It's impossible to definitively label any stock as an easy wealth builder. All investments carry risk -- that's kind of the whole point of investing -- and past performance can't guarantee future results.
That being said, some stocks are better bets than others. If you're looking for low-effort stocks that should do just fine if you forget to check up on them for a few years, you should take a closer look at Amazon.com (AMZN +1.53%), Visa (V 0.29%), and Johnson & Johnson (JNJ 0.14%).
This trio of familiar household names should let you build wealth for decades to come -- without ever losing sleep over their business prospects. You'll never find a more intriguing and diverse gathering of wealth-building characters. We must be cautious.
NASDAQ: AMZN
Key Data Points
Amazon's dual strengths: E-commerce and cloud computing
Amazon is a giant and a veteran in the e-commerce space. With $484 billion of retail net sales in 2023, the company stands on a massive financial foundation. 72.8% of last year's sales came from the North American segment, leaving lots of room for international expansion.
Its robust e-commerce business provides long-term stability, ensuring a steady stream of revenue in a variety of economic landscapes. And this essential business continues to gain market share, both from bricks-and-mortar retailers and other e-commerce names.
Complementing this base is the hugely profitable Amazon Web Services (AWS) service, which plays a crucial role in the company's growth. AWS was one of the first cloud computing platforms on the market and remains in pole position nearly two decades later. Positioned at the forefront of the generative AI boom, AWS should thrive in the coming years.
Despite its lack of dividends and very limited share buybacks, Amazon's strong growth trajectory and innovative spirit make it an attractive long-term investment. The combination of a stable e-commerce foundation and the explosive growth potential of AWS gives Amazon the power to build investor wealth over the long run. And don't forget that Amazon led the way in the creation and popularity of both the e-commerce and cloud computing industries. If these ideas run out of growth fuel someday, Jeff Bezos' empire could very well replace them with another as-yet unheralded business idea.
While there are potential risks, such as regulatory scrutiny and rising competition, Amazon is one of my favorite easy wealth builders.
NASDAQ: AMZN
Key Data Points
Visa adapts to the changing payments market
Visa is a titan in the digital payments industry, capitalizing on the global shift away from cash payments. Its extensive network effects and strong brand recognition anchor its market leadership. I mean, you probably have a Visa card or two in your wallet, in collaboration with your favorite bank.
And the story doesn't end there. Beyond traditional card-based payment methods, Visa is proactively exploring new technologies and expanding into emerging markets. Cryptocurrencies and decentralized banking services pose a serious threat to the old-school ways of managing payments, but Visa isn't sitting on its hands.
"Blockchain networks enable new infrastructure for recording the ownership and transfer of digital assets," Visa states on its cryptocurrency hub. "We believe that they have the potential to power new applications in capital markets, payments, and commerce."
So the company manages crypto wallets and blockchain payment networks. The traditional Visa systems can already settle payments made in stablecoins. The Crypto.com and Coinbase (COIN +4.57%) crypto-trading platforms offer Visa cards that draw funds from the user's cryptocurrency balances and earn crypto-based rewards.
The company's enthusiastic foray into crypto-based solutions exemplifies its forward-thinking approach to staying relevant and competitive. In other words, Visa is more than ready to change with the times. If you can't beat 'em, why not join 'em and lead a revolution from the front lines?
On top of that flexibility, Visa's financial health is as impressive as you'd expect from a financial services powerhouse. Free cash flows added up to $19.7 billion over the last four quarters. And Visa has a firm commitment to returning value to shareholders. Dividend payouts stood at $4.0 billion over the same period, while the company bought back and retired stock shares to the tune of $13.1 billion.
Visa faces potential risks such as cybersecurity threats and economic downturns. However, I see more marketwide issues than specific Visa problems in that risk ledger. The company's strong fundamentals and open-minded adaptability provide a solid foundation for long-term growth. That's another easy wealth builder, set to prosper in the era of decentralized finance and beyond.
NYSE: JNJ
Key Data Points
Johnson & Johnson: A top pick for income investors
The hit parade doesn't end there. Johnson & Johnson is another household name, even after the August 2023 separation of its consumer health business. Familiar brands like Band-aid and Tylenol are now under the wing of Kenvue (KVUE 1.43%), a consumer-facing medical giant in its own right. There's still a limited connection as J&J owns approximately 9.5% of Kenvue's outstanding common stock, allowing J&J to benefit from its previous consumer health brands while sharpening its focus on pharmaceuticals and medical devices.
Johnson & Johnson's financial stability is top-notch, with trailing free cash flows of $18.2 billion. Its generous dividend payments didn't end with the Kenvue separation, and the forward dividend yield stands at a lofty 3.4% today. Over the past year, it has paid $11.7 billion in dividends and repurchased $1.25 billion worth of shares, essentially stuffing 71% of its cash profits directly into shareholders' wallets.
While there are potential risks, including litigation related to talc products and competition from generic drugs, Johnson & Johnson's diversified business model provides a solid foundation for long-term growth. Remember that Kenvue's brands accounted for just 17% of J&J's annual revenues, so the separation is hardly the end of this medical innovator as we know it. And that bountiful dividend policy makes J&J's stock an especially tempting pick for income investors.
All in all, Johnson & Johnson demands consideration as an easy wealth builder for investors with an eye for lucrative dividend checks.
Three stocks for easy wealth building
And there you have it. Amazon's stable growth, Visa's flexibility in adapting to changing industry conditions, and Johnson & Johnson's generous cash-based dividends make these companies strong contenders for easy wealth building. You may not like all three ideas, but there should be something for every investor in this mix.
