With the holidays coming to a close and a new year (and decade) upon us, this is typically a period of change: just take a look at your friends and family writing up their new year’s resolutions. And many times, change involves risks. As such, a temptation exists to load up our portfolios with exciting names, not 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, 2019 was a year full of drama. Much of that drama remains unresolved. Even something like a limited trade agreement between the U.S. and China can go awry, as prior negotiations have. Thus, boring stocks to buy may offer some confidence and stability should events not pan out as expected.
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.
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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.
Crown Castle (CCI)
A real estate investment trust (REIT) specializing in communication towers and small cells, Crown Castle (NYSE:CCI) and CCI stock represent 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.
Exxon Mobil (XOM)
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Today, digital technologies don’t just impact internet speeds and device capacities. Increasingly, more people have expressed broader concerns about environmental sustainability. For instance, a Gallup poll earlier in 2019 stated that Millennials’ environmental consciousness has impacted business decisions. Under this context, Exxon Mobil (NYSE:XOM) and XOM stock doesn’t seem like a great choice among boring stocks to buy.
Admittedly, XOM stock is a tough play. Based on stereotypes about young Americans, you’d expect them to protest Exxon rather than embrace its investment potential. Moreover, the rise of alternative sources of transportation like electric vehicles have steadily made big oil less relevant.
Yet I don’t think it’s quite time to give up on XOM stock. Sure, as one of the boring stocks of the Dow Jones, Exxon isn’t as exciting as a Tesla (NASDAQ:TSLA). However, EVs have yet to prove they can integrate into society beyond the rich yuppies.
Petroleum-based vehicles don’t impose on the electrical grid to the extent that EVs do. And they’re cheaper and more accessible, making Exxon Mobil a viable investment.
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, Albemarle (NYSE:ALB) rightfully belongs among boring stocks to buy. One of the world’s leading producers of lithium, ALB stock should move higher over the long run if EVs integrate more deeply into the mainstream. In some ways, Albemarle is a hedge against my bullish thesis for Exxon Mobil.
But even if the EV narrative doesn’t pan out as environmentalists 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. Again, this is a huge, underappreciated catalyst for IRM stock.
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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, can prospective buyers expect continued gains in 2020 and beyond? I believe they can.
No matter the criticisms against the Magic Kingdom, the media giant’s acquisitions have been well worth the price of admission. For instance, Disney’s Star Wars: The Rise of Skywalker was a cinematic disaster. Truly, it was a pathetic way to end the Skywalker saga. Nevertheless, at the box office – where it really counts for DIS stock – Rise of Skywalker is a hit.
If you can take a big steaming pile and turn it into box office success, it’s official: Disney is a cash-printing machine!
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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.
Now, I’m not really sure how long this fake meat fad will last. But if you want a safer, boring bet, go with K stock.
Philip Morris International (PM)
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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. This suggests PM stock has more upside growth potential.
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 earlier in 2019. Combined with fiscal concerns such as a worrying debt load, CVS stock bled out in February.
However, in the second half of the year, CVS stock staged a remarkable comeback. Because of this surge, shares of the company returned double digits for investors in 2019. Not only that, CVS should have some juice in the tank to continue its promising recovery narrative.
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. Therefore, the underlying company likely has many years to mount a counteroffensive.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.