If you think you have to choose between safety and market-beating return potential in your stock portfolio, think again. While no stock is completely safe, there are some excellent businesses that offer a great combination of stability and long-term growth ability. Here are four in particular that I invest in for my own retirement that could deliver excellent wealth building capabilities in the years to come.
Still a great compounding machine
In the nearly 60 years since Warren Buffett took over Berkshire Hathaway (BRK.A +0.10%)(BRK.B +0.15%), the stock has delivered 3,787,464% returns for shareholders through the end of 2022. That's not a typo.
Berkshire isn't going to do the same over the next 60 years. The numbers have become so large that it would be impossible. But the good news is that Berkshire has evolved into an impressive collection of subsidiary businesses and investments and is well-positioned to deliver steady returns that outpace the overall market over time.
NYSE: BRK.B
Key Data Points
Not only does Berkshire own excellent businesses like GEICO and BNSF Railroad that work well no matter what the economy is doing, as well as a massive stock portfolio, but the company also has about $147 billion in cash on its balance sheet. This gives the company a big competitive advantage, especially during recessions and market crashes, as it has the flexibility to take advantage of opportunities while other companies are looking for capital.
Lots of growth avenues
Brookfield Corporation (BN +3.65%) isn't the easiest company to understand. But it is essentially made up of three parts:
- Asset management
- Insurance solutions
- Operating businesses
All three have lots of room to grow. On the asset management side, Brookfield owns 75% of Brookfield Asset Management (BAM +0.00%), whose management believes they can more than double the fee-bearing assets under management in the next few years. The insurance services business helps insurance companies invest their capital, and U.S. insurers have $8 trillion of invested capital. And Brookfield's operating businesses include stakes in its namesake publicly traded renewable energy and infrastructure partnerships, as well as a massive wholly owned real estate portfolio.
A dominant leader in two industries
It's rare to find a company that is as dominant in one industry as Amazon (AMZN +0.63%) is. But you may not be aware that Amazon is the leader in two completely separate industry. We all know about Amazon's e-commerce platform, which has a larger market share of U.S. online sales than its next 14 competitors combined. In addition, the Amazon Web Services (AWS) cloud infrastructure side of the business has a dominant market lead over its primary competitors from Alphabet (GOOGL +1.31%)(GOOG +1.09%) and Microsoft (MSFT +3.64%).
NASDAQ: AMZN
Key Data Points
You also might not be aware of how much growth potential there is on both sides. E-commerce still only makes up just over 15% of U.S. retail sales, and the cloud services industry is expected to more than triple in size by 2030. In short, if Amazon can simply maintain its current market share, there could be lots of growth ahead.
Steadily growing income and impressive long-term returns
I've called net-lease real estate investment trust Realty Income (O 0.71%) perhaps the best overall dividend stock in the market. The company owns more than 12,000 freestanding commercial properties, most of which are occupied by recession-resistant tenants, and this creates a steady and predictably growing stream of income.
Realty Income has a 5.4% dividend yield at the current price and has increased the payout for the past 103 quarters in a row. And not only that, but it has also handily beaten the market, with a 14.2% annualized total return since its 1994 NYSE listing.
Buy with "slow and steady" in mind
It's important to note that I'm assuming you still have quite a few years until retirement with the statement that these can increase your money fivefold. These stocks are not likely to turn $100,000 into $500,000 by the time you retire, if you plan to retire in say, five years. They are built for steady and strong returns, not to quickly multiply.
Having said that, these are four great all-around stocks for investors of all ages. I own all four in my own retirement account (I'm in my 40s) and plan to keep all of them for the long haul.
