For the past 15 months, Wall Street has been testing the resolve of investors. In that time, the iconic Dow Jones Industrial Average, broad-based S&P 500, and growth-dependent Nasdaq Composite all fell into a bear market.
Although bear markets can be scary due to the unpredictability and velocity of moves lower, they also offer a phenomenal opportunity for long-term-minded investors to do some shopping. Despite never being able to predict when bear markets will occur or when they'll bottom with any preciseness, we do know that every previous bear market has eventually (key word!) been fully recouped by a bull market rally. Essentially, double-digit declines in the broader market are an open invitation to snag high-quality stocks at a discount.
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However, you don't have to maximize your investment risk to yield substantial rewards. What follows are four time-tested stocks that have the catalysts necessary to safely double your money, inclusive of dividends (where applicable), by 2028.
Visa
The first rock-solid company that can help you double your initial investment, inclusive of dividends paid, over the next five years, is payment processor Visa (V -0.66%). Even though Visa's yield of 0.8% isn't much to look at, income seekers should be aware that the company's board has increased its quarterly payout by more than 1,600% since 2008.
What's great about cyclical stocks like Visa is they're able to take advantage of the fact that economic expansions last longer than recessions. As the U.S. and global economy expand over time, Visa will benefit from higher consumer and enterprise spending. As a high-margin, fee-based company, Visa should see its profits climb.
Visa's operating model also showcases why it's capable of being a breadwinner for patient shareholders. Visa is strictly a payment processor. While it would probably have no trouble becoming a successful lender, doing so would expose the company to the possibility of delinquencies and loan losses during recessions.
Because it doesn't lend money, Visa doesn't have to set aside capital to cover loan losses during downturns. This subtle but powerful difference from its peers is a big reason why Visa maintains a profit margin north of 50%, and explains its ability to bounce back from recessions faster than most lending institutions.
Further, Visa's addressable market remains largely untapped. A majority of the world's transactions are still being completed in cash. Aside from holding the lion's share of credit card network purchase volume in the U.S. (nearly 53%, as of 2021), Visa has an opportunity to expand into underbanked regions of the world organically or via acquisition for years, if not decades, to come.
Paramount Global
A second time-tested stock that can safely deliver a triple-digit return, with payouts included, by 2028 is media stock Paramount Global (PARA 3.44%). Paramount's 4.4% yield alone is enough to get investors more than 20% of the way to doubling their money in five years.
Similar to Visa, being cyclical is a big reason Paramount Global is such a smart buy right now. Though shares have been weighed down in recent quarters by weaker advertising revenue, ad spending tends to ebb and flow in lockstep with the U.S. economy. In other words, the ad industry spends much more time growing than slowing. That's excellent news for Paramount's new and long-term shareholders.
The big catalyst over the next five years should be the company's streaming services. Paramount ended 2022 with 77 million direct-to-consumer (DTC) subscribers, which represents an increase of 30 million from where things stood at the end of September 2021. Mind you, this includes the loss of nearly 4 million DTC subscribers when the company pulled its services out of Russia last year. This strong subscriber growth suggests the company won't have any trouble raising prices in the future.
Don't discount free, ad-supported streaming service Pluto TV, either. If a U.S. recession were to occur in the months or years that lie ahead, "free" would be an incredibly compelling price point for consumers. This fact isn't lost on advertisers.
With Paramount Global's film segment on the mend and DTC growth impressing, steady gains are a real possibility.
Image source: Getty Images.
Walgreens Boots Alliance
The third tried-and-true stock that can safely double your money over the next five years, inclusive of dividends, is pharmacy chain Walgreens Boots Alliance (WBA 0.65%). Walgreens has raised its dividend in each of the past 47 years and is currently doling out an inflation-fighting 5.36% yield.
What typically makes healthcare stocks a "safe" investment is the simple fact that we don't have any control over when we become ill or what ailment(s) we develop. This is why demand for prescription drugs, healthcare services, and medical devices is relatively consistent in any economic environment.
However, Walgreens was something of an exception to this rule during the COVID-19 pandemic. Because it generates almost all of its revenue from its physical stores, lockdowns hurt pretty much all aspects of its sales channels. The good news is that the worst of the pandemic looks to be over, and Walgreens' management team has implemented a handful of initiatives geared at boosting organic growth.
The most exciting change for Walgreens Boots Alliance is its shift to healthcare services. Walgreens and VillageMD -- Walgreens is a majority investor in VillageMD -- have opened 210 physician-staffed, full-service health clinics colocated in Walgreens' stores, as of Feb. 28, 2023. Capable of handling a broad array of ailments, not just vaccines, Walgreens shouldn't have any trouble attracting repeat visitors with these clinics. The plan is to have 1,000 of these clinics open by the end of 2027.
The other big change is the company's aggressive spending on digital initiatives. Walgreens has revamped its supply chain and spent big bucks to improve its website. Even with its physical stores generating the bulk of net sales, having a more prominent and convenient online presence is key to boosting organic sales and driving repeat business.
Berkshire Hathaway
The fourth time-tested stock that can safely double your money by 2028 is conglomerate Berkshire Hathaway (BRK.A 0.11%) (BRK.B -0.03%). Though Berkshire isn't exactly a household name, its billionaire CEO Warren Buffett certainly is.
One of the benefits of purchasing Berkshire Hathaway stock is getting Warren Buffett as your portfolio manager... of sorts. Since Buffett became CEO in the mid-1960s, Berkshire Hathaway's Class A shares (BRK.A) have delivered an annualized return of 19.8%. In other words, shareholders have been doubling their money every 3.6 years, on average, for almost six decades. While past performance is no guarantee of future results, Buffett outperforming Wall Street has become somewhat the norm.
One reason Berkshire Hathaway has been such a success for so long is Buffett's long-term thinking. The Oracle of Omaha and his team run a $342 billion investment portfolio and regularly use time as an ally. By purchasing stakes in and/or acquiring cyclical businesses, Berkshire Hathaway is able to take advantage of the natural expansion of the U.S. and global economy over long periods. This is probably a good time to mention that Visa and Paramount Global are two holdings within Buffett's portfolio.
Portfolio concentration has been a key cog in Berkshire Hathaway's outperformance as well. The Oracle of Omaha has long believed that diversification is only necessary for investors who don't know what they're doing. Despite owning stakes in 49 different securities, most of Berkshire's portfolio is tied up in just a few stocks.
Lastly, Buffett and his investing team have packed Berkshire Hathaway's portfolio with dividend-paying stocks. Companies that pay a regular dividend tend to be profitable on a recurring basis. More importantly, they've crushed nondividend payers in the return column over multiple decades.
