Some investors focus on high growth, others seek deep value, and still others prefer rock-solid dividend policies. Only a handful of stocks can claim to satisfy all of these investing styles, and even fewer can do so under the banner of a universally familiar brand.
Those do-it-all stocks may be rare, but they do exist. We asked three of our top contributors to share their best all-rounder investment ideas, and they delivered some fantastic names.
3M just might be the perfect stock for novice investors -- and veterans too
Anders Bylund (3M): You are literally surrounded by 3M products every day. Even if you're out of Post-it Notes and Scotch Tape, the same company also makes Thinsulate insulation for your walls, Filtrete filters for your air conditioning systems and your car, and Aqua-pure water filters. Get out of the house, and you'll find 3M providing road signs and pavement markings, the resins and adhesives that keep your airplane together, and the cables strung up in the power lines up ahead.
Those items are actually just a small sample of 3M's massive product catalog, which spans many industries in surprising ways. 3M's engineering is all over the place, under many familiar names. As a consumer, it's easy to get inspired as you learn more about this sprawling business. It really does have something for everyone.
From an investor's point of view, that diversity insulates 3M from sudden market shifts, and ensures steady results for the long haul. Annual sales have increased by 28% over the last decade while free cash flows jumped 83% higher. 3M funneled the growing cash piles into dividend increases pushed payouts 144% larger over the period.
The stock is trading near all-time highs right now, having gained 140% in five years 21% in the last 52 weeks alone, but those years of payout hikes mean it still offers a solid 2.3% yield. Whether you're looking for steady growth, meaty dividend payouts, or exciting investor returns, 3M has it all.
Play hard with this stock
Dan Caplinger (Disney): No matter how old you are and no matter what you enjoy, the odds are good that Disney somehow has a hand in your life. The media giant has a huge stable of Hollywood movie content, from its namesake studio of animated classics to its Pixar, Marvel, and Lucasfilm divisions. It has built up numerous blockbuster franchises, and it has gradually used its production and marketing prowess to squeeze as much profit from them as possible. Disney also uses its theme parks and retail presence to take full advantage of the brands it creates, with cross-marketing opportunities that develop positive feedback loops and enhance sales across the business.
At the same time, Disney has its television assets, including the ABC network, sports giant ESPN, and a number of other cable TV properties. Some investors have been nervous about Disney's TV prospects lately, but many current cable subscribers would seek out ways to get ESPN even if it weren't part of a mandatory bundle.
For shareholders, Disney offers an attractive combination of value, growth, and dividend income. A slump over the past six weeks has taken the stock down to about 15 times forward earnings, which is less than its typical levels recently. The nearly limitless potential of its content franchises offers growth prospects, and Disney boosted its dividend by nearly 10% late last year, bringing its yield to a fairly respectable 1.5%. With its wide variety of entertainment offerings, Disney has something for everyone.
A lot to offer no matter what kind of investor you are
Jason Hall (American Express): Investors have come back to American Express since early early February 2016, when its shares had become -- for lack of a better description -- "stupid cheap." In the ensuing 16 months, AmEx shareholders have seen a market-crushing 61% total return:
Yet even after this huge gain, the company's stock price is still about 16% below the all-time high it set in 2014. It's also trading for around 14 times both trailing and forward earnings estimates -- incredibly cheap as compared to the broad S&P 500, which trades for more than 25 times earnings, and well within historical valuation ranges.
At the same time, American Express, like many of its peers in the credit card, lending, and electronic payments business, is positioned to benefit from the biggest expansion in the world's middle class in history. This is happening at the same time that many places are just gaining wider access to the internet, which is being driven by mobile computing. This is presenting the company with a very big, very long-term growth opportunity.
Lastly, AmEx is also a wonderful dividend growth stock. Even though it yields less than 2% currently, the company has steadily increased the dividend almost every year for decades. This trend is very likely to continue, and should deliver significant compounding returns for investors who buy now and hold for years to come.