Safe stocks can be defined as those with lower volatility and a higher return than the market. Several factors contribute to this, including low risk, stable dividends, and reasonable price multiples.
While it is impossible to say which stock is safe, there are some good places to start looking for them. These include companies with high shareholder value, low debt, and strong cash flow.
This article discusses the importance of safe stocks in your portfolio. It also discusses some strategies to find safe stocks and how they can shield your portfolio against volatility.
|BRK-A,BRK-B||Berkshire Hathaway||$399,728.88 $266.09|
|PG||Procter & Gamble||$141.83|
Safe Stocks: Berkshire Hathaway (BRK-A,BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is a conglomerate holding company headquartered in Omaha, Nebraska. It was founded by Warren Buffett in the early 20th century and has grown to be one of the largest publicly-traded companies in the world.
As Berkshire Hathaway continues to grow, it is sure that it will eventually accumulate over $1 trillion. By 2021, the value of total assets owned by Berkshire Hathaway had grown to nearly $959 billion. This was a remarkable $85 billion over the previous year. To put things into perspective, since 2009, the total asset value has grown by almost $700 billion — a lot of progress in such a short time.
Berkshire Hathaway was an investment company that began with a single textile mill purchased from its founder for $1 million. Eventually, it grew into an insurance and financial services conglomerate with its subsidiaries including Geico, Fruit of the Loom, General Re, The Pampered Chef, and Dairy Queen.
The company is also known for its success with value investing. This investment philosophy emphasizes buying stocks when trading at a low price relative to their intrinsic value.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is one of the leading brands in the world. The company has been around for more than 150 years and is now a household name.
P&G is a highly successful company with revenues of $76.12 billion in 2021, making it a great acquisition for investor portfolios. The company has seen a 7.28% revenue growth in the last 12 months, and its business model is strong enough to support that growth.
P&G makes products for various industries, and the company’s selection will help it succeed in any market climate. The company has historically been very successful and is often used as a benchmark for future growth opportunities.
The company also has a high dividend yield, providing investors with a steady income stream. For over 130 years, P&G has been paid dividends and is currently realizing an amazing 65 consecutive years of dividend payouts. It is both a Dividend Aristocrat and a Dividend King. P&G continually invites shareholders to reinvest in the business and is one of the best of its kind, continuously paying out dividends.
Finally, they have relatively low risk because they have strong brands that are not easily replaceable.
Safe Stocks: CVS Health (CVS)
CVS Health (NYSE:CVS) is a health care company with a retail focus. It has been working on ways to make its services more accessible. They have also been working on ways to make their services more affordable for those who need them the most.
CVS Health is the largest retail pharmacy in the United States, with over 10,000 locations and $299.84 billion in revenue for the year ending March 31.
When discussing safe stocks, it is important to ensure the management practices fiscal discipline. In this case, CVS gets full marks. It is using excess cash to repurchase shares and pare down debt. At the same time, it is continuing to pay a very healthy dividend and investing in new growth areas like home-based health care.
Due to the bearish sentiment gripping the market, the stock has fallen spectacularly since its 52-week high. The strong sell-off has triggered a bearish momentum indicator, suggesting investors should take profits from this position. However, the selling pressure is a bit unfair since the company is delivering across all its key metrics.
The company’s bottom line jumped by 14.6% in its latest quarter. Meanwhile, its top-line also posted a significant jump of 11.4%, beating expected estimates — demonstrating strong business growth. The most impressive part, though, is that CVS has habitually beat Street estimates.
BlackRock (NYSE:BLK) is a company that has been around since 1988. They provide investment services and products to individuals, institutions, and companies.
They aim to help people achieve their financial goals by investing in stocks, bonds, mutual funds, ETFs, and other assets. BlackRock is considered one of the most stable investments as it provides steady returns with low volatility.
As of January 2022, BlackRock was the largest asset management company, with over $10 trillion in assets under management.
BlackRock has been a pioneer in alternative investments and asset management. It provides access to more than 10,000 financial advisors. Its clients can invest in individual stocks, bonds, or funds through BlackRock Advisors LLC or BlackRock Institutional Trust Company, N.A., which are subsidiaries of BlackRock.
BlackRock offers a wide range of services such as investment advice, portfolio management, and retirement planning to individuals and institutions worldwide.
BlackRock has been a stable investment for many years now. They have a strong performance track record and are reliable in terms of investment returns.
Safe Stocks: Adobe (ADBE)
Adobe (NASDAQ:ADBE) is a company with an extensive history in the industry of graphic design and digital media production. They have been around since 1982 and have significantly impacted the industry.
It provides software solutions for artists, photographers, designers, videographers, and photographers. They also provide tools to help people create content on their own.
During the pandemic, Adobe was very successful in generating revenue. Adobe’s success during the pandemic is because of its ability to deliver on-demand, scalable services and solutions that are easy for users to access.
Adobe Creative Cloud (CC) is a subscription-based service that offers a range of creative products and services for photographers, designers, videographers, filmmakers, and other creative professionals. It also offers an integrated workflow for managing your work across different devices and platforms.
Adobe is one of the best software companies, with a great product and tremendous growth potential. In fact, despite people returning to their normal routines in line with the general downturn, this company has managed to pull itself out by healthy margins. As work from home becomes the norm rather than the exception, it will continue to do well.
McDonald’s Corporation (MCD)
McDonald’s (NYSE:MCD) is a worldwide fast-food restaurant chain. The company began franchising its restaurants in 1955, opening its first location outside the United States in Canada. It operates over 36,000 locations worldwide, serving more than 69 million people daily.
McDonald’s is known for its hamburgers, french fries, chicken nuggets, and milkshakes. It also offers salads, fish sandwiches, breakfast items such as McMuffins and McGriddles sandwiches, and desserts such as sundaes, ice cream cones, and cups of soft-serve ice cream. So, the company has a wide portfolio of products that is not limited to only one kind of consumer.
McDonald’s is one of the most successful companies in the world. It has been able to maintain its success in the face of increasing competition and changing consumer habits. The company is also a franchising pioneer, contributing to its success.
The company’s sturdy business fundamentals were on full display in the first quarter of the year. Business earnings and revenue beat estimates for their first quarter this year, led by U.S. price hikes and strong global sales growth. The decision to halt operations in Russia led to a loss of $127 million in the quarter. The fact that McDonald’s
McDonald’s has been paying dividends for years and has increased payouts yearly since 1976. It’s a vIt’ssolid investment with incredible growth potential.
In summary, McDonalds is revolutionizing the restaurant industry. Not only have they brought back their old menu items and remodeled their restaurants, and they are expanding their reach through the use of technology. Now they’re taking their business to a whole new level. Therefore, it can keep increasing its payout for several years.
Safe Stocks: Starbucks (SBUX)
Starbucks (NASDAQ:SBUX) has been a successful company since its founding in 1971. The company is attributable to implementing innovative marketing strategies and adopting new technology.
Starbucks is one of the most successful coffee shops in the world. The company was founded by three partners, Jerry Baldwin, Zev Siegl, and Gordon Bowker. Starbucks is now one of the most recognizable brands, with more than 33,000 locations worldwide.
Successful companies like Starbucks have certain characteristics which make them successful. These include adapting to changes in their industry and staying profitable even during difficult times.
Thanks to the recent turbulence, investors are hoping for more from Starbucks. That is why Howard Schultz, its legendary former CEO, has returned to the helm again. He will surely be able to navigate issues concerning inflation and the supply chain of this company. In particular, the US coffee chain has to contend with issues in the Chinese market. The lockdowns are hurting, and food safety issues at local branches are also not helping.
Still, history suggests that any blips in performance are only temporary. The company is already investing $1 billion in its employees and infrastructure. Its robust fundamentals and 49-cent-per-share dividend translate to a 2.69% yield. Hence, it’s one of the best safe stocks out there.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.