If you're not sure where to invest this year and don't want to take a risk with your money, consider buying shares of dividend stocks. An even better option may be to hold dividend stocks that are low in volatility.
You can see how volatile a stock is by looking at its beta value. A value of 1 suggests it moves generally in the same direction as the market, whereas a value of less than 1 suggests that it isn't as affected by swings in the market. If the beta is more than 1, then the stock is more volatile than the broader market.
A couple of above-average dividend stocks that have beta values of around 0.5 (meaning low volatility) are Johnson & Johnson (JNJ -0.69%) and Kroger (KR 0.94%). Here's why these stocks could be safe places to park your money right now.
1. Johnson & Johnson
Healthcare giant Johnson & Johnson has a robust business that brings in revenue from medical devices and pharmaceuticals -- and for the time being its consumer business as well, which will remain part of its operations until later this year when the company spins that off into a separate company called Kenvue.
Generally, besides the early stages of the pandemic (and the year afterward), the company's business grew at a relatively steady rate over the past five years:
JNJ Revenue (Quarterly YoY Growth) data by YCharts
Johnson & Johnson has been resilient over the years, even as it has faced costly legal battles that have resulted in billions in additional expenses. In each of the past five years, it has reported no less than $14 billion in profit.
It also pays a dividend that yields 2.8%, which is better than the S&P 500 average of 1.6%. Plus Johnson & Johnson is a Dividend King, having raised its payouts annually for 60 consecutive years. It has been one of the most consistent and reliable dividend stocks to own in the world.
With a beta value of only 0.54 and a growing dividend, this could be a safe stock to put your money into this year. Last year, as the S&P 500 crashed 19.4%, shares of this stalwart were up a modest 3.3%. Trading at 24 times earnings, Johnson & Johnson is a bit more expensive than your average S&P 500 stock, which trades at a multiple of 20, but not by a whole lot.
2. Kroger
Investing in grocery stores and supermarkets can be another great way to keep your risk down. Since these businesses sell necessities, they have a lot of power when it comes to passing on higher costs to consumers. That alone can make a stock like Kroger a fairly safe investment to own. Although shares of the supermarket operator fell 1.5% last year, that's still relatively modest in comparison to the broader markets.
As with Johnson & Johnson, this too has been a relatively stable business over the years with respect to revenue growth:
KR Revenue (Quarterly YoY Growth) data by YCharts
The stock's beta value is 0.49, suggesting even less volatility than Johnson & Johnson's stock. It also pays a dividend yield of 2.3% to help pad your overall returns.
An added incentive is that if its pending merger with rival Albertsons goes through, that could make the stock an even better buy, as it would make the business even stronger. But even if that doesn't happen, Kroger remains one of the safer stocks you can own right now. And at just 14 times earnings, it doesn't come at a hefty price tag either.
