Investing In The Final Four: Exxon Mobil Corporation (XOM), Microsoft Corporation (MSFT), Johnson & Johnson (JNJ)

The last company on the list also appears to be the most expensive. Automatic Data Processing (NASDAQ:ADP) is trading at about 22 times trailing earnings and 20 times forward earnings. The company pays out a dividend yielding around 2.7%, which, with the exception of Exxon, isn’t as attractive as the cheaper stocks mentioned above. The company’s CEO, Carlos A Rodriguez, recently dumped 53,100 shares. This doesn’t necessarily mean you should sell, too, if you already own this great company, but opening a position in it now might not be such a good idea due to its current pricey valuations. A recovering economy should help the business services company pick up some steam.

While the company has gotten pricier in terms of P/E, earnings have been increasing lately, and an increasing dividend from a rock-solid company is always encouraging.

The bottom line

Investing in this “final four” portfolio will give an investor exposure to technology, medical, oil and gas, and business services through four AAA rated companies. These companies are also great candidates if you’re looking for solid stocks that increase dividends consistently — in good times and bad. Exxon and Microsoft look fairly valued, and perhaps even cheap, hitting record highs even in a rising market. Both stocks are lagging in capital appreciation, but may provide more safety with their financial stability and healthy, safe dividends if an inevitable correction occurs. Johnson & Johnson and Automatic Data Processing currently look a little too expensive for my liking, but would make great long-term investments, should they come down to more reasonable levels.

The article Investing In The Final Four originally appeared on Fool.com and was written by Joseph Harry.

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