This Mother's Day, millions of people will try to figure out the best way to honor their moms for the hard work they've done. Giving your mom some investing ideas might not exactly be as common a gift as chocolates or flowers, but as your mom gets older, advice that can help her become more financially secure might be what she really needs.
But if your mom is as picky about her investments as my mom was, you can't just settle for any old stock. Only the highest-quality names will do. That's why I started my search for some mom-friendly stocks for mothers of all ages by looking at the 30 stocks in the Dow Jones Industrials (INDEX: ^DJI).
The right stocks for moms
As with any other group, there are plenty of stereotypes about moms. But obviously, you can't generalize about what kinds of stocks are truly mom-appropriate. One person's 90-year-old mom clearly should own a much different mix of investments from another person's 25-year-old mom.
Keeping that caveat in mind, I tried to find some stocks that might fit well as a part of just about any mom's portfolio. For younger moms, these stocks will be among the most conservative investments they might own, whereas for older moms, they might well make up the most aggressive part of their life savings.
But what sets these Dow stocks apart from the rest are the three attractive traits that they all share. First, they all pay dividends, with yields above the market's average. Second, they each have thriving businesses behind them that generate healthy internal returns on equity of 15% or more. And last but certainly not least, all five of these stocks have come through the past five years with a far smoother ride than the overall market. For those nervous moms out there, that combination should make you feel more comfortable about these blue-chip stocks than they might about the average stock.
Take a look
So without further ado, here are the five stocks that made the cut:
|
Stock |
Dividend Yield |
Return on Equity |
5-Year Beta |
|---|---|---|---|
| Johnson & Johnson (NYSE: JNJ) | 3.8% | 16.7% | 0.59 |
| Coca-Cola (NYSE: KO) | 2.6% | 26.7% | 0.54 |
| Wal-Mart | 2.7% | 22.3% | 0.35 |
| Home Depot (NYSE: HD) | 2.3% | 21.1% | 0.79 |
| ExxonMobil (NYSE: XOM) | 2.8% | 25.6% | 0.51 |
Source: S&P Capital IQ.
Johnson & Johnson needs no introduction to most moms, as the company's products are staples of nearly everyone who deals with children. But J&J is about more than just Band-Aids and No More Tears. With its reach into medical devices and pharmaceuticals, J&J is a one-stop health-care conglomerate that has some big growth prospects ahead of it -- if it can get its house in order and clean up a spate of recent recalls.
The other entries on this list show off the diversity of the Dow Jones Industrials and help add balance to any portfolio. Heeding the common maternal advice that you can't just drink soda all the time, Coca-Cola has a widely diversified set of beverage offerings, from the rise of bottled water to its Minute Maid juices. Wal-Mart caters to cost-conscious moms and other shoppers with its low-price focus, and that helped the retailer's stock hold up very well during 2008's bear market.
The final two stocks on the list show how good results can come from completely different sources. You might think Home Depot would have performed terribly in recent years, as the housing market has resisted a recovery countless times. But the home-improvement retailer has cashed in on remodelers seeking to make their current homes more livable rather than trying to sell in a market full of competing properties for sale. By contrast, ExxonMobil has enjoyed high oil prices for years and has posted strong profits as a result, enjoying its time in the sun for as long as energy commodities stay expensive.
Treat your mom right
Before you recommend these stocks to your mom, be sure you understand that there's no guarantee their past strength will continue forever. Unexpected tragedy can hit any company, and if it does, it can make a stock look a lot different in its aftermath.
But if you're looking for ways to pay back your mom for her hard work on your behalf, using your financial expertise to suggest appropriate investments might be the most valuable way you can turn the tables and take care of her for a change.
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