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10 Boring Stocks That Make Money

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·10 min read
In this article:
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In this article, we discuss the 10 boring stocks that make money. If you want to skip our detailed analysis of these stocks, go directly to the 5 Boring Stocks That Make Money.

Amid the rise of retail investors, cryptocurrency and online trading forums, value stocks with little charm or fame often get no spotlight. Retail investors purchased a total of $1.93 billion in assets during the market selloff on September 20, according to data from tactical research specialist Vanda Research, as reported by Bloomberg. Day traders mostly bought exchange-traded funds (ETFs) that track closely followed U.S. benchmark indexes, such as the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and the Invesco QQQ Trust Series 1 (NASDAQ:QQQ), which recorded total inflows of $337 million.

According to separate data from Fidelity Brokerage Services LLC, tech giant Apple Inc. (NASDAQ:AAPL) was one of the most purchased assets on September 20 and remains in the top 10 buys as of September 30, 2021. Apple Inc. (NASDAQ:AAPL) holds the biggest market capitalization of nearly $2.4 trillion followed by other big tech stocks like Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG) with $2.1 trillion and $1.7 trillion, respectively as of September 30.

However, in this article, our focus would be mostly on value stocks that don't get much limelight but nevertheless remain some of the best options for investors to make money.

Photo by Max Harlynking on Unsplash

Our Methodology

The stocks on our list were picked based on their fundamentals and prospects for growth based on key business characteristics. We included value stocks in our list that have consistently increased dividend payments for at least 25 years and above. We included the dividend yield and the number of years each stock offers.

The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The stocks are arranged according to the number of hedge fund holders in each company.

Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let's now look at the 10 boring stocks that make money.

Boring Stocks That Make Money

10. American States Water Company (NYSE:AWR)

Number of Hedge Fund Holders: 14

Dividend Yield: 1.69%

Trailing P/E: 34.79

Forward P/E: 33.42

We start our list of the 10 boring stocks that make money with American States Water Company (NYSE:AWR). The company distributes electricity and water services to residential, industrial, and commercial clients in the US. In the last 66 years, American States Water Company (NYSE:AWR) has grown its yearly cash payout, making it one of the dividend kings, or companies that have regularly increased dividends for at least 50 years.

American States Water Company (NYSE:AWR) currently pays its shareholders an annual dividend of $1.46 per share and has a payout ratio of 53.60%.

On August 4, Wells Fargo analyst Jonathan Reeder kept an Overweight rating on American States Water Company (NYSE:AWR) and raised his price target for the stock to $98 from $87.

In the second quarter of 2021, American States Water Company (NYSE:AWR) reported an EPS of $0.72, beating estimates by $0.01. The company’s second-quarter revenue came in at $128.41 million and beat revenue estimates by $6.87 million.

At the end of the second quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $47.9 million in American States Water Company (NYSE:AWR), same with 14 in the previous quarter worth $38.9 million.

Just like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), Chevron Corporation (NYSE:CVX), The Coca-Cola Company (NYSE:KO), and 3M Company (NYSE:MMM), American States Water Company (NYSE:AWR) is a good stock to invest in, according to market analysts.

9. 3M Company (NYSE:MMM)

Number of Hedge Fund Holders: 42

Dividend Yield: 3.29%

Trailing P/E: 17.89

Forward P/E: 16.92

American industrial firm 3M Company (NYSE:MMM) ranks ninth on the list of 10 boring stocks that make money. Since its inception in 1902, the company has grown to become one of the world's largest manufacturers of industrial products such as personal safety products, adhesives, consumer health care products, and electronics.

3M Company (NYSE:MMM) has increased dividends for the past 63 years and currently pays an annual dividend of $5.92 per share. The company has a payout ratio of 58.36%.

In the second quarter of 2021, 3M Company (NYSE:MMM) reported an EPS of $2.59, beating estimates by $0.30. The company’s second-quarter revenue was $8.95 billion, an increase of 24.7% year over year, and beat revenue estimates by $371.24 million. The stock has gained 11.38% in the past twelve months.

At the end of the second quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1.58 billion in 3M Company (NYSE:MMM), up from 61 in the previous quarter worth $1.51 billion.

8. Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Holders: 50

Dividend Yield: 5.19%

Trailing P/E: 54.85

Forward P/E: 13.11

Oil and gas giant Chevron Corporation (NYSE:CVX) ranks eighth on the list of 10 boring stocks that make money. Chevron Corporation (NYSE:CVX) has increased dividend payments for the past 34 years and currently pays its shareholders an annual dividend of $5.36 per share.

On September 15, Citi analyst Alastair Syme kept a Neutral rating on Chevron Corporation (NYSE:CVX) with a price target of $105 per share.

In the second quarter of 2021, Chevron Corporation (NYSE:CVX) reported an EPS of $1.71, beating estimates by $0.11. The company’s revenue in the second quarter grew 179% year over year to $37.6 billion and beat revenue estimates by $1.15 billion.

At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $4.27 billion in Chevron Corporation (NYSE:CVX), up from 41 in the previous quarter worth $4.86 billion.

7. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 62

Dividend Yield: 3.19%

Trailing P/E: 28.31

Forward P/E: 21.79

Beverage company The Coca-Cola Company (NYSE:KO) ranks seventh on the list of 10 boring stocks that make money. The Atlanta-based beverage company is one of the most popular blue-chip dividend kings, having increased its dividend payment for 59 consecutive years. The Coca-Cola Company (NYSE:KO) currently pays an annualized dividend of $1.68 per share.

On July 22, Truist analyst Bill Chappell kept a Buy rating on The Coca-Cola Company (NYSE:KO) and increased his price target to $65 from $60.

In the second quarter of 2021, The Coca-Cola Company (NYSE:KO) reported an EPS of $0.68, beating estimates by $0.12. The company’s revenue in the second quarter grew 42% year over year to $10.13 billion and beat revenue estimates by $823.1 million. The stock has gained 6.82% in the past twelve months.

At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $24.96 billion in The Coca-Cola Company (NYSE:KO), up from 61 in the previous quarter worth $24.90 billion.

6. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 62

Dividend Yield: 2.21%

Trailing P/E: 24.84

Forward P/E: 18.32

Caterpillar Inc. (NYSE:CAT) is a construction and mining equipment manufacturer and it ranks sixth on the list of 10 boring stocks that make money. Caterpillar Inc. (NYSE:CAT) is currently paying an annual dividend of $4.44 per share and offers a decent yield of 2.21%. The company has increased its dividend payments consecutively in the last 27 years. Caterpillar Inc.'s (NYSE:CAT) current payout ratio is 51.76%.

On August 2, Credit Suisse analyst Jamie Cook kept an Outperform rating on Caterpillar Inc. (NYSE:CAT) with a price target of $256 per share.

Caterpillar Inc. (NYSE:CAT) announced on September 10 its acquisition of CarbonPoint Solutions, a private Rhode Island-based carbon capture technology supplier, to reduce carbon emission in CAT's oil and gas segment.

In the second quarter of 2021, Caterpillar Inc. (NYSE:CAT) reported an EPS of $2.60, beating estimates by $0.19. The company’s revenue in the second quarter grew 29% year over year to $12.9 billion and beat revenue estimates by $360.55 million. The stock has gained 10.18%, year to date.

At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $5.26 billion in Caterpillar Inc. (NYSE:CAT), up from 53 in the previous quarter worth $4.95 billion.

Caterpillar Inc. (NYSE:CAT) together with Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), Chevron Corporation (NYSE:CVX), The Coca-Cola Company (NYSE:KO), and 3M Company (NYSE:MMM) is what makes up a valuable portfolio that secures returns in the long-term, according to market analysts.

In the Q2 2021 investor letter of Oakmark Funds, the fund mentioned Caterpillar Inc. (NYSE: CAT) and discussed its stance on the firm. Here is what the fund said:

“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”

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Disclosure. None. 10 Boring Stocks That Make Money is originally published on Insider Monkey.