As exciting as investing in the stock market can be, it also carries a higher level of risk than other asset classes including government bonds and term deposits. While some investors maintain a high tolerance to risk, others enjoy the peace of mind knowing that their investments are in conservatively managed companies with defensive revenue streams.
While no stock is 100% risk free, the five stocks listed below would be a perfect fit for the more conservative investor.
- ResMed Inc. (CHESS) (ASX: RMD) develops and manufactures products for the treatment of sleep disorders and boasts an incredible history of revenue and earnings growth. With sleep apnea becoming increasingly common in our society, ResMed should continue to benefit well into the future.
- BHP Billiton Limited (ASX: BHP). Compared to most other blue-chip stocks, BHP Billiton is still trading at an attractive price and offers a high level of diversification between operations. It also recently announced plans to spin-off an estimated $14 billion worth of non-core assets which should unlock greater value for shareholders.
- Telstra Corporation Ltd (ASX: TLS). The telecommunication giant's shares are by no means in bargain territory anymore, but are still a good option for conservative investors to hold in their portfolio. The company recently improved its full-year dividend to 29.5 cents per share, putting it on a fully franked yield of 5.3%.
- Coca-Cola Amatil Ltd (ASX: CCL). While the shares have dropped considerably over the last 18 months, I'm very confident the long-term holds far greener pastures for Australia's beverage distribution giant. It boasts one of the strongest brand portfolios in the country and offers a very handsome dividend yield.
- Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). With a business model similar to that of Warren Buffett's Berkshire Hathaway empire, you can sleep easy knowing your money is well managed with Soul Patts. The company maintains significant holdings across various industries, including Brickworks Limited (ASX: BKW) and TPG Telecom Ltd (ASX: TPM). It also offers a generous dividend yield.
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One of the best ways a conservative investor can boost their returns is by investing in quality stocks which offer a strong and sustainable dividend yield.
