“Are there any safe stocks?” This is a popular question, particularly from new investors. Cruel reality answers, “No.” By definition, if there ever was such an entity, it is now extinct.
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However, some stocks are certainly safer than others. All stock market investing basics will advise you that equity investments (common and preferred stocks) offer no guarantees of anything. Even dividend stock investing data sources will advise that the past history of dividends paid to shareholders offers no assurances that dividends will be paid in the future.
A stock trading course might note that there are perceived “safe stocks,” so named because they have long histories of continued growth, profits, and dividend payments. Throughout the twentieth century, stocks like IBM, CocaCola, Procter & Gamble, and Microsoft, to name a few, have consistently grown in value, enjoyed two-for one (or more) “splits,” and have earned the term safe stocks.
Use this rule of thumb when looking for safe stocks. Examine those stocks with a consistent history of growth and profits, paying closest attention to their return on equity (ROE), to find the safe stocks, be they large or small cap. Analyze how they are reacting to current
economic conditions to become comfortable that they should continue their performance.
To find out more, head over to Wall Street Survivor.