The markets taught us plenty of lessons in 2020. We learned that stocks can take a nosedive when we least expect it and for reason we may have never imagined. We also learned that the market can be incredibly resilient even in the bleakest of times.
For long term investors, this year reinforced the importance of having a well balance portfolio that includes a mix of offense and defense. As we look ahead to the rest of the decade let's take a look at three NYSE stocks that should be at the top of your defensive roster.
What Makes Church & Dwight a Long-Term Hold?
Church & Dwight (NYSE:CHD) is a stellar consumer products company that has quietly gone about its business for over 150 years. The maker of Arm & Hammer, OxiClean, and many other popular household brands has an envied history of delivering reliable performance.
The company's formula for success is rather simple. It offers a broad range of products globally that fulfill people's everyday cleaning and hygiene needs. Church & Dwight holds the leading global market share in a dozen product categories from baking soda and laundry additives to condoms and pregnancy kits.
This drives steady revenues throughout the ups and downs of the economic cycle. Combined with a lean cost structure which includes a modest marketing budget, the result is consistent earnings growth. Earnings per share has increased in each of the last five years and are forecast to do the same in 2020 and 2021. Appropriately, the detergent and cleaning supply powerhouse also has a squeaky-clean balance sheet.
And while Procter & Gamble is certainly a worthy choice for this list, Church & Dwight's relative size ($21 billion versus PG's $348 billion) allows it to be a bit nimbler when its comes to pursuing growth opportunities—and affords investors good upside potential.
For the first 20 years of this millennium Church & Dwight's cumulative shareholder return exceeded 3,000%. This outpaced its peer group and the S&P 500 by a long shot. A decorated history of dividend hikes and reliable growth make this company a clear buy and hold.
Is Verizon a Good Way to Play 5G Growth?
Regardless of the economic backdrop phone, cable, and Internet are essential services in today's interconnected world. This has especially been the case during the pandemic with remote workforces and homebound folks depending on communication and in-home entertainment like never before. This makes companies like Verizon (NYSE:VZ) an indispensable part of the global economy.
AT&T merits consideration here as well, but Verizon's wireless service, Fios brand, and leadership position in 5G networking give it an edge over competitors. After launching 5G nationwide last year, the company is in the very early stages of a multi-year growth opportunity as 5G themes like smart cities play out.
Meanwhile, Verizon's core business still has room to grow by reaching new markets and offering new products. Then there's its latest revenue source, network-as-a-service (NaaS) which has all sorts of applications around optimizing an enterprise's IT resources. This business stands to expose Verizon to growth channels in several sectors from health care to education.
So, while the 5G networking opportunity is Verizon's most exciting investment tenant, the strength of its core business and NaaS prospects make it a three headed growth monster. Toss in Verizon's industry leading dividend yield (4.1%) and it's easy to this see why this stock is one to connect with for the next decade.
Is Newmont a Good Gold Stock to Own?
We would be amiss to talk about long-term defensive holdings without mentioning the gold mining space. The popular inflation-protecting play is perhaps the epitome of playing defense.
Enter Newmont (NYSE:NEM), the world's leading gold miner. With eight assets that are deemed 'world-class' on account of their annual extraction potential and mine lives, no other company produces more gold than Newmont—nor will they going forward. It is expected to produce more than 7 million gold equivalent ounces (GEOs) per year through 2029. This will continue to make it the go-to source for many of the world's gold users from jewelers to technology companies to investors.
Gold's value as an inflation hedge has been apparent over the years. While prices of the yellow metal have risen gradually long-term, gold notched its second-best annual return in 2020. Investor interest in gold has increased in recent years and demand for gold-related investments by itself represents a major support for gold prices. At some point this decade we are likely to see a meaningful uptick in inflation and this will only generate more interest in gold stocks.
Newmont is of course significantly leveraged to rising gold prices. This is the engine behind its history of strong free cash flow and overall financial strength. Over the last five years, every $100 bump in the price of gold equated to an extra $400 million of free cash flow for the company. And gold production across four continents is one thing, but Newmont's low-cost profile makes it a best-in-class gold mining play.
ESG-focused investors will also appreciate Newmont's commitment to responsible environmental, social, and corporate governance practices. It has been recognized as the second most transparent company in all the S&P 500 and is the top gold mining company in the Dow Jones Sustainability Index for six years running.
This along with the company's inflation-protecting prowess, make Newmont a shining star that should be part a winning investment strategy.
Companies Mentioned in This Article
Compare These Stocks
Add These Stocks to My Watchlist
7 Post-Inauguration Stocks to Buy For Under $20
There’s a new occupant (officially) at 1600 Pennsylvania Avenue and the stock market is doing its part to promote unity. The Dow shot to a record high on Inauguration Day. We don’t imagine the honeymoon will last long. However it serves as a reminder that investors are more interested in the “what” more than “what party” when it comes to the way it moves.
With that said, many investors are attempting to read the tea leaves of the nascent Biden administration. One of the challenges will be that many of the usual suspects such as the FAANG stocks remain popular, yet frighteningly expensive (in terms of share price).
Valuation is in the eye of the beholder. But some investors may be looking for low-priced stocks that can get them more bang for their buck. The good news is that there are many stocks that you can buy for under $20 that not only show impressive growth, but are leaning in to the macroeconomic issues that will be present during at least the early part of the Biden administration.
In this special presentation, we’re giving you seven of our picks for low-priced stocks you can buy for under $20 today. But take note, these stocks may easily be over $20 in the next few months.
View the "7 Post-Inauguration Stocks to Buy For Under $20".