In this article, we will look at 10 safest stocks to invest in. If you want to explore similar safe investment options, you can also take a look at 5 Safest Stocks To Invest In.
2022 got off to a rough start. With the consumer-price index recording historic highs in February and March and the Fed’s efforts to regulate inflation by raising interest rates, all that was needed for everything to go South was a massive supply chain disruption which was successfully accomplished by Russia’s invasion of Ukraine. Taking a look back to the beginning of 2022, the consumer price index rose 7.9% year-over-year in February, attaining a historic high. Moving on to March 2022, the CPI recorded an 8.5% rise compared to March 2021, the highest since December 1981. In April, the CPI rose 8.3% year over year. On March 16, the Fed issued its first interest rate hike since December 2018, and increased interest rates by 0.25% as the CPI rose to attain all-time highs since the 1980s. The Fed issued its second interest rate hike on May 5 when it rose interest rates by 0.50%, bringing to range between 0.75% and 1%.
The Ukraine conflict served as fuel to the fire. Just when the world bid “good riddance” to the pandemic, and a slowly growing and recovering global economy set itself in motion, Russia’s declaration of war on Ukraine provided a major headwind. Not only did it result in massive supply chain disruptions, but the war caused markets to become historically volatile. Prices of commodities skyrocketed. The increased volatility even resulted in halting trading on the London Metal Exchange, when nickel broke its record and soared to trading over $100,000 per megatonne on March 7 and then sharply falling to roughly half that value on March 8. The price of Brent crude oil almost hit $140 per barrel in March 2022, and as of this June, crude oil prices are nearing $125 per barrel. Global inflation, rising interest rates, and highly volatile markets are leaving investors baffled as to where they should best put their money to retain profitability or at least break even.
There are, however, sectors that tend to exhibit inflation-resistant behaviors and are known to weather well through times of economic strife. Industry-leading names that have a reputation for profitability in both good and bad times are often sought after by investors to fall back on during times when business is in the doldrums. Such companies are also known as blue-chip companies and are typically highly ranked in top blue-chip indices such as the S&P 500 and the Dow Jones Industrial Average.
Some of the most prominent blue-chip companies include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL). However these companies are suffering major declines from the tech sell-off that initiated in May 2022 due to macro-economic headwinds such as the Ukraine conflict, Covid-19 related lockdowns in China, and global economic stagnation.
These three tech giants have reportedly constituted the most to the $1 trillion losses incurred by the tech industry during this May’s tech selloff. In this article, we will explore companies that have proven track records of sustaining their performance in all economic cycles, and therefore serve as the safest and most reliable investment options.
Photo by Tech Daily on Unsplash
Our Methodology
To determine the 10 safest stocks to invest in, we conducted extensive research on industrial sectors that demonstrate robustness in all economic phases and especially during a recession. The key to building a safe and reliable investment portfolio is to diversify investments across a wide array of industries to mitigate and manage risk. Another key ingredient that makes a stock safe is dividends, which is why most of our stock picks are dividend-paying companies.
Along with each stock we have mentioned the analyst rating and investor sentiment for it. We derived the hedge fund sentiment from Insider Monkey’s database which, as of the first quarter of 2022, keeps track of roughly 900 elite hedge funds. We believe analyst and investor sentiment to be fundamental indicators for gauging a stock’s upside, and therefore provide our readership with relevant context to strengthen their due diligence and make informed investment decisions.
Now that we have understood what makes a stock safe and reliable, let’s dive into the list of 10 safest stocks to invest in.
Safest Stocks To Invest In
10. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 22
Realty Income Corporation (NYSE:O) is an S&P 500 REIT and is adored by many because of its consistent monthly dividends which are supported by cash flow from 11,280 real estate properties owned under long-term lease agreements with commercial clients. The company’s monthly dividend payments allow for investors to fall back on during times of economic uncertainty, and therefore makes it one of the safest stocks to invest in now. As of this May, Realty Income Corporation (NYSE:O) has declared 623 consecutive common stock monthly dividends since inception and has a track record of raising its dividend payouts over 110 times.
On May 17, Realty Income Corporation (NYSE:O) declared a monthly cash dividend of $0.247 per share. The dividend is payable on June 15, to investors of record on June 1. As of June 9, Realty Income Corporation (NYSE:O) has a forward dividend yield of 4.35% and has a record of growing its dividends for over 25 years, with a 5-year dividend CAGR of 3.75%.
As of May 23, Wolfe Research analyst Andrew Rosivach has a Peer Perform rating on Realty Income Corporation (NYSE:O) and a $73 price target on the shares.
At the end of the first quarter of 2022, 22 hedge funds were long Realty Income Corporation (NYSE:O) with stakes worth $284.88 million. Of these, Glendon Capital Management was the most prominent shareholder, owning more than 1.8 million shares of the company which amounted to a stake of $128.68 million.
Realty Income Corporation (NYSE:O) is among high-end blue-chip companies and unlike Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL), has managed to sustain its performance amidst economic stagnation.
9. Phillips 66 (NYSE:PSX)
Number of Hedge Fund Holders: 41
Phillips 66 (NYSE:PSX) is a leading American multinational energy manufacturing and logistics company. The company operates through four business segments: Midstream, Chemicals, Refining, and Marketing and Specialties. On June 1, Phillips 66 (NYSE:PSX) announced that it has entered into a strategic collaboration with FreeWire Technologies to help develop its first electric vehicle charging project in the United States. Phillips 66 (NYSE:PSX) will install FreeWire Technologies’ battery-enabled charges at its roughly 7000 premium retail fuel sites across the country. It is one of the few energy giants that is also making strides in the electric vehicle space, and with the ongoing EV boom, Phillips 66 (NYSE:PSX) is a compelling stock option to consider for the long term.
Another reason why Phillips 66 (NYSE:PSX) is one of the safest investment options to consider is because of the company’s undervalued nature and its dividend capacity. As of June 9, Phillips 66 (NYSE:PSX) has a forward dividend yield of 3.52%, a forward PE ratio of 9.71, and on top of this, the stock has appreciated by 19.25% over the past twelve months.
Analysts are bullish on Phillips 66 (NYSE:PSX). On May 23, Piper Sandler analyst Ryan Todd raised his price target on Phillips 66 (NYSE:PSX) to $120 from $119 and maintained an Overweight rating on the shares.
Hedge funds are piling into Phillips 66 (NYSE:PSX). At the end of the first quarter of 2022, 41 hedge funds were bullish on Phillips 66 (NYSE:PSX) and held stakes worth $1.38 billion in this company. This is compared to 41 positions in the prior quarter with stakes worth $927.41 million.
As of March 31, Millennium Management is the leading shareholder in Phillips 66 (NYSE:PSX) owning over 2.9 million shares of the company. The fund’s stakes were valued at $256.53 million.
Phillips 66 (NYSE:PSX) has gained a reputation for demonstrating financial robustness and is among the least volatile and best performing stocks. Blue chip stocks that are vulnerable to near-term headwinds and are suffering losses include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL).
8. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 61
Costco Wholesale Corporation (NASDAQ:COST) is the second-largest retail store in the world. The consumer staples sector is known to be the safest bet since consumers do not stop spending on basic necessities even amidst price hikes. Costco Wholesale Corporation (NASDAQ:COST) has a proven track record for profitability and an industry-wide reputation for its products and services.
On April 26, Costco Wholesale Corporation (NASDAQ:COST) announced earnings for the fiscal third quarter of 2022, in which it outperformed market consensus once again. The big-box retail giant reported earnings per share of $3.04 and beat EPS estimates by $0.02. Costco Wholesale Corporation (NASDAQ:COST) also reported quarterly revenue of $52.60 billion, up 16.16% year over year, and exceeded expectations by $1.11 billion. Moreover, on June 2, Costco Wholesale Corporation (NASDAQ:COST) reported increased sales volumes of $18.23 billion for May, up 16.9% year over year. As of June 9, the stock’s trailing-twelve-month returns are up 23.17%.
This June, Jefferies analyst Corey Tarlowe raised his price target on Costco Wholesale Corporation (NASDAQ:COST) to $580 from $560 and reiterated a Buy rating on the shares.
At the close of Q1 2022, 61 hedge funds were long Costco Wholesale Corporation (NASDAQ:COST), with stakes totaling $5.41 billion. This is compared to 57 positions in the previous quarter with stakes of $5.40 billion. The hedge fund sentiment for the stock is positive.
Fisher Asset Management raised its Q4 2021 stakes in Costco Wholesale Corporation (NASDAQ:COST) by 4% in the first quarter of 2022. As of March 31, Ken Fisher’s hedge fund owns more than 4.2 million shares of the company which amounts to a stake of $2.43 billion. Fisher Asset Management is the most prominent shareholder in Costco Wholesale Corporation (NASDAQ:COST)
Here is what ClearBridge Investments had to say about Costco Wholesale Corporation (NASDAQ:COST) in its “Sustainability Leaders Strategy” fourth-quarter 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 64
The Coca-Cola Company (NYSE:KO), an investors’ favorite dividend stock pick, also happens to be one of the safest stocks to invest in now. Hedge funds are raising their stakes in the beverages giant. Insider Monkey found that at the close of Q1 2022, 64 hedge funds held stakes in The Coca-Cola Company (NYSE:KO) worth $29.17 billion. This is compared to 70 positions in the prior quarter with stakes worth $28.61 billion.
The Coca-Cola Company (NYSE:KO) has consistently grown its dividends for well over 50 years, making it rank among the top dividend kings. Dividend-paying stocks offer investors an inflation hedge and therefore prove suitably safer investment options for volatile times. As of June 9, The Coca-Cola Company (NYSE:KO) has a forward dividend yield of 2.78% and a 5-year dividend CAGR of 3.66% along with an annual payout ratio of 70.25%.
On April 27, The Coca-Cola Company (NYSE:KO) declared a quarterly cash dividend of $0.44 per share. The company will be going ex-dividend on June 14 and paying out the common-stock cash dividend on July 1.
On May 9, BofA added The Coca-Cola Company (NYSE:KO) to its “US 1” list, which includes the collection of its best investment ideas drawn from the universe of Buy-rated, U.S.-listed stocks.
The Coca-Cola Company (NYSE:KO) is one of Warren Buffett’s top stock picks and is among his hedge fund’s top 5 holdings. As of March 31, Berkshire Hathaway owns 400 million shares of The Coca-Cola Company (NYSE:KO) which amounts to a stake value of $24.79 billion. Berkshire Hathaway is the top shareholder in the beverages giant.
ClearBridge Investments recently published its “Dividend Strategy” fourth-quarter 2021 investor letter in which it mentioned The Coca-Cola Company (NYSE:KO). Here is what the firm had to say:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 69
Verizon Communications Inc. (NYSE:VZ), a telecommunications giant, is one of the best blue-chip safest investment options to consider right now. Like other stocks mentioned on our list, Verizon Communications Inc. (NYSE:VZ) is a dividend-paying company that provides unparalleled communication services all over the world. Moreover, Verizon Communications Inc. (NYSE:VZ) is undervalued, which adds more reason to consider investing in it for potentially explosive returns. As of June 9, Verizon Communications Inc. (NYSE:VZ) has a forward dividend yield of 4.96% and a forward price-to-earnings ratio of 9.56.
On May 31, 2022, Verizon Communications Inc. (NYSE:VZ) announced that its board of directors has declared a quarterly cash dividend of $0.64 per share of the company’s common stock. The dividend is payable on August 1, to shareholders of record at the close of business on July 8. The company has been consistent with raising its dividends for roughly 2 decades.
On June 2, Wolfe Research analyst Peter Supino lowered his price target on Verizon Communications Inc. (NYSE:VZ) to $51 from $60 but maintained a Peer Perform rating on the shares.
At the end of the first quarter of 2022, 69 hedge funds were bullish on Verizon Communications Inc. (NYSE:VZ) with stakes worth $4.12 billion.
In the first quarter of 2022, Ken Fisher’s Fisher Asset Management raised its stakes in Verizon Communications Inc. (NYSE:VZ) by 72%, bringing them to $855.15 million. Fisher Asset Management is the leading shareholder in Verizon Communications Inc. (NYSE:VZ) and owns over 16.78 million shares of the company.
ClearBridge Investments also mentioned Verizon Communications Inc. (NYSE:VZ) in its “Dividend Strategy” fourth-quarter 2021 investor letter. Here is what the firm said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
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Disclose. None. 10 Safest Stocks To Invest In is originally published on Insider Monkey.
