In a world in which stocks like GameStop can more than double overnight based on nothing more than Reddit message board threads, it can seem out of step to buy old-school stocks like oil companies or utilities. Yet, these types of “boring” stocks might actually be what you need right now.
With a stock market at all-time highs and investors piling into stocks with little to support them fundamentally, solid, old-fashioned companies with reliable earnings and dividends might turn into safe havens before too long. Even in more normal times in the stock market, the names on this list have proven to be solid long-term performers, even if they’re not the type to jump 50% or more in a single day.
As with any investment, be sure to consult with your financial advisor and discuss your investment objectives and risk tolerance before you make any moves. Here’s a look at some “boring” stocks that may put long-term dollars into your pocket.
- Stock price as of Feb. 17: $176.65
When it comes to so-called “boring” stocks, 3M has to be near the top of the list. The venerable maker of such household products as Scotch Tape and Post-It Notes certainly doesn’t have the headline-making power of, say, electric vehicle maker Tesla or iPhone maker Apple. Yet, 3M has been a member of the Dow Jones Industrial Average since 1976, it has paid dividends to shareholders without interruption for more than 100 years, and it has raised its dividend for 62 consecutive years. Currently, the stock’s yield sits at a fat 3.35%. Put it all together, and as boring as 3M may seem, stock credentials don’t get much more blue-chip than that.
Public Storage (PSA)
- Stock price as of Feb. 17: $234.07
Public Storage is the largest owner and operator of self-storage facilities in the world. This certainly doesn’t sound like an exciting business. However, it’s a great “boring” stock to own due to its consistency. Americans are nothing if not excellent consumers, and in many cases, all of that “stuff” becomes too much to store at home. The storage business is a resilient one and can thrive in nearly any type of economy. In recessions, people downsize and need a place to store their things, and in a booming economy, spending picks up and adds to the “storage of stuff” problem. Thus, analysts consider this type of business recession-resistant. Currently, the stock is paying an attractive 3.5% yield.
- Stock price as of Feb. 17: $202.30
Caterpillar is another staid member of the old-fashioned Dow Jones Industrial Average, joining 30 years ago in 1991. The average consumer may know that Caterpillar makes machinery like bulldozers, but the company is much more than that. In fact, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel-electric locomotives, diesel and natural gas engines, and industrial gas turbines, to the tune of a whopping $53.8 billion in revenues in 2019 alone. With a solid dividend yield of 2.25% and a product line that should benefit from a post-COVID-19 global economic recovery, Caterpillar could be a “boring” stock to watch.
American Water Works (AWK)
- Stock price as of Feb. 17: $160.78
When it comes to “boring” stocks, utilities are usually at the top of the list. Utilities provide the basic services that all Americans need, such as water and power, and they often aren’t popular with consumers, as they issue bills every single month with charges that seem to consistently rise. From an investor’s perspective, however, this is what makes utilities attractive to invest in. By providing services that all people need, utilities generate a predictable, consistent revenue stream. This may sound boring, but it puts money directly into investors’ pockets.
American Water Works is the largest publicly traded water and wastewater utility company in America. The need for clean water will always be there, and in the event of water shortages, prices will go up, which benefits investors. The stock has been a long-term, consistent winner and it currently pays a dividend yield of 1.36%.
- Stock price as of Feb. 17: $95.92
Chevron has had its ups and downs over the years, but it’s still considered a “widows and orphans” stock. This old-fashioned Wall Street term refers to stocks that have solid dividends and relatively stable stock prices, making them appropriate investments for “widows and orphans” or any other vulnerable member of society. Chevron may not be as exciting as many other types of stocks, but even in a world trending toward eco-friendly fuels, fossil fuel producers will likely still be in demand for decades to come. With a fat 5.9% current dividend, Chevron may be “boring” but it’s a great source of equity income.
- Stock price as of Feb. 17: $186.44
The Walt Disney Company may make a more exciting product to most people than companies like 3M or Caterpillar, but it’s still considered a reliable, “boring” stock. Disney could be a stock to take a look at because it is on the cusp of some big changes, one of which is already well in the works. In 2020, the company unveiled its Disney+ streaming service, and the results thus far have been gangbusters. Already exceeding expectations, some estimates have Disney+ reaching 260 million subscribers by 2024. Additionally, if and when the COVID-19 economy recovers, Disney will benefit greatly, with its films back in theaters, its cruise ships back on the open seas and its flagship theme parks once again fully operational.
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NRG Energy (NRG)
- Stock price as of Feb. 17: $39.77
NRG Energy is another utility, like American Water Works, that may sound boring but that could be a good choice for your portfolio. With a current yield of about 3.08%, NRG Energy puts a lot of money in investors’ pockets every year. But the power industry’s leading company has a lot more going for it looking forward than looking back. With the Biden administration taking the reins in Washington, more federal money is going to be allocated to clean energy generation. NRG Energy may benefit from this global push, as the company has three renewable energy plants and is looking to take advantage of this fast-growing area.
- Stock price as of Feb. 17: $244.20
Microsoft is another of a large gang of “old tech” stocks that in many circles just aren’t as exciting anymore, with a new wave of companies like Salesforce.com, Shopify and Square gobbling both headlines and investor interest. Yet, Microsoft is a sleeping giant that has been awakening recently, and soon investors might look at it as much more than the “boring” old tech stock that only sells Windows software. Microsoft has been moving aggressively into cloud services in recent years, and its earnings are starting to reflect a much higher growth profile. Add in the company’s recent partnership with General Motors to develop software for electric vehicles and suddenly, Microsoft is becoming young and trendy once again.
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- Stock price as of Feb. 17: $177.13
Lowe’s is one of the two companies that dominate the home improvement space, along with Home Depot. Unless you’re a contractor, there’s nothing really exciting about a company that sells lights, screws, flooring, tools and construction supplies. However, the stock has been exciting indeed for investors, gaining over 80% since July 2018, when its latest CEO took the helm.
Lowe’s had a great 2020, as the pandemic kept people at home and many undertook renovation projects. However, the long-term prospects of the company are good as well, as foot traffic continues to rise and its installation services are generating additional revenue. As the economy recovers, Americans are likely to both feel more confident and to have more disposable income to spend, trends that can help support companies like Lowe’s.
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- Stock price as of Feb. 17: $337.33
If you’re like 70% of Americans, you likely have a credit card in your wallet. While it may be fun to use it, the business of credit card processing may not sound all that exciting. However, a company like Mastercard is the ultimate bet on a post-coronavirus economic recovery. As the economy opens up, Americans who have been pent-up to various degrees for more than a year are likely to flock to restaurants, movie theaters, shopping malls and countless other businesses. Every time a customer swipes a Mastercard to pay for these purchases, Mastercard generates revenue. Trends are already improving for the company, as it beat analyst estimates for both revenue and earnings in its most recent earnings release.
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Disclaimer: This list of stocks to consider was originally compiled on Jan. 29, 2021.