Last year, retail investors rocked Wall Street's boat like never before. Even though retail investors have been putting their money to work in the stock market for well over a century, the short-squeeze mania that ensued in January and February of last year caused Wall Street to step back and pay closer attention to what people were buying.

But what's even more intriguing than the stocks retail investors have in their portfolios is the companies and exchange-traded funds (ETFs) they continue to add to on a regular basis. Recurring investments are a true sign of conviction.

A person holding a smartphone that's displaying a rapidly rising stock chart.

Image source: Getty Images.

Retail investors are regularly buying these stocks and ETFs

According to online-investing app Robinhood, which is especially popular with retail investors, a mix of 10 stocks and ETFs are the most popular recurring investments on its platform.

  1. Apple (AAPL -0.98%)
  2. Tesla (TSLA 0.42%)
  3. Vanguard S&P 500 ETF (VOO -0.41%)
  4. SPDR S&P 500 ETF (SPY -0.41%)
  5. Amazon (AMZN -1.01%)
  6. Microsoft
  7. Vanguard Total Stock Market ETF
  8. Invesco QQQ
  9. Alphabet (GOOGL -1.63%) (GOOG -1.63%) (specifically Class A shares, GOOGL)
  10. Nvidia

A few things stand out from this list, some of which even I didn't expect.

Two excited children playing with new iPhones on display in an Apple store.

Image source: Apple.

Retail loves brand-name companies

Perhaps the least-surprising aspect of the 10 most popular recurring investments is that retail investors tend to flock to brand-name companies they know, trust, and/or use.

For instance, Apple is the largest publicly traded company in the U.S., with products especially popular with consumers. According to data from Counterpoint, Apple controlled 56% of U.S. smartphone market share in the fourth quarter, which was up from a 40% share in the third quarter of 2020. 

Since introducing 5G capability on its iPhones, Apple's sales, profits, and share price, have soared. Pretty much anytime Apple introduces a new product, you can count on long lines forming outside its stores.

Another perfect example of retail investors buying brand-name stocks they know and trust is Amazon. Based on an August report from eMarketer, Amazon was expected to account for 41.4% of all online retail sales in the U.S. last year. To offer some context, the next-closest competitor to Amazon in online retail share is Walmart, which is over 34 percentage points behind it.

It's also worth nothing that, although not nearly as well-known as its online marketplace, Amazon Web Services is far and away the leading generator of cloud infrastructure revenue in the world.

A Tesla Model S, Model 3, Model X, and Model Y recharging at a Supercharger station.

From left to right, a Tesla Model S, Model 3, Model X, and Model Y at a Supercharger station. Image source: Tesla.

Growth stocks are in focus

Robinhood's list of the most popular recurring investments also shows that retail investors gravitate to growth stocks.

Electric-vehicle (EV) manufacturer Tesla, the second most held stock on Robinhood and the second most common recurring investment on the platform, is the poster child of sustainably fast growth. Despite Tesla's huge market cap of $822 billion, Wall Street's consensus is for the company to grow sales by 54% in 2022. Tesla aims to take advantage of the global green-energy push and should be bringing two new gigafactories online within the next month, which will help boost its EV output.

FAANG stock Alphabet represents yet another growth stock retail investors can't stop buying. Most people are probably familiar with Alphabet's leading internet search engine, Google. Per GlobalStats, Google has controlled between 91% and 93% of global internet-search share for the trailing two years. But it's the company's ancillary platforms -- such as cloud infrastructure-service Google Cloud and streaming-platform YouTube -- that are driving Alphabet's superior growth rate.

A businessperson holding a stopwatch behind ascending stacks of coins.

Image source: Getty Images.

Broad-based ETFs are a popular recurring addition

But the biggest surprise of all might be that four of the top eight most popular recurring investments are ETFs. While the general consensus might be that retail investors love risk, the inclusion of these ETFs suggests that retail investors understand the importance of long-term investing and diversification.

Let's be brutally honest: There's nothing exciting about the SPDR S&P 500 ETF or Vanguard S&P 500 ETF. These are index funds that closely mirror the movements of the S&P 500 and come with extremely low fees. (The Vanguard S&P 500 ETF's net expense ratio is 0.03%, compared to 0.09% for the SPDR S&P 500 ETF.) But boring can be beautiful on Wall Street.

According to data provided by Crestmont Research, the S&P 500 hasn't delivered a negative return over a rolling 20-year period in more than a century. In fact, investors averaged a double-digit annual return in over 40% of the end years examined between 1919 and 2021.

To make things even simpler: If an investor bought and held the S&P 500 for 20 years, they made money, regardless of when they bought. That's a pretty strong case for patient retail investors to buy and hold an S&P 500 index fund no matter how well or poorly the market is performing.