You need money to make money in the stock market. And while you can invest a modest sum of $1,000, I never understood the point of doing so. If you pick a great stock and double your money, you could be up another $1,000. But that may not be an optimal return, given the amount of time you spent learning or reading up on a company.
If you're able to do so, saving up and investing a larger amount like $10,000 is a good aim to have -- and can be more profitable. Of course, you'll want to invest it wisely, and so putting it into safe blue-chip stocks like Eli Lilly (LLY -0.64%), Apple (AAPL -0.57%), and Mastercard (MA -1.19%) can be a good move as these stocks are all growing and pay dividends.
Image source: Getty Images.
1. Eli Lilly
Eli Lilly has grown its top line steadily from $22.3 billion in 2019 to more than $28.3 billion this past year. That's good for a 27% increase in sales from what I'd consider to be a fairly safe stock; Eli Lilly's annual profit margin during that time has been no lower than 19% of revenue.
The company has many top-selling drugs in its portfolio that are growing at rapid rates, including diabetes medication Trulicity, which on its own generated $1.7 billion in the first three months of 2022 and grew 20% year over year. Psoriasis treatment Taltz brought in $488.1 million and rose by 21%, while sales of cancer medicine Verzenio jumped by 74% to $469.4 million.
While COVID-19 antibodies did give the company's top line a boost, contributing $1.5 billion in sales this past quarter, Eli Lilly has many products that don't depend on COVID and that can generate growth for its business for many years. Among its most promising is its Alzheimer's treatment donanemab.
On top of all that potential, the stock also pays a dividend that yields around 1.4%, in line with the S&P 500 average.
2. Apple
Tech giant Apple is arguably the safest stock you can own for the long haul. With a devoted fan base, the company consistently generates strong growth numbers, even though key changes to its iPhones often simply include new colors or adding cameras.
While the innovation is still there, it doesn't compare to what consumers came to expect during the Steve Jobs era. And yet that doesn't seem to have an adverse impact on the company's stock or its financials; Apple's cult following remains devoted to its products.
From revenue of $260.2 billion in fiscal 2019 before the pandemic to a whopping $365.8 billion for the fiscal year ended Sept. 25, 2021, its top line has surged more than 40% in a two-year window. One of the ways Apple can continue to drive growth is by potentially offering a new hardware subscription model, which is rumored to be in the works.
Whatever Apple does, it has plenty of money to build or develop a new growth avenue; as of the end of March 26, the company had more than $51 billion in cash and marketable securities on its books.
With a yield of only 0.6%, Apple's dividend isn't huge. However, the company has been raising its payouts over the years, including a 4.5% bump-up that the company declared last month. There's definitely incentive for investors to buy and hold the stock for the growth in both Apple's top line and its dividend.
3. Mastercard
Mastercard is an underrated stock right now. Staying at home during the pandemic and spending less while collecting stimulus payments has put Americans in better financial positions now than they were at in 2019. However, inflation will chip away at the savings that consumers have accumulated over the past few years. And as savings accounts become depleted, consumers will likely use their credit cards more to fund purchases or vacations.
As a result, a top credit card company such as Mastercard could stand to benefit from an increase in spending as the economy (hopefully) returns to normal this year.
The company's revenue in 2020 dipped to $15.3 billion, a nearly 10% drop from the previous year. Although 2021 saw a recovery back up to a new high of $18.9 billion, there could be even more growth ahead for the business this year. In the company's latest SpendingPulse report, Mastercard reported that compared to pre-pandemic spending in 2019, April's retail sales (excluding auto) were up by 15.3%. That's a good sign that a recovery in the economy could be well underway.
Like Apple, Mastercard doesn't offer a huge payout, as its dividend yields around 0.6%. But it has also been increasing its payouts, which have doubled in just the past five years.
