Buying these 3 Robinhood stocks might be the smartest investment you’ve ever made
When you think of the most popular stocks held by Robin Hood‘s (NASDAQ: HOOD) clients, more speculative investments like meme stocks are probably the first that come to mind. But there are also more stable options that should make shareholders a lot richer.
Johnson & johnson (NYSE: JNJ), Pfizer (NYSE: PFE), and Visa (NYSE: V) are three companies widely owned among Robinhood clients. Let’s see why buying these stocks could be one of the smartest actions of your investing career.
1. Johnson & Johnson
It’s no surprise that Johnson & Johnson is a mainstay in many portfolios – thanks to well-known brands like Neutrogena and Aveeno (which is part of the consumer health segment that will soon be separated to form an independent company).
Johnson & Johnson is also well known for its track record as the Dividend King, increasing its payouts for 59 consecutive years. But what matters most is the future, and it looks like the company can maintain that success for years to come. What makes me so confident?
First, Johnson & Johnson’s dividend is quite sustainable considering its payout ratio stands at around 43%, using the midpoint of $ 9.80 of its non-GAAP earnings per share (EPS) forecast. (adjusted) for the year.
Second, J & J’s pipeline has 47 medical indications in late-stage clinical trials. That should make up for the upcoming patent for its best-selling drug, Stelara, around 2025 – and that’s why analysts predict the company will generate 8% annual profit growth over the next five years.
Finally, with a futures price / earnings (P / E) ratio of just 16.5, Johnson & Johnson stocks can offer investors decent growth at a reasonable valuation. When we combine its 2.5% dividend yield with 8% annual earnings growth, the stock appears positioned to deliver 10% annual total returns for the foreseeable future.
All of these factors make Johnson & Johnson a smart buy for long-term investors.
Most people around the world recognize Pfizer for its best-selling COVID-19 vaccine, Comirnaty, which it co-developed with Germany BioNTech (NASDAQ: BNTX). Pfizer predicts the drug will generate $ 29 billion in revenue in 2022. But as Pfizer leads the battle against COVID with Comirnaty with its oral treatment Paxlovid, investors could lose sight of the firm’s strong non-COVID portfolio.
In the third quarter of 2021, Pfizer’s other vaccines and drugs helped the company increase revenue (excluding Comirnaty’s $ 24.3 billion) by 10.4% year-on-year to 33, $ 4 billion. Medicines such as the anticoagulant Eliquis (together with Bristol Myers Squibb (NYSE: BMY)) and rare heart disease drugs Vyndaqel and Vyndamax were the main contributors to Pfizer’s sales growth.
Pfizer’s COVID leadership over the past two years has resulted in a significant increase in profitability. That’s why its dividend payout ratio is only 27% based on the $ 1.60 per share dividend expected to be paid this year, leaving plenty of room for future dividend growth.
Investors can get Pfizer’s best-in-class 2.7% dividend yield with a forward price-to-earnings ratio of just under 10, which is a good deal considering the 18-year earnings growth. % that analysts predict over the next five years. This arguably makes Pfizer an obvious Robinhood stock to buy in the long run.
Most consumers around the world are familiar with the Visa payment processor, which is not surprising given that its network had more than 3.7 billion debit and credit cards in circulation as of June. Yet Visa’s leadership in the global $ 45 trillion card payments market is only scratching the surface.
Visa’s scale and brand recognition is also expected to capture market share in the $ 140 trillion global person-to-person and business-to-business payments market. Visa has taken a step forward to take a stake in this huge arena with its recent acquisition of Currencycloud, which gives businesses the ability to transfer money across borders and easily transact in multiple currencies.
Because of this major growth catalyst, analysts predict that Visa will deliver 18% annual profit growth to shareholders over the next five years. With its stocks listed at a forward P / E ratio of 31 – in line with its five-year average – Visa looks set to create robust total returns for shareholders in the years to come. This is why it is an attractive buy and hold action for growth investors.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.