In this article, we discuss the 11 set-it-and-forget-it stocks to buy according to financial media. To skip the overview of set-it-and-forget-it stocks and portfolios, go directly to the 5 Set-It-and-Forget-It Stocks to Buy According to Financial Media.
Some stocks are meant to be kept forever according to financial media and investors. The set-it-and-forget-it stock portfolio should honor its name. Fundamentally, they should be somewhat close to widow and orphan stocks. The stocks should be well known, well established, have long-term growth prospects, and it’s a bonus if they give out dividends.
Beginners can often get confused in the nuances of the stock market, overseeing and adjusting portfolios. Additionally, selecting individual stocks can become overwhelming. The perfect set-it-and-forget-it portfolio should make these investment decisions easy and generate long-term returns.
The set-it-and-forget-it portfolio investments can be of several types. The most common one would be a basic 60/40 portfolio. A basic 60/40 portfolio would give 60% weightage to the S&P 500 and 40% weightage to US treasuries. Due to the low volatility of bonds, people with little financial knowledge could also go for a bond-heavy portfolio. Ray Dalio’s All Weather Portfolio follows a similar theme. 40% of the portfolio is represented by long-term US bonds, 30% by US stocks, 15% by intermediate US bonds, and 15% by commodities. According to Dalio, this portfolio performs well in all kinds of economic conditions. Over the last 30 years, it has grown at a compound annual rate of 7.19%.
During our research for set-it-and-forget-it stocks according to financial media, we also took a peek at public forums such as Reddit and Quora, where people had revealed their long-term portfolios. Index funds were the most common long-term investment people had mentioned. Vanguard 500 Index Fund ETF (VOO), Schwab US Large-Cap Growth ETF (SCHG), and Schwab US Dividend Equity ETF (SCHD) are some of the most commonly preferred funds for people who want a retirement portfolio. Over the last 5 years, Vanguard 500 Index Fund ETF (VOO) has gained 91.12%, Schwab US Large-Cap Growth ETF (SCHG) is up 143.16%, and Schwab US Dividend Equity ETF (SCHD)’s stock price returns are 62.84% higher.
Quality dividend stocks like Colgate-Palmolive Company (NYSE:CL) and The Coca-Cola Company (NYSE:KO) were also among Reddit favorites but failed to make our list. Both of these companies have increased their dividends consecutively for over 60 years and have dividend yields way higher than their sector average.
While our current set-it-and-forget-it list is a little close to our last one, posted at the beginning of the year, one new player has emerged due to the AI surge that is expected to be visible in several new long-term portfolios. NVIDIA Corporation (NASDAQ:NVDA) was unstoppable in 2023 due to its market share of AI-related GPUs. The company covers around 80% of the supply of the GPUs used for training and developing AI applications. Although there are competitors like Advanced Micro Devices, Inc. (NASDAQ:AMD) that are trying to take a chunk out of the AI accelerator market, experts suggest that NVIDIA Corporation (NASDAQ:NVDA) is still expected to retain a larger share of it.
With these new developments in the market, some of the best set-it-and-forget-it stocks include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL). AI has also become a long-term growth catalyst for these three companies.
Photo by Karolina Grabowska from Pexels
Our Methodology
For this article, we chose 11 set-it-and-forget-it stocks based on the consensus picks of financial media sources. These stocks have strong fundamentals and potential for long-term growth, and many of them pay healthy dividends.
Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. The stocks in this article are listed in ascending order of their hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator. The list of the top 10 hedge fund stocks don’t change dramatically from quarter to quarter, so an investor could have spent only a few minutes once every three months and outperformed the market by 140 percentage points over the last 10 years.
11 Set-It-and-Forget-It Stocks to Buy According to Financial Media
11. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 23
Realty Income Corporation (NYSE:O) is a California-based real estate investment trust that acquires and manages single-unit freestanding commercial properties and serves commercial clients.
On December 12, Realty Income Corporation (NYSE:O) increased its monthly dividend by 0.2% to $0.2565, payable by January 12 to the shareholders of record on January 2. As of the December 22 market close, the stock’s dividend yield was 5.41%.
On November 13, Realty Income Corporation (NYSE:O) announced a joint venture with Digital Realty Trust, Inc. (NYSE:DLR) to construct two data centers in northern Virginia. The company will hold an 80% equity stake, and the first phase of the project is expected to be completed in mid-2024.
Realty Income Corporation (NYSE:O) is one of the set-it-and-forget-it stocks to buy according to financial media, along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL).
10. AerCap Holdings N.V. (NYSE:AER)
Number of Hedge Fund Holders: 54
AerCap Holdings N.V. (NYSE:AER) is headquartered in Dublin, Ireland, and provides aircraft leasing and aviation finance services.
On December 13, AerCap Holdings N.V. (NYSE:AER) announced that it is in lease deals with Swiftair for two Airbus A321 Passenger-to-Freighter aircraft.
On November 14, AerCap Holdings N.V. (NYSE:AER) reported that it acquired five General Electric GE90-115B engines from Sanad.
Horos Asset Management mentioned AerCap Holdings N.V. (NYSE:AER) in its first quarter 2023 investor letter. Here is what it said:
“To explain the merits of our investments in the financial sector, I would like to end with a quick review of the difference between the management of their businesses, compared to the two risks we have just discussed, i.e., maturity mismatch and (excessive) financial leverage of traditional banking (obviously, moral hazard has no place here, as the privileges of banking do not apply to these companies). Specifically, I am going to focus on the purest cases of financial intermediation in which we are invested: AerCap Holdings N.V. (NYSE:AER), ALD Automotive, Sun Hung Kai & Co and S&U.
Let us start with maturity mismatch, which is the first of the structural problems in banking. We own a stake in AerCap and ALD Automotive, two companies with very similar businesses in their essence. In short, these entities borrow money to acquire assets (aircraft and automobiles, respectively), lease them for a period of time (on average, seven and four years) and sell them at the end of their contract (in the case of AerCap, the longer useful life of its aircraft means that the contracts are usually renewed at maturity). If these companies were to operate like a bank, they would borrow at very short maturities and would have to continually roll over that financing to avoid falling into an unsustainable liquidity risk, should they have to repay their debt (their assets are leased). However, as we have already seen, operating with such a maturity mismatch would be a recipe for failure. In fact, Guinness Peat Aviation, the company that pioneered the aircraft leasing business in the 1970s and 1980s, ended up going bankrupt (among others), for over-reliance on short-term financing.32 A lesson never to be forgotten by Aengus Kelly, CEO of AerCap and the person who inherited the unloved assets of Guinness Peat Aviation after its sale to GECAS in 1996 (by a twist of fate, Kelly eventually acquired GECAS two years ago)…” (Click here to read the full text)
9. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 75
The Procter & Gamble Company (NYSE:PG) is an Ohio-based company that manufactures and markets fast-moving consumer goods.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 75 funds had investments in The Procter & Gamble Company (NYSE:PG)’s stock in the third quarter, compared to 74 in the previous quarter. Ken Fisher’s Fisher Asset Management was the top investor in the company and increased its stake by 106% to 9.997 million shares worth $1.458 billion.
Of the 17 Wall Street analysts that covered The Procter & Gamble Company (NYSE:PG) over the last three months, 11 kept a Buy rating on the stock. As of the December 22 market close, the average price target of $163.31 had an upside of 12.41%.
Hayden Capital commented on The Procter & Gamble Company (NYSE:PG) in its third quarter 2023 investor letter. Here is what it said:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, Coca-Cola trades at ~30x P/E despite having the same earnings as 10 years ago. The Procter & Gamble Company (NYSE:PG) is likewise at ~27x P/E, with earnings only ~12% higher than a decade ago (or a ~1% annual growth rate). This equates to a mere 3.3% – 3.7% earnings yield.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Proctor & Gamble is facing disruption from direct-to-consumer brands that offer their products for a fraction of the price.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
8. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 84
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based company that researches, develops, manufactures, and sells a range of products for human health and provides medical technology-related services.
On December 18, Johnson & Johnson (NYSE:JNJ)’s Janssen Research & Development announced that its selective inhibitor of mechanistic target of rapamycin complex 1 received FDA orphan designation.
On December 12, Johnson & Johnson (NYSE:JNJ) announced that its CD38-directed antibody Darzalex Faspro, co-developed by Genmab A/S (NASDAQ:GMAB), reduced the risk of disease progression or death by 58%, compared to standard of care in a Phase 3 study.
Johnson & Johnson (NYSE:JNJ) was mentioned in ClearBridge Investments’ third quarter 2023 investor letter. Here is what it said:
“The health care space provided some opportunities in the quarter, as we increased our exposure to medical device company Becton, Dickinson as well as large cap pharmaceutical company Johnson & Johnson (NYSE:JNJ). Johnson & Johnson recently spun out its consumer health care business, becoming a more focused yet broadly diversified pharmaceutical and medtech company.”
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) is one of the world’s biggest tech companies. Other than its famous devices, it provides software applications and related services, accessories, and third-party digital content.
On December 22, it was reported that Apple Inc. (NASDAQ:AAPL) is looking to pursue deals with publishers worth $50 million. The company wants to use news articles for the training of its generative artificial intelligence systems.
Hayden Capital commented on Apple Inc. (NASDAQ:AAPL) in its third quarter 2023 investor letter. Here is what it said:
“Even Berkshire Hathaway’s most famous investment of the last decade – Apple Inc. (NASDAQ:AAPL) – was based on a similar set up. When Berkshire invested in 2016, Apple’s subscription revenues were just starting to cross ~10% of total revenues. Today, that figure is ~25%.
While operating income has grown +90% from 2016 to 2023, the valuation multiple itself has expanded by ~300%, from ~6x EV/EBIT to ~24x EV/EBIT today.
Investors have evolved their perception of Apple’s products – from that of a “fad” hardware company at risk of competition, to that of a “consumer staple”, a necessary part of a household’s budget…” (Click here to read the full text)
6. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 167
Visa Inc. (NYSE:V) is a California-based company that carries out electronic funds transfers through its branded credit cards, debit cards, and prepaid cards.
On December 15, Visa Inc. (NYSE:V) announced that it will buy a majority stake in Mexico-based Prosa. The deal’s transaction is expected to be completed in the second half of 2024.
On December 18, Barclays raised the price target on Visa Inc. (NYSE:V)’s stock to $304 from $278 and maintained an Overweight rating on the shares.
Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL) are some of the set-it-and-forget-it stocks to buy according to financial media, besides Visa Inc. (NYSE:V).
Visa Inc. (NYSE:V) was mentioned in Ensemble Capital Management’s third-quarter 2023 investor letter. Here is what it said:
“Mastercard is a company that pretty much everyone has heard of. In fact, when we meet with Ensemble’s clients, we occasionally tell them that we’re nearly certain that they are carrying a Mastercard in their wallet or purse as we speak, and if not, they are carrying a Visa Inc. (NYSE:V). Most people carry both.
People carry Mastercard and Visa because they are accepted nearly everywhere in developed markets. And they are accepted in most emerging economies, at least at locations where higher income people spend money. As a shopper you can show up at a bodega in Peru, a high end hotel in Tokyo, a truck stop in Alabama, or an ice cream cart in Milan, show them a piece of plastic and they’ll let you walk away with goods and services without any worry that they aren’t going to get paid…” (Click here to read the full text)
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Disclosure. None. 11 Set-It-and-Forget-It Stocks to Buy According to Financial Media is originally published on Insider Monkey.