10 excellent, low volatility stocks with consistent returns

by Justin Weinger on June 30, 2013

If one of your financial goals is to build a diversified portfolio with stocks and bonds of various risk you should like this blog today about 10 stocks that have all been delivering consistent returns over many years as well as paying generous dividends that continue to increase on a regular basis.

All 10 have excellent balance sheets with plenty of cash and very low debt and, even better, are all leaders in their particular industry and have been around for decades. While we are not recommending any of the stocks per se, we believe that they are all a solid value and well worth including in any diversified portfolio.

  1. While Apple may have staked its claim as the world’s most valuable company, ExxonMobil (XOM) has a corporate history that spans more than a century and its one of only 4 companies that have attained a perfect credit rating from Standard & Poor’s, AAA. While Exxon has cut back on its refining business and a North American oil glut are a bit problematic for the company, their functional and geographical diversity gives them an almost unparalleled ability to compete in the global market. Having really, really deep pockets helps quite a bit as well. Add to that the fact that they have been giving out dividends for longer than most people have been alive and you’ve got a stock that’s truly hard to beat.
  2. Have you looked in your kitchens cupboards and in your refrigerator lately? If so, the chance that you saw a food product from General Mills (GIS) is practically 100%. With brands like Progresso soups, Cheerios cereal, Betty Crocker cake mixes and the inimitable Green Giant vegetables, General Mills has proven over and over that it’s brand is more than able to withstand extremely tough competition from cheaper, generic brands. They are also using their formidable cash position in order to expand into the world’s emerging markets as well as to finance acquisitions, dividends and share buybacks. Definitely a great choice for any diversified portfolio.
  3. When you’ve been around for over 100 years you’ve seen your share of economic storms. International Business Machines (IBM) has seen their fair share but continues to innovate, spending more than $6 billion on research in 2012, something that allowed them to win more patents than any other company on the planet, 6180. Although cloud computing is definitely a growing  challenge to their business (high-end hardware) there are a few companies that know how to bounce back like IBM. Definitely a worthwhile addition.
  4. While recent recalls have been a problem, Johnson & Johnson (JNJ) has a strong medical devices unit and equally strong consumer segment that are both on the road to recovery. With a slew of promising drugs that are coming out in the next few years, including those to treat hepatitis, cancer and even schizophrenia, Johnson & Johnson’s pharmaceuticals franchise is strong as well. As far as their financial picture is concerned, J&J is quite healthy, thank you very much. As one of the only four companies with a AAA credit rating their $32 billion in cash allows them to be very opportunistic with their acquisitions as well as buying back shares and raising their dividend. Well worth inclusion in any portfolio.
  5. Possibly the world’s most famous brand, McDonald’s (MCD) continues to place their golden arches in emerging markets around the globe and even in first world countries, where the demand for new restaurants is actually quite low, they still continue to gain market share. Indeed, the economies of scale and bargaining clout that McDonald’s enjoys comes from being the world’s number one restaurant chain in total sales. When you consider that the average in the fast food industry per location is $1 million in profit per year and that the average McDonald’s generates approximately 2.7 million per year, you don’t need to be a math professor to see that, when it comes to fast food, McDonald’s is the best. Their stock should be considered one of the best as well.

Those are the first 5 of our 10 low-volatility stocks. We hope that you agree that they’re well worth taking a closer look at and possibly including into your portfolio. Be sure to come back sometime soon as will be posting part 2 the next few days. See you then.

 

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