Surely double your own money? Well, that sounds like using defensive top stocks and the time factor. With a solid return over time and a moderate valuation, it is certainly possible.
Still, you may not be aware of which top-defensive stocks are now attractively valued, or which may be facing a revaluation. Of course, you do not know for sure. But with Verizon Communications (WKN: 868402) and Fresenius (NASDAQ: AAPL) I see the potential that they can certainly double their own money. The question is just how long it lasts.
Verizon Communications: Top Shares to Securely Double Money?
The Verizon Communication stock offers many qualities. Simply divided, we can describe them as cheap, high-yield with a defensive business model and a clear list of management priorities. Let’s work through this list.
Currently, this top stock has a price-to-earnings ratio of only 9.9 with a dividend of around 5%. Provided consistent valuations can yield a total return of 10% per annum. That, in turn, would mean that it would mathematically take ten years for this defensive stock to double its own money. With a stagnant yield, we needed about 20 years. The only question left is: Why should the numbers remain constant or ideally improve moderately?
The simple answer here too: Because the business model as the leading telecommunications group in the United States is very strong and timeless. Growth is possible because the management of the top stock recently invested in 5G technology. Now is the time for these investments to be translated into growing free cash flows. As a result, management wants to increase dividends moderately in the longer term. Yes, even stock repurchases seem to be possible as well as strengthening the balance sheet. Particularly moderate growth allows the top stock to double its own money in less than ten years. But even with stagnation and stability, it would only be a matter of time.
Fresenius: The cheap DAX dividend aristocrat
Fresenius owns something Verizon Communications does not yet have: a royal dividend. Nevertheless, the DAX Dividend Aristocrat is valued relatively cheaply as a defensive top stock. A price-earnings ratio of 9.7, a price-to-sell of less than 0.5 and a dividend of around 3% also constitute the favorable core here. This is a feature that can double your money here. But of course there is more.
Fresenius’ management delivered moderate growth last year. If this is strengthened, then there is little to be said against a significantly higher valuation for the DAX Dividend Aristocrat. In the end, it’s also just a matter of time here. Especially since the payout percentage of less than 30% allows for dividend growth. Dividend growth can also be a solid catalyst for stock prices.
There are problem areas on Fresenius. The top-yield stock is weak at Medical Care, the dialysis subsidiary. But overall, the stock is strong, defensive and not very cyclical. Therefore, I think it is only a matter of time before the top stock with solid earnings returns and stable dividends doubles its own money.
The article “Double Your Money Safely: Defensive Top Stocks with Good Odds” first appeared on The Motley Fool Germany.
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Vincent owns shares in Fresenius and Verizon Communications. The variegated fool recommends Fresenius and Verizon Communications.
Broget Fool Germany 2022