While we all want to invest in stocks without exposing ourselves to risk, there’s no such thing as a stock that is completely safe to invest in. Even the biggest and best companies out there can face unexpected problems. And it’s not uncommon for some of the most stable companies to experience volatility in their stock prices.
With that said, there are some stocks that are certainly safer than other ones. These safe stocks tend to have strong balance sheets, stable stock price movements, and sell products and services that people want to use even during recessions.
Interested in learning more? If so, then continue reading and we’ll walk you through everything you need to know.
Berkshire Hathaway (NYSE: BRK-A) is a conglomerate that owns a collection of about 60 subsidiary businesses. Those businesses include household names like battery manufacturer Duracell, rail transport business BNS, and auto insurance giant GEICO. Many of these businesses are noncyclical, which means that they should do fairly well no matter what the state of the economy is.
Most of the components of Berkshire Hathaway are selected by CEO Warren Buffett himself. Referred to as the Oracle of Omaha, Warren Buffet is often viewed by other traders as one of the smartest investors in history.
It’s also worth pointing out that Berkshire Hathaway also holds large positions in Coca-Cola (NYSE: KO), Bank of America (NYSE: BAC), and Apple (NASDAQ: AAPL).
Most people know Disney (NYSE: DIS) for its characters, movie franchises, and theme parks, but there’s a lot more to this entertainment giant. In addition to these assets, Disney owns:
Owning Disney stock is essentially like owning a diversified portfolio. Even when their theme parks took a hit during the coronavirus pandemic, Disney+ viewership surged.
Procter & Gamble (NYSE: PG) is a mainly noncyclical business. That means that this corporation manufactures products people need in any economic environment. P&G is the parent company behind household staples brands such as:
The company is so stable that it’s actually been able to increase its dividend for over 60 consecutive years. That makes it one of the best dividend stocks in the history of the stock market.
If you’re looking for an asset that often delivers great long-term growth without much risk, then you should look into real estate. To give you an illustration of real estate’s stability, consider the Great Recession of 2008-09. Real estate was the main cause of the recession yet that sector still performed better than the overall stock market.
When you invest in the Vanguard Real Estate Index Fund (NYSEMKT: VNQ), you’re essentially investing in a diverse variety of real estate stocks.
It’s hard to find a brand that has a bigger competitive advantage than Starbucks (NASDAQ: SBUX). Its high reputation helps to give it pricing power over its competitors. Plus, its huge scale gives it advantages in efficiency too.
Starbucks has also been making strides in the relatively untapped Chinese market. And it got an extra boost when it turned out that it’s biggest Chinese competitor, Luckin Coffee, had actually been mostly lying about its performance.
Starbucks continues to grow with each passing year and they’ve been quick to adapt to global changes.
Apple (NASDAQ: AAPL) is one of the most valuable companies in the world and is worth nearly $2 trillion! They have the great advantage of a very loyal customer base and also an entire ecosystem of hardware and software that is designed to work together. The fact that your iPhone, iMac, iPad, and Apple TV all work so well together is no accident.
And the fact that Apple customers pay a premium to purchase Apple products only underscores the strength of their business.
Sherwin-Williams (NYSE: SHW) is one of the biggest paint, coating, and home-improvement companies in the world. And they also just happen to deliver one of the most reliable dividends on the stock market. Sherwin-Williams has been increasing its annual dividend for over 40 consecutive years.
In 2019, they generated over $1 billion in free cash flow, which is three times as much cash as they need to support their dividend payments. And thanks to the coronavirus pandemic, many homeowners decided to spend their free time working on their homes. This has led to an increase in sales of SHW’s products.
Microsoft (NASDAQ: MSFT) may seem a bit stuffy to younger investors, but it’s certainly the real deal. In fact, it’s only one of two publicly traded businesses that has the coveted AAA credit rating from Standard & Poor’s (S&P). The company has over $100 billion in cash and only a little over $62 billion in debt.
Microsoft provides a synergy between high-margin legacy businesses and a leap toward next-generation cloud services and enterprise software. It’s been an excellent performer for years and only seems to have an even brighter future ahead.
When you’re investing in the stock market, it’s always a good idea to have a balanced and diversified portfolio. That means you should have a good mix of speculative stocks but also safe stocks that you can rely on.
This is also referred to as the barbell approach.
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