a little bit less enticing, I’m going to take a contrarian view. I believe that we may have semi-permanently changed our collective relationship with TP. As the Washington Post stated, severe crises can affect people, especially the younger folks, for decades.
Plus, non-cyclical investments make sense as part of your long-term portfolio of safe stocks.
Verizon Communications (VZ)
To be quite honest, Verizon Communications has been a disappointment. For years, analysts have recommended Verizon as one of the top safe stocks for inclusion in your retirement strategy. I’m not going to disagree on that. However, with a trailing five-year return of less than 10%, VZ stock isn’t exactly killing it.
But again, if you’re thinking retirement, Verizon deserves strong consideration. Mainly, we have the 5G rollout that should pay dividends once the U.S. and the rest of the international community resolve the Covid-19 crisis.
Indeed, the coronavirus itself has demonstrated the importance of connectivity technologies in the modern landscape. No matter what, we need 5G to integrate the next wave of innovations. This dynamic should serve VZ stock well into the future.
Also, despite the terrible impact to the consumer economy, people are still forking over their discretionary funds for the latest iPhone or whatever in-fashion gadget. This too should support Verizon as one of the more viable safe stocks for consideration.
In the physical computing hardware era, IBM was king. If you were rich, you could afford an IBM PC proper. If you were an average everyday plebe, you bought an IBM clone – oh, the horror!
These days, no one would know what the heck you were on about if you mentioned the above. For one thing, the hardware component of technology is gradually shifting over to mobile devices. As well, the emphasis today is on software, as you might have noticed with recent technology-based initial public offerings. As this paradigm became more apparent, IBM stock lost its luster.
Therefore, on paper, it doesn’t appear that “Big Blue” should be considered one of the safe stocks for your 401K. I disagree. It could turn out to be one of the safest investments to make because IBM stock isn’t about getting rich off one particular trading session. No, we’re in this for the long haul.
Plus, shares have already come down substantially from their highs. You’d figure a recovery will materialize over the next several years.
For the patient investor, there’s a lot to like. With significant exposure to relevant innovations such as artificial intelligence, cybersecurity and blockchain solutions, to name but a few, IBM can marinate quite delectably for your 401K.
Exxon Mobil (XOM)
Admittedly, I really trashed the case for Exxon Mobil and the broader oil industry. I know that at least one oil and gas executive reads my InvestorPlace articles so I’m here to tell you folks (if you happen to be reading this one) that my skepticism was nothing personal. During the midst of the worst phases of the coronavirus, demand was just dead on arrival.
Anecdotally, my mileage clocked in 2020 was roughly a quarter of what I normally put in. Let me put it another way: I’m concerned that my credit card company will remove me due to extended nonactivity. I’m sure I’m not the only one experiencing this, which isn’t great news for XOM stock.
Plus, you have the Democrats who are angling for more green-friendly initiatives. Again, that sounds like a severe headwind – and a long-term one at that – for XOM stock.
However, if we’re being realistic, it will take time for wholesale changes to our energy infrastructure. I’m talking decades, not next year. Therefore, oil and gas are relevant if you’re a contrarian investor banking on a recovery.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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.