As the COVID-19 pandemic rattles markets worldwide, investors should focus on high-quality stocks that are well-insulated from the macro headwinds, pay stable dividends, and trade at reasonable valuations. Stocks that check those boxes will likely weather the storm and support a long-term investor's retirement plans. These three stocks fit the bill: Johnson & Johnson (JNJ 1.46%), Microsoft (MSFT -0.14%), and Apple (AAPL -2.15%).

A classic dividend stock

Johnson & Johnson's business is diversified across the pharmaceutical, consumer healthcare, and medical device markets. These units are so diverse that occasional headwinds -- like generic competition for blockbuster drugs, or lawsuits regarding the safety of certain products -- are easily offset by the strengths of its other businesses.

A retired couple discusses their portfolio with a financial adviser.

Image source: Getty Images.

That's how J&J's stock delivered a total return of nearly 200% over the past decade. It's also raised its dividend annually for 57 straight years, which makes it a Dividend Aristocrat -- a member of the S&P 500 that has raised its payout for at least 25 straight years. J&J spent just 40% of its free cash flow on its dividend over the past 12 months, and it currently pays a forward dividend yield of 2.7%.

J&J's business remains naturally insulated from the COVID-19 headwinds, but the pandemic is also generating some tailwinds for the company. It's already developing a lead vaccine candidate for the virus, and it recently inked a $1 billion deal with the U.S. government to expand its manufacturing capacity for future vaccines. The stock also remains reasonably valued at 16 times forward earnings, and it should withstand the current challenges and steadily rise over the next decade.

A mature tech stock that became a growth stock again

Microsoft was running out of steam ten years ago. It was losing the mobile markets to Apple and Alphabet's Google, and sales of Windows and Office were losing momentum as customers postponed their upgrades.

Microsoft CEO Satya Nadella.

Image source: Microsoft.

But in 2014, Microsoft's cloud and enterprise chief Satya Nadella took over as CEO. Under Nadella, Microsoft abandoned mobile hardware, evolved its Surface and Xbox businesses, and aggressively expanded its mobile apps and cloud services. It transformed Windows and Office into cloud-based services, and grew Azure into the world's second-largest cloud infrastructure platform after Amazon Web Services (AWS).

That seismic shift initially throttled Microsoft's earnings growth, but it eventually turned its commercial cloud business, which generated 34% of its revenue last quarter, into its new core growth engine. Microsoft recently admitted that the pandemic was hurting its Windows licensing, hardware, and search-based ad businesses, but it also noted that demand for its cloud and collaboration services was surging as more people worked from home.

Microsoft's strengths should outweigh its weaknesses through the crisis and propel its stock much higher over the long term. It pays a forward yield of 1.2% and trades at 26 times forward earnings, which is a reasonable valuation for tech giant with so many irons in the fire.

A misunderstood tech giant

The COVID-19 crisis forced Apple to temporarily close its retail stores and deal with widespread supply chain disruptions. The critics also fretted over its dependence on the iPhone, which generated 61% of its revenue last quarter, and its costly attempts to chase Netflix and Disney into the streaming market.

Apple CEO Tim Cook.

Image source: Apple.

However, Apple's iPhones, iPads, and Macs are merely gateway devices that lock users into its software and services ecosystem (which includes the App Store, Apple Music, Apple TV+, Apple Pay, and Apple Arcade) and a cycle of regular hardware upgrades. This prisoner-taking strategy drives Apple's growth, and is still expanding its fiercely loyal customer base more than a decade after it introduced the first iPhone.

Apple also continues to diversify its business with robust sales of the Apple Watch and AirPods, and the upcoming 5G upgrade cycle could spark another growth spurt for its iPhone business. It also ended last quarter with $207 billion in cash, equivalents, and marketable securities -- which gives it plenty of capital for investments, acquisitions, buybacks, and dividends.

Apple will definitely hit a few speed bumps throughout the COVID-19 crisis, but its business will inevitably rebound as the headwinds wane. It pays a decent forward yield of 1.2%, has plenty of room for future hikes, and regularly repurchases its own stock. At just over 20 times forward earnings, Apple remains a solid core holding for most retirees.