Some buy-and-hold investors check up on their stocks every single day, despite knowing they've got no plans to make an exit no matter what's happening. Other investors have no interest in the daily check-in. They've selected stocks truly meant to be long-term holdings, and are faithfully letting time do the work.
If you find yourself to be more like the former but would like to be more like the latter, swapping out some of your stocks for safer holdings can help. Here's a rundown of three reliable, resilient picks that don't require constant supervision.
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1. Infosys Limited
Infosys Limited (INFY +3.31%) is one of those companies that most people have heard of but few people actually understand. In simplest terms, the India-based outfit is a technology consultant, helping all sorts of enterprises move deeper into the digital age. For example, the company just facilitated an upgrade of a resource-planning computer system for a water utility provider in Florida. It also does outsourced tech work when an organization just wants to pass such ongoing duties off to a third party.
It's not a particularly riveting line of business, but it has incredible traction. Not once in the past 20 years has Infosys revenue fallen from one year to the next, and only once -- in 2013 -- has operating income tumbled year over year. And bear in mind, that 20-year timeframe includes the impact of the COVID-19 pandemic as well as the economic fallout of 2007-09's subprime mortgage meltdown. It's impressive.
Analysts are looking for more growth going forward, too, on the top and bottom lines. After accelerating this year following 2020's headwind, the analyst community is calling for next year's 11% sales growth to drive an identical 11% increase in per-share earnings. It's a growth pace one typically doesn't see for an organization that seemingly isn't swayed by any environmental factors.
2. McDonald's
You know the company, as does everyone else on the planet. Indeed, fast-food chain McDonald's (MCD 0.05%) boasts one of the most recognizable brand names (and logos) in the world. Except, this company isn't quite what it seems to be with just a passing glance. Rather than a fast-food chain, McDonald's is often described as a real estate company. It just so happens that all of its tenants are fast food franchise operators.
It's not an unfair assessment either. Of the 39,676 McDonald's restaurants up and running as of the end of last quarter, only 2,690 of them were actually owned by the corporation. The other 36,986 are being operated by franchisees. These franchisees of course pay regular fees and royalties to the parent company. Most notably, though, as part of the franchise agreement, these operators must rent their land and building from the parent company. Like any other rent payment, these are due irrespective of a locale's profitability and are instead based on a percentage of monthly sales.
It's not the norm in the world of fast food. In most cases, an operator either owns the property in question or has secured it from a third party -- without the potential conflict of interest clearly at play when McDonald's is a franchisee's one and only option as a landlord. These franchisees, however, find that the heavy-handed rules are well worth it. The brand is still one of the most profitable franchise options in the fast-food business, which means the parent company's revenue and earnings stream is plenty reliable.
3. General Dynamics
Finally, add General Dynamics (GD 0.34%) to your list of resilient stocks that can help stabilize a shaky portfolio.
It's the sort of pick that isn't always comfortable to own. Not only is the aerospace business at least a little bit cyclical, the defense industry seems forever vulnerable to changes in the direction political winds are blowing.
The thing is, that fear looks past a key aspect of General Dynamics' business. That is, a huge amount of its revenue stems from maintenance contracts and the supply of goods that are regularly consumed by both military and aircraft customers. Of last quarter's top line of $9.5 billion, for perspective, $4 billion of it was generated by the provision services rather than sales of products. Just as compelling is the fact that as of the end of last quarter, General Dynamics boasted a business backlog of $88 billion, most of which is already funded. This is future revenue that's already lined up, but can't be booked until the product or service is actually delivered.
General Dynamics isn't quite as consistent on the revenue and earnings front as Infosys or McDonald's. The company that manufactures everything from combat management platforms to Abrams tanks to nuclear submarines ran into some turbulence between 2011 and 2019, often in response to spending cuts and sometimes as a result of corporate reconfiguring.
Think bigger picture, though, and longer-term. The need for military hardware is never going to go away, even if spending on certain military hardware can ebb and flow from one year to the next.
