We all know the feeling. You hear the rumble of the mail truck, and after it trundles away, you open your mailbox to find one of the big envelopes. It's too tall to be a bill, and too fat to be a birthday card. Congratulations! It's the quarterly portfolio statement from your broker!
But if you open it, you might find bad news.
Wouldn't it be great, though, to know in your heart that the news won't be too bad? That even if the market has been going down, your stocks probably didn't go down as much as everyone else's did?
To help you achieve this level of reassurance, we've put together a useful little stock screener (with some help from our friends at free stock-screening website finviz.com), and tasked it with finding stocks with four important attributes, aimed at minimizing the fear of checking on how your portfolio is doing:
- Reasonably large, established companies, with $2 billion in market cap and up and recognizable brand names.
- A respectable dividend -- at least 5%.
- Stocks that don't zig and zag with every wobble in the stock market, showing a beta of less than 1.0.
- Stocks that don't cost a lot -- at least 20% cheaper than the stock market's 25.6 P/E ratio.
What follows, I think, are three stocks that fit the bill. Go ahead -- read on and see if you agree.
You wouldn't expect an internet stock to be the kind to set your mind at ease when checking your portfolio. Then again, CenturyLink (NYSE:CTL) isn't your average, everyday kind of internet stock. Instead, it's one of the biggest companies providing wholesale internet services to businesses and consumers -- an internet "backbone" stock. And it's soon going to get even bigger. Late last year, CenturyLink inked a deal with Level 3 Communications to execute a merger of equals that will greatly expand its business and yield several hundred millions of dollars in cost synergies (i.e., increased profit) in the years to come.
Yet despite the opportunities, CenturyLink looks pretty darn cheap. Priced at just 15 times earnings, CenturyLink stock is fully 40% cheaper than the average stock included in the S&P 500 today. And with an 8.5% dividend yield, it's the kind of stock you know will pay you real money even if its stock price never goes up. (Of course, with its price now 22% below its 52-week high, there's every chance CenturyLink's stock will go up).
CenturyLink also boasts a beta of just 0.79, which tells you that even if the rest of the stock market goes down, chances are CenturyLink stock will go down a whole lot slower than everybody else does. Granted, this also means that CenturyLink stock probably won't zoom as fast when the stock market is rising, but you can't have your cake and eat it, too.
Spectra Energy Partners
Like steady stocks? Then allow us to introduce you to Spectra Energy Partners (NYSE:SEP), a true tollbooth kind of business that collects steady income through the transportation of a commodity and gets paid the same for the transportation service, regardless of how the price of the commodity itself fluctuates over time. Spectra's specialty is the storage and transportation, through pipelines, of natural gas -- the same "cheap, clean, natural gas" that you've been hearing about as it displaces coal as America's largest power source. Simply put, this is a business that's not going away anytime soon -- which helps to explain its reassuringly low 0.64 beta.
But Spectra Energy stock, though -- that one could really be going places. Priced at just 15.2 times earnings, Spectra Energy stock is only a whisker more expensive than CenturyLink shares, and it's still far cheaper than the average stock on the S&P 500. Spectra Energy also pays a mighty fine dividend yield of 6% -- more than twice the average on the S&P. And given the dependability of its revenue stream, its dividend runs little risk of being cut.
Terra Nitrogen Company
And speaking of steady, low-risk businesses that won't ever go away, well, what could be more basic than fertilizer? Everybody has to eat, and so long as food grows in the ground, you can bet there will be a market for fertilizer to grow it -- which just happens to be Terra Nitrogen Company's (NYSE:TNH) main focus of business. Little wonder, then, that no matter what the rest of the stock market does, it rarely affects the performance of Terra Nitrogen stock, which boasts a very low beta of just 0.66.
Meanwhile, the prospects for nitrogen price increases, and price hikes for Terra Nitrogen stock, just keep going up. Market analysts note that nitrogen contracts jumped 30% in price for February delivery, the third straight month of such rises, and a recent Farm Futures report noted that "increased domestic production in the U.S. isn't coming online fast enough to offset an international supply chain filled with constraints." That's all good news for Terra Nitrogen's stock price.
Speaking of which, priced at less than 13.9 times earnings, Terra Nitrogen is arguably the cheapest stock on this list -- and the stock's beefy 6.2% dividend yield is no slouch, either. If you're looking for a stock that will let you sleep at night, you could do a lot worse.