Some stocks are right for certain people, and other stocks are well suited for other types of investors. That’s why everyone’s portfolio looks at least a little different from anyone else’s. And that’s the way things should be.
There are a few companies, however, that are so all-weather and so reliable that they’re at home in anyone’s portfolio. Here’s a rundown of three of these names you may want to think about scooping up if you don’t own them already.
You know the company. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is, of course, parent to search engine giant Google, which as of Global Stats’ most recent data, still handles 92% of the world’s search traffic. Each of those searches is ultimately another revenue-bearing ad impression. Alphabet is also behind the world’s biggest online repository of digital video, YouTube, which serves up more than a billion hours’ worth of content every single day to over two billion monthly users.
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And while it’s not a major profit center in and of itself, the Android operating system falls under Alphabet’s umbrella too, positioning the company as the proverbial middleman between most of the world’s mobile device owners and the internet. Global Stats indicates Android powers more than 70% of the planet’s actively-used smartphones and tablets, funneling this crowd toward Google’s revenue-bearing platforms.
The prominence of Alphabet’s place in our cultural landscape is tied to the extreme unlikelihood the world will suddenly stop using the internet or suddenly lose interest in quick, easy-to-access, entertaining videos. People are now leaning on Google, YouTube, and Android out of sheer habit without giving it a second thought, generating revenue for Alphabet’s coffers every day.
In this vein, the company has posted year-over-year revenue declines in only two quarters over the course of the past 10 years with one of those lulls linked to the arrival of COVID-19 in North America.
When most investors think of computer hardware companies to invest in, names like NVIDIA or Intel come to mind. And understandably so — these are the companies that helped usher in the modern technology era.
There’s a problem with owning stocks of this ilk, however. That is, these companies are operating in hypercompetitive slivers of the industry, and they’re one design flaw or one foundry problem away from hard times. The more reliable plays from the technology sector are focused on the simpler, perpetually marketable products like sensors, transistors, and other solutions you’ll often find soldered to a circuit board.
Enter Texas Instruments (NASDAQ: TXN).
You may recognize the company first and foremost for its calculators, but there’s so much more to this operation. Its semiconductors are found in broadband modems; it’s supporting the autonomous driving evolution; and you’ll even find its tech installed in an aircraft cockpit, just to name a few. And yet, most people can’t actually name one specific item (aside from calculators) that Texas Instruments makes. That’s the point. It’s the supplier within the technology sector you never think about but would definitely miss if it were to unexpectedly stop production.
The kicker: Texas Instruments has raised its annual dividend for 18 straight years at an annualized rate of 25%. Yet, with last year’s payout of $4.21 per share still only a fraction of the $8.26 the company earned, there’s plenty of room for continued payout growth. The stock’s current yield stands at 2.5%.
Finally, add Dollar General (NYSE: DG) to the list of stocks anyone should consider adding to their portfolio.
At first blush, it feels like any retailer that has to compete with Walmart is already operating at a disadvantage. That’s not quite the case here, however. Dollar General is using its smaller stores to its advantage, doing things Walmart can’t (or at least won’t). Namely, the company is catering to the small-town crowd that might not be looking to drive too far just to pick up a few things. The company says 75% of its 18,000-plus stores are located in communities with populations of less than 20,000, offering them basics like milk, bread, frozen foods, and other consumer goods that are necessary but not necessarily accessible at other nearby stores.
And the model works. Dollar General’s top line has more than doubled over the past 10 years.
Look for the discount retailer to continue nabbing market share from bigger rivals like Walmart and Kroger, too. Its DG Fresh initiative, launched in 2019, is now supplying around 2,000 stores with perishable goods like dairy items and fresh produce, but given enough time, that number could be ratcheted up to 10,000 of its locations.
In the meantime, the company is taking a more direct stab at Walmart and rivals like Party City and Five Below. While its new pOpshelf brand of stores is still more of an experiment than a profit center, this suburb-focused concept will target a more affluent customer base that the Dollar General brand cannot. It still offers convenience and accessibility that Walmart doesn’t, though.
The company aims to have pOpshelf locations up and running by 2025.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. James Brumley owns Alphabet (A shares). The Motley Fool owns and recommends Alphabet (A shares), Intel, Nvidia, and Texas Instruments. The Motley Fool recommends Alphabet (C shares) and Five Below and recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.