Investing in 2022 is like opening the box to a piece of IKEA furniture: The instruction manual has no words and you're left to guess what to do next by the pictures provided. Since the year began, all three major indexes have plunged into a bear market, and a number of metrics and indicators suggest the broader market could head even lower.
While that's not exactly a rosy forecast, it does represent an incredible opportunity. No matter how poorly the stock market's major indexes have performed throughout history, big declines have eventually always been recouped by bull market rallies. This means the current bear market is an ideal time to put money to work.
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However, investors don't have to buy volatile stocks to build wealth on Wall Street. There are a number of relatively safe stocks that have navigated their way through downturns before and offer reasonable long-term growth potential without the violent price swings typically associated with high-growth stocks. What follows are three exceptionally low-risk stocks that have the ability to turn an initial investment of $400,000 into $1 million, including dividends paid, by 2030.
Walgreen Boots Alliance
The first safe stock that offers low volatility and the opportunity to generate a total return, including dividends paid, of 150% by 2030 is pharmacy-chain Walgreens Boots Alliance (WBA -0.11%).
Are things perfect for Walgreens at the moment? No. A slowdown in COVID-19 vaccinations has modestly slowed foot traffic into its stores. Arguably more pressing, a strengthening U.S. dollar threatens to weigh down its earning potential in overseas markets.
That has some folks on Wall Street leery about putting money to work in this pharmacy giant. However, this is a narrow-sighted view for a company making all the right moves.
For years, Walgreens has been undertaking a transformation designed to make the company more efficient, boost organic growth, and increase customer loyalty. The initial report card for this transformation should result in an "A" grade.
In terms of operating efficiency, Walgreens set a goal to reduce its annual operating expenses by $2 billion by the end of fiscal 2022 (the company's fiscal year ends August 31). Walgreens surpassed $2 billion in annual cost savings and managed to reach its goal one year ahead of schedule (fiscal 2021).
Of course, cost-cutting only moves margins and the profit needle so far. What's far more enticing is where the company has been deploying its capital. For instance, it's beefed up its online retail presence in the wake of the pandemic. Even though this is a brick-and-mortar-dominated retail chain, Walgreens is seeing sustained digital sales growth in the double digits.
Additionally, Walgreens has partnered with and made a majority investment in VillageMD to open up to 1,000 full-service health clinics by 2027. They'll be co-located at Walgreens' stores in over 30 U.S. markets.
As of the end of August, 152 of these clinics were already open. Having a physician on staff broadens the treatment landscape for these clinics and provides an impetus for repeat visits.
One final note: Walgreens is doling out a 5.4% yield and has raised its base annual payout for 47 consecutive years. Valued at just seven times its fiscal 2022 earnings, Walgreens Boots Alliance seems to provide a very safe floor and reasonably high ceiling.
York Water
Exceptionally low-risk stocks don't have to be well known to deliver triple-digit total returns. Completely off-the-radar water utility stock York Water (YORW 1.00%) is the perfect example of a safe stock that can make its shareholders a lot richer by 2030.
For even the most diehard utility investors, York Water is probably a name few have heard of before. It's a small-cap company ($603 million market cap) that averages about 63,000 shares traded daily. More specifically, it operates water and wastewater utility services in 51 municipalities spanning three counties in South-Central Pennsylvania. But what York might lack in publicity, it more than makes up for with its capital-return program, which I'll get to in a moment.
The beauty of water utility stocks like York Water is that their operating cash flow is very predictable. To begin with, homeowners and renters have few, if any, choices when it comes to choosing their water and wastewater utility provider.
To build on this point, York is a regulated water utility. This means the company can't pass along rate hikes without receiving approval from the Pennsylvania Public Utility Commission.
While this might sound like more hassle than benefit, it's quite the opposite. With rates known in advance, York avoids being exposed to potentially unpredictable wholesale pricing. This predictability plays a key role in York setting aside capital for acquisitions and its dividend without having to worry about these outlays adversely impacting profits.
But the real star for York Water has been its dividend. Earlier this year, I referred to York as the "Greatest Dividend Stock of All Time," because no publicly traded company has paid a consecutive dividend for a longer time frame -- 206 years (and counting).
Though its 1.8% yield may be a bit pedestrian among utility stocks, the compound annual total return of its shares plus dividend since 1999 would put investors on a path to gain 150% on a $400,000 initial investment by 2030 (assuming its average returns for the past 23 years hold true for another eight years).
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Intel
The third exceptionally low-risk stock that can turn a $400,000 initial investment into $1 million by 2030 is semiconductor stock Intel (INTC 0.61%).
Understandably, a quick look at Intel's stock chart on a year-to-date basis might have investors feeling anything but "safe." The combination of historically high inflation, persistent global supply chain issues, a strengthening U.S. dollar, growing fears of a recession, and market-share gains by key rival Advanced Micro Devices have pushed shares of Intel to their lowest point in more than eight years. Though cyclical stocks like Intel don't bounce back at the snap of a finger, they can offer competitive advantages and predictability that make them rock-solid buys.
For example, on a macro basis, semiconductor stocks appear poised to benefit from certain products and industries becoming more technology-driven. Everything from our home appliances to cars are becoming more reliant on semiconductor solutions. This provides a steady growth opportunity for what often amounts to multiyear economic expansions.
More specific to Intel, its data center segment should become a cash cow this decade. Although Intel is best known for its personal-computing (PC) processors, it's the steady shift of enterprise data into the cloud that should fuel data center demand for years to come. Even with modest market share losses to AMD, Intel still commands the bulk of PC, server, and mobile central-processing-unit market share.
The CHIPS and Science Act, which President Joe Biden signed into law in August, presents another opportunity for Intel to move the needle. Intel is spending $20 billion to bolster its foundry operations and build two manufacturing plants in Ohio. The company could lean on the subsidies provided to the semiconductor industry via the CHIPS Act to construct additional facilities in the United States.
At no point in Intel's storied history has the company been valued so inexpensively relative to its book value. When you add in its 5.4% dividend yield, you get an extremely safe tech stock with what should be a sturdy floor beneath its current share price.
