The Robinhood Markets top-100 stock list, along with the usual meme-favorite names, includes a lot of stocks that are boring in a good way. They are household names that are popular among investors because they continually deliver.
Three Robinhood 100 stocks I like now because they have delivered consistent safe returns and have shown an ability to leapfrog over economic hurdles that slow other stocks are Realty Income (O -0.17%), Microsoft (MSFT 1.82%), and Costco Wholesale (COST 1.01%).
All three companies have delivered triple-digit total returns over the past decade, while growing revenue in the triple digits as well.
O Total Return Level data by YCharts
Realty Income lives up to its name
Realty Income may be the ultimate buy-and-hold forever Robinhood stock because it's perfect for investors who don't plan on selling. The stock's dividend yield is around 4.9%, and the real estate investment trust (REIT) has increased its dividend for 102 consecutive quarters.
That commitment to dividend raises sets the stock apart. During the height of the COVID-19 pandemic in 2020, Realty Income was the only one of 15 S&P 500 REITs that raised its dividend.
The company has a huge portfolio of properties -- 12,492 as of the end of the first quarter, spread over 1,259 tenants across 84 industries. That diversity of commercial properties means that the company is less volatile than more specialized REITs, because if one industry is doing poorly, chances are that another one in the company's portfolio will be doing well.
In the first quarter, the company reported occupancy of 99%, with an average remaining lease term of 9.4 years. That gives the company consistent cash flows that allow it to reliably deliver its monthly dividends. In the first quarter, Realty Income reported revenue of $944.4 million, up 16.9% year over year, and funds from operations (FFO) per share of $1.03, up 1.9% over the same period last year.
The company also raised guidance in its first-quarter report. It originally said it expected yearly FFO of between $4.01 and $4.13, but now says it expects that number to be between $4.05 and $4.15. Last year, the company reported yearly FFO of $4.06.
Microsoft retains its leading edge
Microsoft, the most valuable publicly traded company in the world, has shown over and over its ability to adapt to market trends. The tech company has evolved from a small software business to a behemoth that also sells gaming hardware, computers, cloud computing systems, and storage, and now it appears to be at the forefront of monetizing an artificial intelligence (AI) service.
Microsoft enjoys a huge moat because of its operating systems. Basically, they are used so widely that the company's various services become more efficient the more the company grows.
Unlike many fast-growing tech companies, Microsoft has another reason it is a buy-and-hold stock: a dividend. It raised its quarterly dividend per share by 10% last year to $0.68, the 20th consecutive year the company has increased its dividend. The yield is only 0.77%, but with a payout ratio of 29%, the dividend is likely to continue growing.
The company's stock is up more than 48% so far this year, thanks to strong earnings and its announcement this week that it will charge a $30-per-month subscription fee for its Microsoft 365 AI service, Copilot. The company introduced Copilot in March and had already been trying out the service on a trial basis to 600 companies, so the pricing point wasn't pulled out of thin air.
The service will be able to summarize meetings, rank the importance of emails, design presentations and offer writing prompts. The addition of this service should help prop up sales of the company's Microsoft 365 array of applications.
The company's cloud services are driving strong revenue growth. In the third quarter, Microsoft reported revenue of $52.9 billion, up 7% year over year, and earnings per share (EPS) of $2.45, up 10% over the same period last year. Azure cloud computing revenue grew 27% year over year, and overall cloud computing revenue jumped 22% over the same period last year.
Costco grows in good times and bad
Costco's stock is up more than 20% so far this year. The cost-conscious retail company operates 853 membership warehouses, including 587 in the United States and Puerto Rico, 107 in Canada, and 40 in Mexico. It has another 82 in Asia and 37 in Europe. The company also has e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia.
Costco's shares have been resilient for several reasons. In times of economic hardship, consumers turn to the company for deals on everyday merchandise because of its emphasis on low prices on bulk items.
Even when other budget-minded retailers report declining sales, Costco's revenue continues to be solid because the company makes a lot of money from its yearly memberships ($4.2 billion last year), particularly since it has consistently grown its membership base. Last year, it had nearly 119 million cardholders, up 6.5% over 2021. The membership renewal rate showed little churn as it was 93% in the U.S. and Canada and 90% worldwide.
In the first quarter, the company reported revenue of $52.6 billion, up 1.9% year over year, though EPS slipped to $2.93, compared to $3.04 in the same period last year. Costco has raised its quarterly dividend for 19 consecutive years, including a 13% boost this year to $1.02 per share. The regular dividend has a safe payout ratio of around 27%, so it is unlikely to be cut.
While the yield on the dividend is only 0.74%, it's worth noting that every two or three years the company has also delivered a special dividend to investors when profits are good. The last one came in 2020, when the company, helped by surging sales during the pandemic, gave investors a special dividend of $10 a share.
