In this article, we discuss the 10 best stocks to buy for financial stability.
Investing in stocks is one of the most effective ways to build long-term financial stability. While stocks can be volatile in the short term, history has shown that they generate higher returns over time compared to other asset classes. With the right strategy, investing in stocks can help individuals accumulate wealth, hedge against inflation, and secure a comfortable retirement. Stocks have historically outperformed other investment vehicles, such as bonds and savings accounts. According to data from the S&P 500, the stock market has delivered an average annual return of about 10% before inflation over the past century. In contrast, bonds have yielded around 5–6%, while traditional savings accounts provide returns of less than 1% annually. Recent studies reinforce this trend. A 2024 report from JP Morgan Asset Management found that over any 20-year period, the likelihood of losing money in the stock market is close to zero. Even with market downturns, those who stay invested tend to see significant growth.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
The power of compounding is a key reason why investing in stocks enhances financial stability. The earlier an individual starts investing, the greater the impact of compounding. For example, if an investor puts $5,000 annually into an index fund earning 8% per year, they would accumulate approximately $1.3 million over 40 years. This long-term growth potential allows individuals to plan for major life events, such as purchasing a home, funding education, or retiring comfortably. The US Federal Reserve reports that individuals with investment portfolios of at least $100,000 are significantly more likely to achieve financial security than those relying solely on savings. While stocks can be volatile, diversification helps reduce risk. A well-balanced portfolio containing stocks from different sectors, as well as international investments, can mitigate losses during market downturns.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we scoured investing forums, analyst reports, and advice from money managers and billionaires to compile a list of stock options that can provide financial stability to investors. These stocks belong to defensive sectors like consumer staples, healthcare, and energy. Many of these companies have solid dividend histories and enjoy a stable market position. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Stocks
Best Stocks To Buy For Financial Stability
10. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
PepsiCo, Inc. (NASDAQ:PEP) manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. In the fourth quarter of 2024, the company’s operating profit rose by 163%, largely due to the 148% boost from last year’s impairment charges related to the SodaStream business. In January, the company announced that it had closed the acquisition of Siete Foods. With Siete, PepsiCo will further expand its portfolio of products with nutritious, simple foods and ingredients and bring this popular, growing brand to new fans in even more places. In February, the Board of Directors of PepsiCo declared a quarterly dividend of $1.355 per share of PepsiCo common stock, a 7% increase versus the comparable year-earlier period.
9. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 60
McDonald’s Corporation (NYSE:MCD) operates and franchises McDonald’s restaurants around the world. In the third quarter of 2024, consolidated revenues for the firm reached nearly $6.9 billion, marking a 3% increase over the prior year. In early February, CNBC reported that McDonald’s was bringing the iconic Uncle O’Grimacey back to promote the Shamrock Shake. The Shamrock Shake, a seasonal staple for more than 50 years, returns to US restaurants annually before St. Patrick’s Day. The milkshake comes back in mid-February, and this year, 25 cents of every Shamrock Shake sale will go toward the Ronald McDonald House Charities.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) provides branded consumer packaged goods. In the report for the second fiscal quarter of 2025, the total sales were $21.9 billion, showing an increase of 2% from the prior year. In February, Febreze, one of P&G’s most recognizable and successful brands in the home care category, created the innovative PLUG Scent Booster. It is a device that gives you complete control over your home’s scent. The PLUG Scent Booster is compatible with over 30 Febreze PLUG refills, offering a vast library of scents to choose from — from soothing lavender to invigorating citrus.
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
The Coca-Cola Company (NYSE:KO) is a beverage company. As per the report for the third quarter of 2024, the company reported a 1% decline in net revenues, totaling $11.9 billion, compared to the same period in the previous year. Despite this, organic revenues—which exclude the impacts of currency fluctuations and structural changes—experienced a 9% growth, driven by a 10% increase in price/mix. Operating income saw a significant decrease of 23%, primarily due to a $919 million charge related to the remeasurement of contingent consideration from the 2020 acquisition of Fairlife and adverse currency effects. In February, the company announced the launch of Coca-Cola Orange Cream for sale in the US and Canada. In January, Costco announced plans to replace Pepsi with Coca-Cola as its food court beverage supplier, marking a significant shift in the retail giant’s strategy and highlighting Coca-Cola’s growing market momentum.
6. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE) transmits, distributes, and sells electric power to retail and wholesale customers in North America. In the report for the fourth fiscal quarter of 2024, the company reported net income of $1.2 billion, or $0.58 per share, on a GAAP basis, compared to $1.21 billion, or $0.59 per share, for the same period in the prior year. The firm recently revealed that it plans to partner with GE Vernova on natural gas generation while also seeking regulatory approval to restart its nuclear plant in Iowa. The new projects across the US will feed AI data centers and other large electricity users.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 75
Costco Wholesale Corporation (NASDAQ:COST) engages in the operation of membership warehouses. For the fourth quarter of 2024, the company reported net sales of $78.2 billion, an increase of 1% compared to net sales of $77.4 billion in the fourth quarter of fiscal year 2023. In January, the company declared a quarterly cash dividend of $1.16 per share. The quarterly dividend is payable February 2025 to shareholders of record. The firm has started the new year off with yet another sales gain, saying in a release recently that revenue last month rose 9.2% year over year to $19.51 billion.
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) researches and develops, manufactures, and sells various products in the healthcare field. In the fourth quarter of 2024, the company reported sales growth of 5.3% to $22.5 billion, with operational growth of 6.7% and adjusted operational growth of 5.7%. In February, the company announced that the European Medicines Agency has recommended expanding the approval of a new under-the-skin version of RYBREVANT. This treatment can be used with LAZCLUZE as a first-line option for adults with advanced non-small cell lung cancer (NSCLC) that have specific EGFR mutations (exon 19 deletions or exon 21 L858R substitutions). It’s also recommended as a standalone treatment for adults with advanced NSCLC who have EGFR exon 20 insertion mutations and didn’t respond to previous platinum-based chemotherapy.
3. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 87
Intuit Inc. (NASDAQ:INTU) provides financial management and compliance products. The company reported a total revenue of $3.3 billion for the first fiscal quarter of 2025, marking a 10% increase from the previous year. In February, the company launched its national Financial Literacy Forum series and Hour of Finance Challenge. The first event will take place during Super Bowl LIX week in New Orleans in partnership with the NFL’s Inspire Change initiative and the New Orleans Saints. The forum aims to teach local students important financial skills in a fun and engaging way. This event will kick off a series of student-focused financial literacy forums across the country.
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Walmart Inc. (NYSE:WMT) engages in the operation of retail, wholesale, and other units worldwide. In the report for the third fiscal quarter of 2025, consolidated revenue reached $169.6 billion, marking a 5.5% increase, or 6.2%, on a constant currency basis. The consolidated gross margin rate also rose by 21 basis points, driven primarily by Walmart US. In February, the company said it planned to relocate more workers to Arkansas and California, eliminating jobs in North Carolina. The company has also announced new office spaces in Sunnyvale, CA, and Bellevue, WA, as well as upgrades in Hoboken, NJ, and its Fashion office in New York City.
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 112
UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified healthcare company in the United States. In the fiscal year report of 2024, the company’s operating cost ratio was 13.2% compared to 14.7% in the prior year. In January, the company announced the set up of an optimal setting for delivering value-based care, especially for patients who are most in need and have limited access to care. The company’s Optum’s home care models are designed to keep patients healthy and out of the hospital by surrounding them with a team of physicians, nurse practitioners, social workers and pharmacists who are all working to ensure no one slips through the cracks.
While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than UnitedHealth Group Incorporated (NYSE:UNH) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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