There are thousands of publicly traded companies listed on the stock exchanges around the world. It is often difficult to decipher the winners and the losers.
This is why it is important to understand that not all companies are created equal, and with investing for retirement, the “invest in boring” approach can work very well.
Boring stocks might prove to be more stable
Sometimes the most successful companies are not the ones who are always in the news media. The companies that are always in the business headlines are likely to have more price volatility because of the closer scrutiny investors give it.
Instead, consider companies that rarely make the headlines, such as REITs (real estate income trusts), these are companies that own office, retail, and industrial real estate. These companies are not glitzy and glamorous but REITs provides a steady monthly income.
Another area to consider are companies that are suppliers for others. Sherwin Williams (NYSE:SHW) is one firm, it supplies paints for home makeovers and renovations. Sherwin Williams shareholders have been enjoying steady dividend increases every year since 1979. Its share price has grown faster than the S&P 500.
Richard’s Packaging (OTCMKTS:RPKIF) is a manufacturer and supplier of glass containers for drugs and pharmaceutical companies. It has been around since 1912 (over 100 years old) and pays a steady monthly dividend.
Technology and fashion industries pose higher risks
Technology and fashion firms carry a slightly higher risk profile, and this is because of its constant need to change and innovate. Technology companies such as Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), and Apple (NASDAQ:AAPL) are definitely great companies and the products it makes are exciting. But the competition they face is also very fierce.
These firms need to continuously innovate to stay ahead of the competition. It was only several years ago that Blackberry (NASDAQ:BBRY) dominated the cell phone market, only to be toppled by Apple a few short years after.
The fashion industry faces a similar predicament. These companies often need to come out with the latest style or fashion trend to attract consumers. A miss on the fashion trend can mean a hit to the bottom line. There have been a few firms where it was riding high on its success only to struggle later on (see American Eagle and The Gap).
It is hard to predict where the stock market is heading next year or even tomorrow but investing in the right companies can at least minimize the volatility.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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