Change involves risk, and as we watch the markets swerve, for many it’s time to switch from loading up our portfolios with exciting names, and taking a good long look at boring stocks to buy.
Certainly, as a fan of several speculative industries, I’m in no position to lecture people about conservative investing habits. In order to grow your portfolio, you must take risks: that’s the nature of the game. However, whether you’re a speculator or a by-the-numbers type of investor, boring stocks such as blue-chip giants offer significant value.
For one thing, boring stocks typically pay dividends, rewarding you simply for holding the equity. Usually, you’re not going to get rich off dividends, unless you purchase an ungodly amount of shares. However, passive-income generating companies tend to weather market storms better than high-flying growth names.
Second and on a related note, this is a year full of drama. Obviously, the novel coronavirus has disrupted the entire global community. As well, we’re just getting a glimpse into the economic damage the pandemic has caused. If recent indicators are any guide, the pain is only beginning. In this case, boring stocks to buy offer you relative stability – something that’s coming at a premium these days.
Finally, every portfolio, even for young investors, should have some exposure to boring stocks. You’re simply not going to win them all, and these established names should provide some downside mitigation.
So, without further ado, here are nine boring stocks to buy.
Chances are, if you’re thinking about technology names, IBM (NYSE:IBM) doesn’t come to mind; that is, unless you were discussing legacy names that were relevant in the pre-internet era. As a result, IBM stock has been among the most boring of boring stocks to buy.
Nevertheless, this is a situation where Big Blue’s (negative) reputation precedes it. True, IBM stock has failed to inspire investors despite many shifts in strategy. Further, more exciting tech firms have overshadowed the legacy company.
However, with IBM’s acquisition of Red Hat, management is making a credible push into cloud computing for large enterprises. Specifically, the company has invested heavily in Kubernetes, a container-based cloud protocol that allows unprecedented scale and efficiency.
With this Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)-developed innovation, end-users can share applications in self-contained data packages, thus eliminating the need for everyone to download the same system architecture. It’s a massive step forward in cloud technologies, thereby providing a long-term lift for IBM stock.
Further, Big Blue is forging ahead with their artificial intelligence capabilities. Given that AI represents greater efficiencies and organic cost savings, IBM stands to be wildly relevant in the new normal.
Crown Castle (CCI)
A real estate investment trust (REIT) specializing in communication towers and small cells, Crown Castle (NYSE:CCI) represents a vital cog in our digitalization initiatives.
But no matter what the industry, most folks rarely pay attention to the background players. Instead, they tend to focus on the front-facing action; in this case, smart device manufacturers.
Granted, the 5G rollout is a major paradigm shift in our telecommunications industries. Undoubtedly, those frontline companies will attract investor dollars. But for the astute buyer (that’s you!), CCI stock offers steady and viable capital growth and passive income opportunities. Obviously, none of the innovations associated with 5G can happen without the small cells that harness the telecom spectrums.
In addition, the transition from 4G to 5G will not happen overnight. Therefore, the big cell towers that facilitate 4G waves will still be relevant for many years. Plus, additional technologies may open new applications for cell towers. Therefore, this is a time to consider loading up on CCI stock despite its less-than-exciting reputation.
Duke Energy (DUK)
When oil prices dropped below zero for the first time in history, one thing became abundantly clear: we’re not trading in normal markets anymore. But some things never change. For instance, when we flip the switch, we expect the lights to turn on. And that’s the main thesis behind Duke Energy (NYSE:DUK) and DUK stock.
Of course, this simple act is something that we all take for granted; hence, my inclusion of Duke Energy in this list of boring stocks to buy. But in these crazy times, it’s the mundane things for which we should be grateful.
Obviously, the coronavirus has disrupted everyone to a varying but significant degree. This is what makes this crisis worse than anything we’ve encountered in modern history.
However, utility firms like Duke have kept the lights on – literally, in this case – allowing us to weather the storm. This one constant in our paradigm shift makes DUK stock an easy buy.
In many if not most cases, lectures on specialty chemicals and industrial metals will make eyes glaze over. By logical deduction, companies that focus on such elements can be relegated to a portfolio of boring stocks.
However, the inclusion of Albemarle (NYSE:ALB) into this list of boring stocks to buy is a badge of honor.
One of the world’s leading producers of lithium, ALB stock should move higher over the long run if electric vehicles integrate more deeply into the mainstream. Admittedly, though, this narrative may have taken a backseat for the time being, given how cheap oil prices are today.
However, I believe one of the reasons why some EV makers continue to perform well is due to broader implications of the oil industry. Though cheap oil is great for drivers, it’s not so great for our domestic oil industries. If prices don’t recover, we will see wholesale layoffs, presenting huge national stability problems.
But even if the EV narrative doesn’t pan out as many investors hope, ALB stock still has upside potential. As you know, lithium plays a vital role in battery technology, particularly those optimized for electronic devices.
I don’t see this tailwind declining anytime soon. Therefore, despite the occasional supply chain challenges, lithium and ALB stock should have a bright future.
Iron Mountain (IRM)
A recognized brand in data storage and protection, Iron Mountain (NYSE:IRM) is probably the most dry investment in this list of boring stocks to buy.
Indeed, its physical paper-related businesses – including shredding services and document storage – seem anachronistic in this day and age. Ironically, though, digitalization makes IRM stock immeasurably viable.
Although companies like IBM are encouraging corporate clients to shift to the digital cloud, large enterprises will never stop using actual paper. That’s because digital data is too easy to exploit and compromise. And if something were to go wrong – data breach, infrastructural crisis, or an Act of God – a physical backup can help mitigate the overall damage. It’s one of the understated reasons why astute investors love IRM stock.
Furthermore, as a company grows, their paper record storage needs expand. Iron Mountain offers an easy solution, providing safe storage in an offsite location. Therefore, even if the target company is compromised, its documents will not be.
Unfortunately, being compromised is a very real threat. During this crisis, nefarious agents have wreaked havoc on unsuspecting victims, including those associated with critical infrastructures. Therefore, this pronounced need for security and safeguards is a huge, underappreciated catalyst for IRM stock.
While Disney’s (NYSE:DIS) vast content library is anything but tedious, DIS stock is at home among boring stocks to buy.
Here’s the reality: if your equity shares are traded on the Dow, chances are, they didn’t get there by taking investors on the ride of their lives.
However, boring doesn’t necessarily have to equate with low growth. Despite its reputation as a slow-and-steady dividend bearer, DIS stock returned over 36% in 2019. Now, the question is, whether and how well it will recover from its latest challenges.
On the surface, it doesn’t look good. Disney has taken a hit to its resort, movie and sports (via ESPN) businesses. Frankly, you have every reason to run.
However, once society normalizes, it’s possible that we could see pent-up demand, particularly for sports viewership, in which everyone was forced to go without. In the meantime, Disney’s streaming platform Disney+ should help mitigate some of the damage.
Putting Kellogg (NYSE:K) on a list of boring stocks to buy shouldn’t offend anyone’s sensibilities. Aside from our breakfast table, we really don’t think too much about the company. As a largely secular company, K stock is good for solid dividends and for holding the fort in a downturn.
But that’s not the reason why I’m interested in K stock this time around. Instead, it’s the hype machine surrounding Beyond Meat (NASDAQ:BYND) and the rejuvenated plant-based meat industry. Supposedly, BYND is a transformative investment that can convert meat-eaters toward alternative meat. However, the problem is that real meat is almost universally flavorful to carnivores. Fake meat, though, has sharp critics.
But a bigger problem is scale and competition. Beyond Meat only produces fake meats. But Kellogg can disrupt this space through its MorningStar Farms subsidiary while not skipping a beat in its core markets.
Furthermore, the meat-shortage crisis may force some consumers to consider protein alternatives. Theoretically, this benefits BYND. However, I believe Kellogg’s superior scale will help give K stock the edge.
One last note – as food prices rise, hard-hit consumers will likely gravitate toward products that they can afford. Given Kellogg’s brand name appeal, this crisis may give the company a new lease on life.
Philip Morris International (PM)
For many years, electronic-cigarette smoking or vaping occurred as a niche practice. But in the latter half of 2019, everybody was talking about vaping, and not for good reasons. The public blamed a rash of illnesses and deaths on flavored vape devices, creating a panic.
When the outbreak occurred, Philip Morris International (NYSE:PM) shares took a hit in the markets. Although PM stock is primarily levered to traditional tobacco products, the underlying company invested heavily in heat-not-burn devices called IQOS. Similar to vaporizers, IQOS mimics the experience of “analog” smoking but in a cleaner and arguably healthier platform.
Despite the ugliness of the vaping crisis, PM stock has skyrocketed since late September of 2019. I firmly believe that this was because the hysteria over vape devices was substantially exaggerated. In December, the Centers for Disease Control and Prevention pointed to vitamin E acetate as the main culprit.
Since vitamin E acetate is not a substance found in legal vaping products, the crisis was really about risky behaviors. And while the coronavirus is a concern, cynically, the pressures on mental health due to shelter-in-place orders may increase cigarette and vaping usage.
Interestingly, Philip Morris’ recent earnings report indicated that while the company sold fewer cigarettes, price hikes boosted earnings by 30%. This suggests that consumers are willing to pay a premium to get their fix, which is a dubious but still viable long-term tailwind for PM stock.
CVS Health (CVS)
When e-commerce behemoth Amazon (NASDAQ:AMZN) wants to disrupt your industry, it’s almost always bad news for you. Retail pharmacy specialist CVS Health (NYSE:CVS) learned this the hard way last year. Combined with fiscal concerns such as a worrying debt load, CVS stock bled out.
Though Amazon’s encroachment is a serious challenge, CVS stock may have a moat. Like many other boring stocks to buy, CVS has a powerful brand identity. Additionally, the pharmacy has a vast physical footprint, with many locations open 24 hours.
Unless Amazon can offer immediate shipment, it simply can’t compete with CVS without investing onerous amounts of money. Additionally, the Covid-19 pandemic has bolstered the demand for on-the-spot purchases. Therefore, the underlying company likely has many years to mount a counteroffensive.