In this article, I’m giving long investors information about safe stocks to buy and hold for a long time; if not to own forever.
Many investors haven’t been through a bear market, much less one that is accompanied by 40-year high inflation. This leads some analysts to poke a hole in the idea of the classic buy-and-hold strategy. And when Apple is the most shorted stock in the market, many investors are scoffing at the idea of any stock being a “safe stock.”
However, this reminds me of a time when Tiger Woods was at the height of his dominance. Before every major championship the question was do you take Tiger or the field? Although he won his share, more often than not, someone other than Tiger won the major.
As it relates to the market, I believe the same question applies. You can bet that this time is different. Or you can bet that the time-tested history of the market will prevail. The bears may claim some victories, but history tends to be on the side of the long-term investor.
If you share that belief, and you have the time horizon to wait it out, here are seven safe stocks that you’ll be glad to own today and for whatever the future holds.
AAPL | Apple | $146.40 |
MSFT | Microsoft | $249.20 |
AMZN | Amazon | $120.95 |
NEE | NextEra Energy | $81.77 |
NVDA | Nvidia | $132.09 |
MCD | McDonald’s | $239.09 |
ABBV | AbbVie | $143.33 |
Apple (AAPL)
I’ll get the obvious choice out of the way first. Apple (NASDAQ:AAPL) makes this list of safe stocks to buy and hold for many reasons.
A global pandemic didn’t douse demand for the company’s signature iPhone. During that time, the company has also become a compelling player in the streaming market. It may become an even more entrenched option if it wins the rights to the NFL Sunday Ticket.
But the reason I tend to go with Apple is that the company has products that will continue to be in demand regardless of what’s going on in the broader market.
I realize that Bank of America (NYSE:BAC) recently issued a warning that said Apple may not outperform the market in the near term. We’ll know more about that when we get a look at the next quarter or two of earnings. But an analyst that I hold in high regard recently had this reminder about Apple in his e-newsletter: “There is not another company on the planet making $105,116 a minute.”
Revenue like that makes AAPL stock a safe choice for me.
Microsoft (MSFT)
If Apple is my number one pick, then Microsoft (NASDAQ:MSFT) would be 1A. The case for Microsoft is similar to that of Apple. The company continues to find ways to generate revenue even as it retains superiority with its Windows operating systems and Office 365 digital document suite.
However, like Apple, Microsoft’s name continues to pop up in just about every sector that is projected to show strong growth in the years ahead. Of course, investors have to consider its cloud business which now contributes the largest chunk of the company’s revenue. But the company is also well-seeded in areas like cybersecurity, gaming and data storage.
Like Apple, Microsoft may face some short-term headwinds that are drawing the attention of analysts. However, MSFT stock checks all the boxes for safe stocks to buy and hold including a steadily growing dividend.
The yield of 1% may not excite investors, but it currently pays out approximately $2.48 per share on an annual basis and has been growing for 18 years.
Amazon (AMZN)
Something’s got to give? That was the sentiment I had when I wrote, perhaps foolishly, a few years ago that Amazon (NASDAQ:AMZN) should consider issuing a dividend. I mean how much more growth could the company provide?
Of course, I couldn’t have foreseen a global pandemic that would cause AMZN stock to rip higher. Still, heading into 2022, the stock was trading around $2,000 a share and looking out of reach for many retail investors who had other options.
But something did give with Amazon’s 20-for-1 stock split, and I’ll admit it’s made the stock look a lot more enticing to me.
Yes, the company has some short-term issues to work through and it hasn’t been immune from the broader sell-off. When the dust settles, investors are going to see a current share price of around $120 as a bargain that’s too good to pass up.
I’m sure two Prime days will be better than one, but as part of my list of safe stocks to buy and hold, I look at the rest of the company’s business, particularly its Amazon Web Services (AWS) which continues to grow market share.
NextEra Energy (NEE)
Moving away from the tech sector, I’m looking at NextEra Energy (NYSE:NEE).
My thesis here is pretty straightforward. The world is moving to renewable energy sources and that’s not going to change. At the same time, the world will need fossil fuels to make that happen.
That means when you’re looking at energy stocks to buy and hold you’ll want companies that will benefit from an all-of-the-above approach. NextEra Energy fills this space nicely. To begin with, the company operates as a traditional utility. Florida Light & Power is how the company derives much of its income and profits.
However, it also has one of the largest portfolios of wind and solar projects, and the company continually reinvests a substantial amount of its profits into these projects.
As a stock to own for the long haul, NEE stock is an attractive choice. In the short term, however, there will be work to be done to repair infrastructure damaged by Hurricane Ian. But NextEra Energy offers a dividend that currently has a yield of around 2%. In a volatile market, that’s a nice reward as you wait.
Nvidia (NVDA)
It may seem odd for me to include a semiconductor stock on a list of safe stocks to buy and hold. It’s a cyclical business after all, and investors in Nvidia (NASDAQ:NVDA) have watched shares get whacked by nearly 60% in this market downturn.
But if you believe that a good measure of a safe stock is free cash flow (FCF), then I’d urge you to take a closer look at the company. Nvidia has nearly doubled its FCF in the last two years. While I wouldn’t expect that kind of growth to continue, it does suggest that the company will be able to manage through this down market.
As Josh Enomoto wrote, there’s reason to believe that the company will see continued growth in the gaming sector and, perhaps, renewed demand for cryptocurrency. Ian Bezek recently wrote about the company’s opportunity in the area of quantum computing.
McDonald’s (MCD)
I recently put McDonald’s (NYSE:MCD) on my list of Dow stocks to buy on the dip, and one of the reasons I listed there applies here as well. As I wrote in that article, the company was one of the pandemic winners. It is still projecting to grow revenue and earnings in the high single digits for the next few years. That’s impressive for a company as large as McDonald’s.
One of the reasons that I believe McDonald’s is a safe stock is the company’s commitment to reinventing itself. It has embraced digital technology. Whether ordering through its mobile app and getting curbside delivery or using its in-store kiosks to place your order, McDonald’s is figuring out how to be efficient while delivering food that is value-priced and familiar to consumers.
When you’re looking for stocks to bet on for the long haul, many investors look for great dividend stocks. There aren’t many better than MCD stock. The current payout is $5.52 per share on an annual basis and the company has increased its dividend for the last 45 years.
AbbVie (ABBV)
Last, but certainly not least on this list of safe stocks to buy and hold is AbbVie (NYSE:ABBV). I have to admit that every time I write about AbbVie, I wonder why I don’t own the stock yet. It’s an oversight I’ll have to correct at some point.
ABBV stock didn’t draw a lot of headlines in 2020 and 2021 because it wasn’t a part of the Covid-19 vaccine race. Some investors were concerned about what would happen to the stock once the company lost its patent protection on its flagship Humira rheumatoid arthritis drug.
To address that, the company has launched two new drugs, Skyrizi and Rinvoq. As Louis Navellier wrote for InvestorPlace readers, the two drugs combined are expected to provide more than $15 billion in annual revenue by 2025. That would be more than Humira at its peak.
AbbVie is a dividend king, having increased its dividend in each of the last 50 consecutive years. It currently pays out an impressive $5.64 per share annually. It has an equally impressive dividend yield of 3.98%, and let’s not forget that ABBV stock is up nearly 6% for the year.
On the date of publication, Chris Markoch had LONG positions in AAPL and MCD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.