Playing It Safe: 10 Low-Risk Stocks with High Rewards
What type of investor are you? Do you take risks for a high return? Or would you rather choose something safe in exchange for lower, yet more stable, growth?
Imagine, now, that you could get the best of both worlds. Rock solid stocks that offer a high return. Seems counterintuitive, doesn’t it? If something low-risk could offer high returns, wouldn’t it be so attractive as to push the price sky-high?
Yet there are options out there that offer a great return with little risk. Keep reading for ten low-risk stocks that have high rewards.
Firstsource offers business process management solutions tailored to fit the client’s needs. They also offered a 58/1% return between January 1 and August 13, 2018. With a growing client base, returns promise to continue to grow throughout the rest of the year and into 2019. It’s successful foray into the mortgage business only bolsters this valuation.
Recent high-profile data breaches have reinforced the importance of cybersecurity. While the big names remain, FireEye is attracting a crowd for it’s application of learning software to the cybersecurity world.
It’s for good reason, too. Despite the efforts made to ensure security, threats are constantly evolving. Having an adaptive approach allows FireEye to stay ahead of hackers.
Share prices dropped after their IPO, though this often happens with tech stocks. Since then the valuation seems to have settled into a very reasonable range. With the potential for a buyout from one of the bigger players, FireEye is well positioned to be a big winner.
Though not a traditional tech company, Teradyne’s automation and robotics department have been on a tear. After purchasing Universal Robotics they’ve been producing low-cost robots. These robots are able to work alongside production workers, capable of packing, assembling and more. This division alone has grown 35% year over year.
The role of automation in manufacturing continues to grow. This ‘collaborative robotics technology’ will only find more applications.
The pharmaceutical giant continues to move in leaps and bounds on product development. Vaccinations, life-saving drugs, and an eye on health programs for rural areas all suggest that steady growth will continue. A 38.64% rate of return between January 1 and August 13, 2018, supports this.
A real estate investment trust, Omega Healthcare gets the nod for not just it’s near yearly 10% yield, but also it’s ever-increasing dividends. Dividends have increased every quarter since 2003, growing at an annual rate of 9.5% per year. That’s an incredible payout on top of healthy growth.
The need for assisted living created by an aging boomer population continues to grow. Omega Healthcare set to capitalize on this as the landlord of specialized housing facilities. Though they focus on healthcare, they’re insulated from changes to Medicare. This is because they’re the property owner and not the care provider.
The senior health care market will continue to grow. This ensures the Omega Healthcare is well positioned to reap the benefits.
Senior Housing Property Trust
Senior Healthcare Property Trust is like Omega healthcare. It’s a real estate investment trust focusing on health care needs. It specializes in individual and assisted living, as well as medical and life science facilities. This makes them well-positioned to benefit from the aging population’s needs.
What really helps to make them a smart investment is that they have limited their exposure to Medicare. That protects them from the uncertainty surrounding government-subsidized healthcare plans.
While an exciting company is great for short-term gain, boring is best for long-term growth. And, despite a name that suggests cryogenic sleep pods, Life Storage is about as wonderfully boring as it gets.
Instead, they operate storage locker facilities. That’s one of those out-of-sight, out-of-mind sectors that quietly fulfills a growing need.
Much like with Omega Healthcare, LSI’s value comes from holding property. By leasing out their holdings one unit at a time, they generate easy profits with little necessary overhead.
While the 5% yield may seem like a tortoise at a rabbit race, it’s the dividends that make it such a promising hold. Structured as they are, they’re mandated to return the majority of their taxable income to shareholders.
While the 2008 financial recession did away with the ‘too big too fail’ myth, there are still companies for which that’s unlikely to apply to. AT&T is a great example of that. Already a leading telecom, their recent purchase of Time Warner only solidifies this. This gives them not just ownership of the content, but also the delivery system.
This structure not only guarantees them the steady earnings offered by their infrastructure. It also allows for the potential of breakout programming that reaches the cultural zeitgeist, like Game of Thrones.
American States Water
Utilities are regularly recommended to new investors looking for a stock with stability. They offer peace of mind as they control the production and infrastructure of basic necessities such as electricity. Since the cost of entry into this sector is significant, the existing companies are generally well protected.
Energy is a common utility people look to. American States Water benefits from focusing on a less volatile commodity than the various fuel sources. Instead, they deliver water and maintain sewage lines.
That they’ve increased dividend payments annually for 63 years only makes them more attractive. Consider the droughts wracking California. Think of the aging sewage infrastructure as revealed in Flint, Michigan. These are all opportunities that ASW can benefit from.
NextEra Energy Partners
NextEra is another utility, but with a twist. NextEra partners the promise of green technologies with the proven stability of natural gas.
With nearly twenty years left on their power purchase agreements, NextEra is producing 3.1 GW of wind power and 600 MW of solar. Having these power generators in action allows them to gain the necessary experience in renewable energy.
The addition of the power purchase agreements guarantees a market in the meantime.
Should renewable energy become the standard, they’re well-positioned to capitalize on it. If things are less clear, owning 542 miles of natural gas pipelines helps insulate them from too much uncertainty.
Still not sold? How about the tax law that protects them from paying taxes for at least the next eight years, if not longer?
Final Thoughts on Low-Risk Stocks
More and more people are depending on smart investment strategies to plan for their retirement. Having a list of low-risk stocks that return high yields sets you up to invest wisely now for a better future.