Boring has gotten a bad rap. That's the case in investing, at least. Sometimes, it's the exciting stocks where you lose the most money. On the other hand, some of those boring stocks quietly chug along without much fanfare, but become huge winners over time.
Most investors won't find Bank of America (NYSE:BAC), Brookfield Infrastructure Partners (NYSE:BIP), Clorox (NYSE:CLX), Cummins (NYSE:CMI), and ONEOK (NYSE:OKE) especially exciting. But here's why these five boring stocks could make you rich over the the long run.
Bank of America
Banks tend to be staid and somber, and their stocks often follow suit. Bank of America is no exception. It has had decent returns so far this year and has an OK dividend, which yields just under 2%. However, there's little about Bank of America stock that seems to scream, "Buy me now!"
Consider, though, that the company has delivered consistent and growing earnings per share since it recovered from the financial crisis of 2008 and 2009. That happened because Bank of America has steadily increased revenue while keeping expenses under control. Along the way, it has also improved its balance sheet and the quality of its assets, and diversified its revenue stream.
Even better for investors thinking about buying the stock, Bank of America currently trades right at its book value. With the company planning to repurchase a sizable chunk of its stock over the next year, this cheap valuation probably won't last for long.
Brookfield Infrastructure Partners
Communications towers, oil and gas pipelines, ports, power lines, and railways are about as exciting as watching paint dry. For Brookfield Infrastructure Partners, though, these assets translate to steady cash flow. And that cash flow is something for investors to get excited about.
Brookfield returns much of its cash flow to investors in the form of dividends. The company has raised its dividend every year since going public in 2008, and currently yields a little over 4%. While the yield has declined this year, it isn't because the dividend payments have been reduced. Brookfield's yield has fallen because the stock has gone up considerably -- around 30% so far this year.
The company plans to grow its earnings by 6% to 9% per year over the long run. Much of this growth will likely stem from further acquisitions, which shouldn't be a problem because Brookfield Infrastructure Partners is sitting on a huge cash stockpile bolstered by recently issuing more equity. If the company hits its targets -- which seems achievable -- Brookfield's earnings growth combined with the strong dividend should make investors a lot of money over the coming years.
Clorox's name has become synonymous with its bleach products. But the company also markets household names including Glad garbage bags and wraps, Liquid-Plumr, and Pine-Sol. Flashy and stimulating? Nope. But consumers need them -- and buy them.
By providing products that people need year in and year out, Clorox has stable cash flow. The company has used that stability to reward investors with dividend increases for 40 consecutive years. Clorox's dividend currently yields just under 2.5%.
You might be surprised that Clorox stock has outperformed the S&P 500 as a whole over the last decade. The company has also delivered greater returns than the overall market over the last five years and so far in 2017. With the company gaining market share thanks to its continual innovation, I expect Clorox will continue its winning ways for investors in the future.
You have to be the kind of person who likes to look under the hood to get excited about Cummins' core products. The company ranks as one of the largest global manufacturers of diesel and natural gas engines and engine-related components.
Cummins stock took an especially hard beating during the financial crisis that began in 2008. However, since 2009, the stock has increased by almost sixfold, handily beating the broader market. So far this year, Cummins' share-price performance has nearly doubled that of the S&P 500 index. And that doesn't count the impact of Cummins' solid dividend yield of 2.6%.
Although the valuation of Cummins' stock will no doubt ebb and flow with economic cycles, the long-term prospects for the company seem quite strong. Growth in developing countries, like China and India, could be particularly beneficial for Cummins.
ONEOK operates midstream (processing, storing, and transporting) services to natural gas producers. The company recently completed the acquisition of the master limited partnership (MLP) that it already largely owned, ONEOK Partners, L.P. Handling natural gas might be boring to many people, but ONEOK's dividend is anything but dull.
The company's dividend currently yields more than 5%, and it should get even better. ONEOK thinks it will be able to deliver 9% to 11% annual dividend growth through 2021, aided by bringing its MLP in-house. The company also plans to build more pipelines to drive cash flow higher.
There's one primary trouble spot for ONEOK: its debt load. However, the company thinks that increased cash flow will allow it to reduce its leverage over the next few years. ONEOK could turn out to be a gold mine for income investors. If its stock performs as well as it has over the last decade -- more than doubling the return of the S&P 500 -- ONEOK could be a gold mine for growth investors, as well.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Cummins and ONEOK. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.