There is no shortage of strategies to playing the market in order to earn profit in the short term and long term alike. For those who prefer not to devote countless hours on researching and monitoring their positions, it is of great benefit to find a group of stocks to diversify in that is low maintenance and stands the test of time. While every stock has its good and bad days, the following companies have shown the ability to remain profitable and expand over a long period of time as well as the prospect of continued growth for years to come. I believe these stocks make an ideal addition to a retirement portfolio.
Intel (NASDAQ:INTC) is an extremely solid and low risk buy that sits at the heart of the technology sector; as the largest provider of computer processors and the designer of the x86 architecture used in computers across the globe. Its stock has more than doubled over the past three years in a move from $13 per share to $27. Its five year growth isn't as great - it had taken a fall from $20 to $13 before climbing back to $27, but its dividends are what make this stock a winner.
Intel pays quarterly dividends at a payout ratio of 0.32, which allows investors to strengthen their positions over time by reinvesting the dividend in more shares. Because the stock has shown that it can sustain its value over time, the dividends increase the overall value of the stock through added shares at no additional cost. Its latest payout was $0.21 per share which means an investor with 1,000 shares would have gained 31 shares for free over the last year - a 3% return that continues to compound each time dividends are paid and is separate from gains generated by the rise in stock value over time.
Johnson and Johnson (NYSE:JNJ) is a buy for many of the same reasons mentioned above for Intel. Its stock price has shown a similar amount of flux over the past five years and sits within $1 per share of where it sat back then but the stock pays out quarterly dividends at a payout ratio of 0.50 and 3% yield (its dividends average $0.57 per share over the past four quarters), which allows investors to continue buying shares that have shown a stable history and have much more potential to gain value than to lose. Its place in the market is extremely stable as well as one of the top providers of medical supplies, pharmaceuticals and over the counter medicines and remedies. This company is here to stay for a long time and its stock is a safe buy for long term results.
Pfizer (NYSE:PFE) is the world's largest pharmaceutical company and its drugs generate revenue of over $70 billion per year. Its shares show a five year difference of $5 per share and although the value of this stock has dropped from $27 to $22, it is currently on the upswing and also pays out dividends at a payout ratio of 0.46 and a yield of 4%, making it slightly more profitable than Intel and Johnson and Johnson over the long term. Consistent profits in the $8 billion range every year for the past three years also show me that this stock is going to stay around for a very long time.
Cisco Systems (NASDAQ:CSCO) is not a dividend king but has the potential to be. It currently pays out $0.06 per share, which is at a payout ratio of 0.18 and a 1% yield but the stock has the potential to double in value in 2012 and 2013. Cisco leads the world in the production of data networking hardware and software and has recently made an entrance into the videoconferencing and web collaboration niches through its TelePresence and Cius projects. Consistency and innovation make this stock a buy now and in the future, and I think it is set to make a huge move over the next year, making now the perfect time to take a position.
General Electric (NYSE:GE) consistently earns profits over $10 billion each year with $17.3 billion in 2008, $10.7 billion in 2009 and $11.3 billion in 2010 followed by an average of $3 billion per quarter in the first three quarters of 2011. Its dividends payout at a ratio of 0.49 and a yield of 4% and have been rising over the last four quarters from $0.14 per share to $0.17 in its latest payout. Consistent profits, a solid dividend return and an overall gain over the past three years in share value make General Electric a great long term buy.
Pfizer and Cisco are my favorites in this group, due to Pfizer's consistency in a market that will never be short of demand and Cisco's opportunity to make big moves in 2012 and 2013. Intel is another sure thing, in my opinion, and is a resilient company in the technology sector that has shown the ability to compete against Advanced Micro Devices (NASDAQ:AMD) and ARM (NASDAQ:ARMH) go the distance over time. Johnson and Johnson and General Electric are both reliable providers of solid and compoundable dividends over time, and I don't feel that you can go too wrong with a position in either of them, but I have to favor General Electric's 1% higher yield if I needed to choose between them.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.