9 Low-Risk Stocks for Risk-Averse Investors in 2019

9 Low-Risk Stocks for Risk-Averse InvestorsPosted on Monday, November 12th, 2018 by Chris Markoch

One of the most important things for any investor to understand is their risk tolerance. Warren Buffett famously said the two most important rules of investing are as follows. Rule #1: don’t lose money and Rule #2: remember rule #1. Many investors know that they should be invested in stocks and other equities. However, they truly don’t have the stomach to invest in aggressive stocks that have the potential for huge gains, but also huge losses.

The reality of the market is that there is no investment that does not carry some level of risk. Even the value of cash depreciates over time. Fortunately, investors don’t have to choose between sleeping at night and investing in stocks. In this slideshow, we'll review nine stocks that offer risk-averse investors the opportunity for stable growth and, in some cases, a nice dividend which investors can use as additional income or reinvest.

With 2018 quickly coming to a close, it’s an ideal time to start rebalancing your portfolio for a profitable 2019. If you’re concerned about the direction of the market and want to sleep well knowing your portfolio is protected by low-risk stocks, then you owe it to yourself to consider the stocks in this presentation.

#1 - TransCanada Corp. (NYSE:TRP)

Tc Pipelines logo

TransCanada Corp. (NYSE: TRP) When you’re looking at low-risk stocks, the fundamentals become very important. The oil and gas industry can be a volatile industry, but there is always value to be found in stocks such as TransCanada. You can start with a balance sheet that is rock solid with EBITDA (earnings before interest, taxes, depreciation, and amortization) supported by regulated assets and long-term contracts. Other reasons to look at this low-risk company is its ‘A' credit rating and very manageable debt load. TRP has plenty of cash on hand which they put to work by funding projects that should propel their growth. They also have a solid history of paying out dividends to their investors. By investing in their future growth, they are helping to ensure increasingly high dividend payments. Their current yield is around 5.26%. Yet another reason to look at TRP is a valuation that is much lower than the overall market. TRP is trading right around 13 times earnings, as opposed to a ratio of 25 times earnings in the broad market.

About Tc Pipelines
TransCanada Corporation operates as an energy infrastructure company in North America. It operates through Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines, and Energy segments. The company transports natural gas to local distribution companies, power generation and individual facilities, interconnecting pipelines, and other businesses. It owns and operates a network of 80,800 km of wholly-owned natural gas pipelines and 11,100 km of partially-owned natural gas pipelines; and regulated natural gas storage facilities with a total working gas capacity of 535 Bcf. The company also owns and operates Keystone pipeline system of 4,324 km for the transportation of crude oil from Hardisty, Alberta to Wood River and Patoka in Illinois; Cushing, Oklahoma; and the U.S. Gulf Coast. In addition, it operates terminal and pipeline facilities to transport crude oil from the market hub at Cushing, Oklahoma to the U.S. Gulf Coast refining markets. Further, the company owns, controls, and develops approximately 7,000 MW of generation capacity powered by natural gas, nuclear, and wind assets; and owns and operates regulated and unregulated natural gas storage facilities. It also operates 11 power generation facilities and 118 Bcf of non-regulated natural gas storage facilities in Alberta, Ontario, Québec, and New Brunswick in Canada, as well as in Arizona. TransCanada Corporation was founded in 1951 and is headquartered in Calgary, Canada.

Current Price: $44.43
Consensus Rating: Hold
Ratings Breakdown: 4 Buy Ratings, 5 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $53.1667 (19.7% Upside)

#2 - Brookfield Renewable Partners (NYSE:BEP)

Brookfield Renewable Partners logo

Brookfield Renewable Partners (NYSE: BEP) Another consideration when investing in high-quality, low-risk stocks is finding companies that are the largest in class. That’s one of the many strengths of Brookfield Renewable Partners. Brookfield is a subsidiary of Brookfield Asset Management and they own a portfolio of power generation facilities that use renewable energy. The reach of the company extends internationally. Like other low-risk stocks, BEP maintains a very sound balance sheet highlighted by a stable cash flow that is anchored by long-term contracts which make up 92% of the company’s funds from operations (FFO). The company uses 70% of their FFO as a payout in the form of a dividend. In their latest earnings report, the company expressed confidence that they will be able to increase their payout by 5% to 9%. This makes it likely that their dividend will not only continue but also increase over time. The company is also putting their stockpile of cash to use in acquiring $500-$600 million per year of additional assets that should lead to double-digit growth over the next several years. The company is currently trading at a discount compared to other companies in its sector.  

About Brookfield Renewable Partners
Brookfield Renewable Partners L.P. owns a portfolio of renewable power generating facilities in the North America, Colombia, Brazil, Europe, and internationally. The company operates through Hydroelectric; Wind; and Solar, Storage, and others segments. It operates 840 generation facilities using hydro, solar, wind, biomass, and other renewable technologies. Brookfield Renewable Partners Limited operates as the general partner of Brookfield Renewable Partners L.P. The company was formerly known as Brookfield Renewable Energy Partners L.P. and changed its name to Brookfield Renewable Partners L.P. in May 2016. The company was founded in 1999 and is based in Hamilton, Bermuda. Brookfield Renewable Partners L.P. is a subsidiary of Brookfield Renewable Partners Limited.

Current Price: $29.81
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $32.10 (7.7% Upside)

#3 - Medical Properties Trust (NYSE:MPW)

Medical Properties Trust logo

Medical Properties Trust (NYSE: MPW) You'll start to notice a theme as we look at Medical Properties Trust, which is a hospital property-owning real estate investment trust (REIT). MPW shares many of the high quality, low-risk features of the first two companies in this report. One of the strongest is their funds from operations (FFO) which is among the industry's best. And says Chairman, President, and CEO Edward K. Aldag, Jr. in the company's third-quarter earnings report: "We think 2019 has the potential to be a monumental year for the Company with opportunity to deliver market-leading FFO and dividend growth from the very large, diverse and actionable acquisition pipeline that we have assembled." The company's revenues come in large part from lease and mortgage payments which helps it generate stable cash flow. The company currently pays out approximately 70% of its cash flow in the form of dividends, which currently have a yield of just over 6%. In terms of future growth, the company estimates it can continue to buy $500 million to $1 billion of properties each year.

About Medical Properties Trust
Medical Properties Trust, Inc. is a self-advised real estate investment trust formed to capitalize on the changing trends in healthcare delivery by acquiring and developing net-leased healthcare facilities. MPT's financing model helps facilitate acquisitions and recapitalizations and allows operators of hospitals and other healthcare facilities to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. Facilities include acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals, and other medical and surgical facilities.

Current Price: $18.32
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $16.75 (-8.6% Upside)

#4 - Berkshire-Hathaway (NYSE:BRK.A)

Berkshire Hathaway logo

Berkshire-Hathaway (NYSE: BRK) For those that don't know, Berkshire-Hathaway is Warren Buffett's company. However, it's not just one company; it's more like 60 companies. And the company has an ownership stake in approximately 40 other companies. Since you know Buffett is a value investor, then you can be assured that the stocks that are selected for the BRK's portfolio fit the definition of high-quality with low-risk. Ownership in BRK allows investors to benefit from Buffett's stock-picking expertise without owning the individual companies. The stock has enjoyed an almost unbelievable average of approximately 21% growth since its inception in 1975 and is enjoying double-digit growth in 2018. Nobody can predict the future, and the future of BRK once Warren Buffett decides to step away is a subject of growing interest in the financial press, but Buffett has built his company around one of his famous mottos, “invest in companies so wonderful an idiot could run them.” With that in mind, an investment in Berkshire-Hathaway, while pricey could be a solid option.

About Berkshire Hathaway
Berkshire Hathaway Inc., through its subsidiaries engages in insurance, freight rail transportation, and utility businesses. It provides property and casualty insurance and reinsurance, as well as life, accident, and health reinsurance; and operates railroad systems in North America. The company also generates, transmits, and distributes electricity primarily from solar, wind, geothermal, and hydro sources; operates natural gas distribution and storage facilities, interstate pipelines, and compressor and meter stations; and holds interest in coal mining assets. In addition, it offers real estate brokerage services; invests in fixed-income and equity instruments; and engages in manufactured housing and finance business, leasing of transportation equipment, and furniture leasing activities. Further, the company manufactures boxed chocolates and other confectionery products; specialty chemicals and metal cutting tools; flooring, insulation, roofing and engineered, building and engineered components, paints and coatings, and bricks and masonry products; recreational vehicles, apparel products, jewelry, and custom picture framing products; and alkaline batteries. Additionally, it manufactures castings and forged components, machined airframe components, and engineered critical fasteners; airfoil castings; titanium and nickel; and seamless pipes, fittings, and forgings. The company distributes newspapers, televisions, and information; franchises and services quick service restaurants; distributes electronic components; and offers steel and logistics services, professional aviation training programs, and fractional aircraft ownership programs. In addition, it retails automobiles; furniture, bedding, and accessories; household appliances, electronics, and computers; jewelry, watches, crystal, china, stemware, flatware, gifts, and collectibles; kitchenware; and motorcycle accessories. The company was founded in 1889 and is headquartered in Omaha, Nebraska.

Current Price: $307,925.00
Consensus Rating: Buy
Ratings Breakdown: 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $378,000.00 (22.8% Upside)

#5 - Johnson & Johnson (NYSE:JNJ)

Johnson & Johnson logo

Johnson & Johnson (NYSE: JNJ) Another great low-risk investment strategy is to buy what you know. Or maybe put another way, buy what you know you, or others, are buying. That idea of reaching customers at a variety of touch points is one of the reasons it has an outstanding business model. JNJ is known for its consumer products, but also operates businesses in 60 countries with products that provide diverse revenue streams in the areas of consumer products, pharmaceutical, and medical devices. Like other low-risk stocks, Johnson & Johnson is a defensive stock. There’s a reason health care remains on the front burner of our national conversation. People get sick and so JNJ’s products will have a customer base regardless of the market. And most of those purchases will be steady, repeat purchases which helps provide them with a consistent revenue stream. Johnson & Johnson is also one of only two companies that maintains a AAA credit rating. This gives it access to low-cost debt that they can pour into R&D, marketing and other acquisitions that fuel growth while still maintaining a solid free cash flow that allows them to return cash to shareholders. To that end, J&J is considered a dividend aristocrat returning a dividend that has increased for 54 years.

About Johnson & Johnson
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. Its Consumer segment offers baby care products under the JOHNSON'S brand; oral care products under the LISTERINE brand; beauty products under the AVEENO, CLEAN & CLEAR, DABAO, JOHNSON'S Adult, LE PETITE MARSEILLAIS, NEUTROGENA, RoC, and OGX brands; over-the-counter medicines, including acetaminophen products under the TYLENOL brand; cold, flu, and allergy products under the SUDAFED brand; allergy products under the BENADRYL and ZYRTEC brands; ibuprofen products under the MOTRIN IB brand; and acid reflux products under the PEPCID brand. This segment also provides women's health products, such as sanitary pads under the STAYFREE and CAREFREE brands, and tampons under the o.b. brand; wound care products comprising adhesive bandages under the BAND-AID brand and first aid products under the NEOSPORIN brand. The company's Pharmaceutical segment offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic, and pulmonary hypertension diseases. Its Medical Devices segment provides orthopedic products; general surgery, biosurgical, endomechanical, and energy products; electrophysiology products to treat cardiovascular disease; sterilization and disinfection products to reduce surgical infection; diabetes care products that include blood glucose monitoring; and vision care products, such as disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery. The company markets its products to general public, retail outlets and distributors, wholesalers, hospitals, and health care professionals for prescription use, as well as for use in the professional fields by physicians, nurses, hospitals, eye care professionals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey.

Current Price: $135.42
Consensus Rating: Buy
Ratings Breakdown: 7 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $141.8182 (4.7% Upside)

#6 - Iron Mountain (NYSE:IRM)

Iron Mountain logo

Iron Mountain (NYSE: IRM) A common theme for low-risk stocks is the ability to generate reliable revenue from a consistent customer base. That’s one of the reasons Iron Mountain makes this list. IRM is in the records and data storage industry. When you think about how much data you have in cloud storage, it’s not hard to extrapolate that with the data that businesses generate, some of which is, by necessity still in paper form. Iron Mountain has over 230,000 organizations as customers, including almost 95% of the Fortune 1,000. This is a market that is sure to grow and because it’s a hassle to move data and records that are already securely stored, Iron Mountain has an excellent retention rate. In fact, approximately 25% of the boxes in their storage facilities have been there for 22 years. As an investor, you can also count on Iron Mountain to produce a dividend (currently paying out at a 7.65% annual yield). As a REIT, the company is obligated to return at least 90% of its earnings to shareholders as dividends. So even if the stock underperforms, you still have the security that comes from regular dividend payouts.

About Iron Mountain
Iron Mountain Incorporated (NYSE: IRM), founded in 1951, is the global leader for storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 85 million square feet across more than 1,400 facilities in over 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Providing solutions that include information management, digital transformation, secure storage, secure destruction, as well as data centers, cloud services and art storage and logistics, Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster, and enable a more digital way of working.

Current Price: $35.84
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $36.6250 (2.2% Upside)

#7 - Waste Management (NYSE:WM)

Waste Management logo

Waste Management (NYSE: WM) It's said that death and taxes are two of the only constants in life. To that, you could add trash. Waste management covers an underlooked segment of the market, but one that has the potential to be extremely profitable. Simply put, trash is becoming big business and that’s not only because we continue to generate waste, but there has to be someplace to put it. Landfill sites are becoming more sophisticated and Waste Management is one of the companies that is developing new revenue streams by changing the way businesses think about recycling. For example, the need for electronics recycling is becoming more important than ever and companies are realizing that beyond the need to ensure data is wiped from hard drives, the physical disposal of hardware is not just as simple as putting it into a landfill. With 90 material recovery facilities across the country, WM was able to keep over 37.5 million cubic yards of waste out of landfills in 2017. And with a customer base that relies on their weekly, or on-demand, services, they have a stream of consistent and predictable revenue.

About Waste Management
Waste Management, Inc., through its subsidiaries, provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It provides collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations. As of December 31, 2017, the company owned or operated 244 solid waste landfills; 5 secure hazardous waste landfills; 90 MRFs; and 305 transfer stations. It also provides materials processing and commodities recycling services; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. Further, it portable self-storage and long distance moving services; fluorescent bulb and universal waste mail-back services through LampTracker program; portable restroom services under the Port-o-Let name; and street and parking lot sweeping services, as well as holds interests in oil and gas producing properties. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is headquartered in Houston, Texas.

Current Price: $99.32
Consensus Rating: Buy
Ratings Breakdown: 6 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $102.40 (3.1% Upside)

#8 - Check Point Software (NASDAQ:CHKP)

Check Point Software Technologies logo

Check Point Software (NASDAQ: CHKP) If you're willing to look at the technology sector for low-risk stocks (and there's no reason why you shouldn't), Check Point Software is a good place to start. Looking for predictable revenue? CHKP made a decision to focus on subscription sales of its products and services. This was groundbreaking at the time but has quickly become the industry standard. The model continues to show signs of paying off with subscription sales and the recurring revenue from those sales rising by 27% to $118 million in the second quarter. This was in addition to over $200 million in revenue from their other core business of servicing and updates. Put together, this two-pronged strategy accounted for 70% of their top line growth. Not only does this business model help drive an increase in revenue, but it also reduces overhead costs. Whereas many competitors in this space can spend nearly half their revenue on sales efforts, Check Point's expenses in the second quarter were just 25% of total revenue. This combination of growing revenue and reduced expenses are showing up in their earnings per share (EPS) that increased to $1.12 in the last quarter – an 18% increase.

About Check Point Software Technologies
Check Point Software Technologies Ltd. develops, markets, and supports a range of products and services for IT security worldwide. The company offers a portfolio of network and gateway solutions, management solutions, and data and endpoint security solutions. It provides Check Point Infinity Architecture, a cyber security architecture that protects against 5th generation mega cyber-attacks across various networks, endpoint, cloud, and mobile; security gateways from platforms for small business and small office locations, high end and high demanding data centers, and perimeter environments; and Check Point SandBlast family for threat prevention and zero-day protections. The company also offers Check Point CloudGuard cloud security product that delivers threat prevention security for enterprise cloud networks, data, and applications; Check Point SandBlast Mobile for mobile security in iOS and Android devices; and Check Point Security Management, which offers security management through a single console that streamlines security operations and provides visibility into policy administration and threat analysis. In addition, the company provides technical customer support programs and plans; professional services in implementing, upgrading, and optimizing Check Point products comprising design planning and security implementation; and certification and educational training services. It sells its products and services to enterprises, service providers, small and medium sized businesses, and consumers through a network of channel partners, such as distributors, resellers, system integrators, original equipment manufacturers, and managed security service providers. Check Point Software Technologies Ltd. was founded in 1993 and is headquartered in Tel Aviv, Israel.

Current Price: $121.18
Consensus Rating: Hold
Ratings Breakdown: 5 Buy Ratings, 15 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $115.9412 (-4.3% Upside)


IBM logo

IBM (NYSE: IBM) IBM’s stock had a rough start to 2018, falling 20% - most of that decline coming after the company reported weaker than expected third-quarter results fueled by their acquisition of Red Hat Inc. However, analysts are projecting the stock to surge by as much as 9% by April 2019. However, even with that growth factored in, the stock is selling at a discount to others in its sector. It is currently trading at just above 19X earnings which are still below the average of its peers (28.7). IBM has been a little late to the party in terms of achieving revenue growth through subscription sales, but (the third quarter aside) they have been showing both revenue (top line) and earnings per share (EPS) growth. When you combine its growing revenue and extremely value-priced stock with a dividend yield that has just climbed above 5%, you have a stock that is well positioned for the risk-averse investor.

About IBM
International Business Machines Corporation operates as an integrated technology and services company worldwide. Its Cognitive Solutions segment offers Watson, a computing platform that interacts in language, processes big data, and learns from interactions with people and computers. This segment also offers data and analytics solutions, including analytics and data management platforms, cloud data services, enterprise social software, talent management solutions, and tailored industry solutions; and transaction processing software that runs mission-critical systems in banking, airlines, and retail industries. The company's Global Business Services segment offers business consulting services; delivers system integration, application management, maintenance, and support services for packaged software applications; and finance, procurement, talent and engagement, and industry-specific business process outsourcing services. Its Technology Services & Cloud Platforms segment provides cloud, project-based, outsourcing, and other managed services for enterprise IT infrastructure environments. This segment also offers technical support, and software and solution support; and integration software solutions. The company's Systems segment offers servers for businesses, cloud service providers, and scientific computing organizations; data storage products and solutions; and z/OS, an enterprise operating system. Its Global Financing segment provides lease, installment payment plans, and loan financing services; short-term working capital financing to suppliers, distributors, and resellers; and remanufacturing and remarketing services. International Business Machines Corporation has a strategic partnership with Samsung Electronics to manufacture microprocessors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. The company was founded in 1911 and is headquartered in Armonk, New York.

Current Price: $137.84
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 10 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $155.7647 (13.0% Upside)

Predictable revenue from a broad customer base; a history of paying consistent, and in many cases rising, dividends; a healthy balance sheet. These are just a few of the things risk-averse investors should be looking for when considering which stocks to be invested in. These are qualities that reach across sectors and all of these qualities are found in the companies in this report.

With the mid-term elections behind us and the end of the year rapidly approaching, the market is looking primed for a year-end rally that could easily propel stocks into 2019. Adding one or more of these stocks to your portfolio will help you relax and enjoy everything the Holidays bring while watching your portfolio achieve slow, steady growth. And with marketbeat.com, you can easily track your stocks as well as receive analysts ratings as soon as they come out. It’s a great way to stay informed of news that could affect your portfolio.

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