Outperforming the S&P 500 is no easy feat, as the vast majority of portfolios fail to meet that the goal annually. However, value investing has shown over time to be a proven strategy in meeting that goal. Below are three diversified companies that should provide returns that outperform the market in the foreseeable future.
Is General Electric Company (NYSE:GE) poised to move higher?
General Electric Company (NYSE:GE) is a massive conglomerate with more than $145 billion in annual sales and a market capitalization of approximately $230 billion. Being a leader in such a diverse array of industries, ranging from wind turbines to medical diagnostics to financial services, allows the company to have a more stable revenue base, which is always welcome. The company just recently traded down from its $23.90 52-week high and looks to be attractively priced.
Trading at just a 16.5x trailing and 12x forward P/E is historically cheap for this well-established corporation. Operationally, the company has performed well, either meeting or exceeding consensus estimates in each of the last four quarters. In addition, management has shown to be a good steward of capital by generating a return on equity of more than 12% in the past 12 months.
Perhaps most enticing is its 3.4% consistently-growing dividend yield. With the current payout ratio at just 50%, investors can confidently expect that trend to continue. Moreover, as the economy slowly rebounds, General Electric Company (NYSE:GE) will be a big beneficiary, which gives me even more confidence that the dividend hikes and share buybacks will continue.
Will United Technologies Corporation (NYSE:UTX) spring your portfolio forward? Let’s find out!
United Technologies Corporation (NYSE:UTX) is a behemoth with $60 billion in annual sales and a market capitalization at approximately $85 billion. It makes a diversified array of products in the aerospace, defense, and manufacturing industries, including such well- known brands as Pratt & Whitney and Otis elevators. The company is sitting near its $95.84 52-week high and yet still looks attractively priced.
Trading at a 13.5x trailing and forward P/E is definitely not expensive for such a well-run and well-respected company. In addition, United Technologies has been excellent in exceeding analysts’ estimates in each of the last four quarters.
A strong return on equity of more than 20% and a return on assets of 7% shows us that it has a high-quality management team. Finally, and perhaps most importantly, the company yields a growing 2.3% dividend. At just a 40% payout ratio, investors should be confident that the dividend is not only safe, but poised to continue being raised in the near future.
Is Johnson & Johnson (NYSE:JNJ) poised to serve investors well?
Johnson & Johnson (NYSE:JNJ) has a storied history dating back to its founding more than 125 years ago in 1886. Since that time, it has grown to churn approximately $70 billion in annual revenue and a market capitalization at approximately $240 billion. The stock has had a nice run the past year, sitting at a new 52-week high and yet still looking reasonably priced. Moreover, as the global middle class continues to grow in massive world markets such as China and India, Johnson & Johnson (NYSE:JNJ) will surely be a beneficiary.