Which are the most stable companies in the US?
Given all that can happen around the world such as interest rate hikes, economic recessions, and natural disasters, the future is not set in stone. A lot can happen that can cause profits at companies to go down. Competitors can appear. Supply can exceed demand. CEOs can make bad acquisitions. If profits shrink, stock prices can shrink too. Given the unknowable nature of future profit streams, equities have proven more volatile than bonds in the past, which makes finding some of the most stable companies in the U.S an important buffer for your portfolio.
Yet while many equities are volatile, some companies are stabler than others. Those companies are what you might call ‘Warren Buffett‘-type corporations that have wide moats and strong balance sheets. Some like AT&T Inc. (NYSE:T), Johnson & Johnson (NYSE:JNJ), Procter & Gamble Co (NYSE:PG), and The Coca-Cola Co (NYSE:KO) have been around for a long time. Other companies, such as Kraft Heinz Co (NASDAQ:KHC), Mondelez International Inc (NASDAQ:MDLZ) and PepsiCo, Inc. (NYSE:PEP) have substantial goodwill with customer bases and operate in stable sectors. While the average consumer might postpone buying a big ticket item such as a car or washer during uncertain times, he/she will likely continue eating Oreo cookies and drinking Mountain Dew. Others, such as Verizon Communications Inc. (NYSE:VZ), Visa Inc (NYSE:V), and Mastercard Inc (NYSE:MA) have very substantial barriers to entry. Financial transaction networks have strong network effects while competitors to Verizon will need to spend tens of billions on spectrum licenses and infrastructure just to compete.
Not surprisingly, all of the most stable companies pay a dividend. Some, such as AT&T Inc. (T)’s dividend (currently at 4.6%), outpace the dividend payouts of others in the pack. Many stable companies are Dividend Aristocrats, companies that have paid an increasing annual dividend for 25 consecutive years or more. Those include Procter & Gamble Co (PG), The Coca-Cola Co (KO), PepsiCo Inc. (PEP), and AT&T Inc. (T). Due to their more stable nature, the stocks of said companies have generally been less volatile than the market, and in many instances have outperformed the market over time (and especially during recessions).
While buying stocks of stable companies isn’t a way to get rich fast, purchasing a basket of shares of the most stable companies in the U.S has historically been a way to keep wealth and steadily add to it. With all that said, let’s take a closer look at the 10 most stable companies in the United States. For more reading on recession proof ideas, check out 11 Recession-Proof Businesses You Can Start Now.