Ripping above the 24,000 mark for the first time this week, the Dow Jones Industrial Average (^DJI 0.13%) may have some investors reaching for bottles of the bubbly. On the other hand, there are plenty of other folks ringing the alarm bells, arguing that a correction is imminent. Regardless of whether they fall into one of these camps, the majority of investors agree that every portfolio should have a spot -- either large or small -- reserved for some more conservative investments. Let's look at three stocks that fit the bill.

Time to get your feet wet

The only water-utility member on the S&P 500 and Dow Jones Utility Average, American Water Works (AWK 0.47%), is the largest publicly traded water service provider by market cap and has a customer base of 15 million. Illustrating a large geographic footprint, American Water Works' customer base spans 47 states, Washington D.C., and Ontario, providing a competitive advantage and mitigating the risk of adverse local weather phenomena.

A dial labeled risk points to the word minimum.

Image source: Getty Images.

Although it also operates in the market-based segment, it's the regulated businesses segment in which the company makes its hay, accounting for 87% of the top line in fiscal 2016. Management, moreover, foresees this segment continues to provide the lion's share of revenue for the next several years -- an estimated 85% to 90% of revenue in fiscal 2021, according to a recent investor presentation. Primarily dealing in the regulated markets affords the company great clarity into its financial future -- a future in which management sees smooth sailing.

American Water Works, for example, forecasts earnings per share to rise at a compound annual growth rate (CAGR) between 7% and 10% for fiscal 2015 through fiscal 2021. In conjunction with the bottom-line growth, management expects to raise its dividend while maintaining a conservative payout ratio between 50% and 60%. A commitment to returning cash to shareholders is something with which investors are already familiar. Over the past 10 years, the company's dividend has risen about 108%.

Risk-averse investors may fret over the company's amount of debt. However, these concerns are mitigated by the fact that the company retains investment-grade credit ratings of "A3" and "A" from Moody's and Standard & Poor's, respectively.

Go for the gold star

The self-proclaimed "gold investment that works," Franco-Nevada (FNV -0.84%) is not only the largest royalty and streaming company by market cap; it's also one of the largest gold stocks on the market. Because of the potentially wild swings in the price of gold, investors may be skeptical of investing in the yellow metal, but Franco-Nevada is different. Operating as a royalty and streaming company, Franco-Nevada provides up-front payments to gold miners, and in exchange, it receives the rights to purchase the yellow stuff at preset prices or to receive a percentage of mineral production from a mine. 

FNV Revenue (Annual) Chart

FNV Revenue (Annual) data by YCharts.

In addition, the company often secures long-term commitments to purchase gold from mines at a steep discount to the market price of the mineral, providing a buffer to the volatility inherent in the price of the yellow stuff. 

Have a gas

In business for more than 100 years, Praxair (LIN 0.80%) is an industry leader in the manufacturing and distribution of process gases (helium, carbon dioxide, hydrogen, electronic gases, specialty gases, and acetylene) and atmospheric gases (oxygen, nitrogen, argon, and rare gases). From 3D printing to the food and beverage, process gases are required by a wide swath of industries; consequently, Praxair mitigates the risk of a slowdown in growth in any one industry.

Digging into the company's financials, skeptical investors may recognize a red flag in the company's 12% revenue growth over the past 10 years. This, however, must be taken with a grain of salt: During the same time period, the company has excelled in its ability to grow its free cash flow.

PX Revenue (Annual) Chart

PX Revenue (Annual) data by YCharts.

Demonstrating its commitment to shareholders, management isn't merely filling its coffers with the cash. The company has been aggressive in buying back stock, reducing its share count by more than 11% over the past 10 years from 325 million to 288 million, according to Morningstar. In addition, Praxair has been consistent in rewarding shareholders by way of its dividend policy. The company's annualized dividend grew from $1.20 per share in fiscal 2007 to $3 per share in fiscal 2016.

Investor takeaway

Dealing with water and gases, American Water Works and Praxair are unlikely to see demand for their services waning anytime soon -- something that should appeal to risk-averse investors. Likewise, the demand for gold is unlikely to ebb, suggesting Franco-Nevada is also an ideal option for investors eager to avoid risk.