The seesaw battle going on with WallStreetBets and short sellers on the markets is a whole lot of drama that savvy investors can -- and should -- do without. Rather than worry about what's going on with speculative, risky investments like GameStop, investors are better off sticking with proven, big-name stocks that will be solid buys for years and aren't totally unpredictable.
One way to measure volatility is through a stock's beta value, which tells you how closely it moves with the market. A beta under one indicates lower volatility. Three blue-chip stocks you can safely hold in your portfolio today that have low betas include UnitedHealth Group (UNH 0.97%), Walmart (WMT 1.97%), and Visa (V 2.08%). They all pay dividends and can help steadily grow your savings over time. Here's a closer look at the businesses and why they're great investments right now.
UnitedHealth is a top name in healthcare, providing insurance coverage for millions of Americans. It's also one of the largest companies in the world, ranking seventh on the Fortune 500 list.
On Jan. 20, the business released its year-end results. Revenue of $257.1 billion for the period ending Dec. 31, 2020, rose 6.2% from the previous year. Net earnings of $15.4 billion ($16.03 per share) were also an 11.3% improvement from the $13.8 billion ($14.33 per share) that the company generated in 2019. For 2021, UnitedHealth expects earnings to grow, forecasting between $16.90 to $17.40 in per-share profits. And that includes headwinds related to COVID-19 that will weigh on its bottom line, taking into account factors like unemployment and patients deferring care. But generating strong numbers isn't anything new for UnitedHealth. In the three previous years, its net income has been $10 billion or better, with net margins coming in at over 5% of revenue.
Over the past 12 months, UnitedHealth stock has risen 24%, outperforming the S&P 500, which is up 18% during that same period. However, the stock doesn't move in unison with the index, averaging a five-year beta of 0.76. The low volatility makes this a good stock for income investors, as UnitedHealth also pays a dividend of 1.5% -- slightly below the S&P 500 average of 1.6%.
With a decent dividend yield, low volatility, and a stable business, UnitedHealth is a safe healthcare stock you won't have to worry about and can hold in your portfolio for years.
One of the few stocks higher on the Fortune 500 list than UnitedHealth is Walmart -- which owns the top spot. The big-box retailer has been performing well even amid the coronavirus pandemic, in fact, its online business is soaring. In Walmart's most recent earnings release, on Nov. 17, 2020, sales for the period ending Oct. 31, 2020 totaled $134.7 billion and rose 5.2% year over year. U.S. comparative store sales grew 6.4%, while the e-commerce business generated revenue growth of 79%. As a result, profits of $5.1 billion were 56.2% higher than they were in the prior-year period.
The company has been a popular option for consumers during the public health crisis, giving them an easy place to pick up all their necessities and keeping the number of trips to a store to a minimum. And that's why even as the pandemic continues to be a problem, Walmart's business doesn't look to be in much danger. The company isn't stagnant, either. Walmart launched its own subscription service last year, Walmart+, to compete with Amazon Prime and offer unlimited free delivery in certain locations. It's also growing Walmart Health, which provides primary care, optometry, dental, x-ray, and other services to customers. It is currently available in select stores in Georgia, Arkansas, and Illinois. The company plans to expand Walmart Health into Jacksonville this year, and other Florida markets are on its radar. With about one-in-five residents in Florida being 65 and older, there could be significant demand there for Walmart's low-cost health services.
Walmart's ability to find new ways to grow is what makes it an attractive long-term buy. And with a five-year beta of less than 0.5, it's even less volatile than UnitedHealth. In the past year, its stock is up more than 22% and pays a dividend yield of 1.5%. For investors focused on safety and dividend income, it makes for a solid buy-and-forget investment.
Visa is more volatile than the other two stocks listed here, averaging a five-year beta of just below one. But it's still a safe stock, because the need for credit isn't likely to go away (or down) -- certainly not in an economic downturn and when people are spending more money online. According to Fortune Business Insights, the market for online payments is expected to reach a value of $17.6 trillion in 2027, up from $3.3 trillion in 2019 as it rises at a compounded annual growth rate (CAGR) of 23.7%.
Right now, the coronavirus pandemic is hurting Visa's business, as a decline in travel means a bit less spending. But the company is still doing better than most. The business reported its most recent quarterly results on Jan. 28, and for the period ending Dec. 31, 2020, net revenue of $5.7 billion was down 6.1% year over year and net income of $3.1 billion fell by a more modest 4.5%.
With profit margins typically around 50%, Visa makes for a stable long-term investment, especially given the growth in the sector that could very well be accelerated as a result of the pandemic. Its modest dividend yield of 0.7% isn't going to be the main reason to buy shares of the company, but it's a good bonus on top of all that potential growth.
The stock is flat from where it was a year ago, but that's why now may be a good time to buy it -- before it takes off in value as the economy recovers and if there's an uptick in travel, which could happen later this year depending on how the battle with COVID-19 progresses.