OWhat is the best way to build wealth and become rich on the stock market? Contrary to what you may have heard, it’s not by speculating on penny stocks, day trading or any other risky method.
The right (and most reliable) way to “get rich” with stocks is to invest in solid companies and stick with them for as long as they remain solid companies. Here are three in particular that new and experienced investors may want to take a closer look.
This payout stock is really a slot machine
PayPal (NASDAQ: PYPL) is a massive company, with 429 million active accounts and over $1.2 trillion in annualized payment volume. It is also one of the worst performing stocks in the S&P500 index, with shares down more than 60% so far in 2022.
To be fair, there are a few good reasons. PayPal’s recent growth in active users has been disappointing, and the company has admitted that its growth targets (the company was aiming for 750 million users within a few years) were unlikely to be realized. Instead, PayPal is focused on monetizing its current user base.
While this was certainly disappointing for investors, it’s important not to overlook what a powerful company this is. PayPal is the undisputed leader in online payments and continues to grow impressively, with 15% year-over-year revenue growth in the first quarter in its core business. The average PayPal user made 47 transactions in the quarter, up 11% from a year ago. And PayPal is an absolute cash machine, with over $5 billion in free cash flow per year and enormous flexibility to invest in its own growth.
A dialing machine with a stellar track record
I called Real estate income (NYSE:O) perhaps the best overall dividend stock on the market, and for good reason. The real estate investment confidence, or REIT, has paid 624 consecutive monthly dividends to its shareholders and has increased the payout for 99 consecutive quarters at an annualized growth rate of 4.4%. And it’s not just an income game – Realty Income has delivered a stellar average annual return of 15.3% since its inception in 1994. New York Stock Exchange SEO.
Realty Income invests in single-tenant properties, primarily occupied by commercial tenants. According to the latest information, the company has more than 11,200 properties in the United States and Europe.
Don’t worry about the word “retail”. Most of Realty Income’s tenants are businesses that are weathering the recession, as well as the headwinds of e-commerce. Just to name a few, Walgreens (NASDAQ: WBA), General dollar (NYSE:DG), fedex (NYSE: FDX)and walmart (NYSE: WMT) are among Realty Income’s top tenants. It is a high-yielding dividend growth stock that has done an excellent job of building long-term shareholder wealth.
An entertainment powerhouse with trillion-dollar potential
Be certain, disneyit is (NYSE: DIS) business has suffered because of the pandemic, with its theme parks and cruise lines closed or limited for much of 2020 and 2021, and with movie theaters unavailable to show its blockbuster films. And its theme parks in Asia remain affected.
However, Disney’s core business has come back strong. As I write this, reservations for at least one of its Walt Disney World theme parks have sold out for six of the next seven days. Its film franchises are resuming operations. And Disney’s merchandise sales and cruise business are also strong. Plus, with stellar subscription growth from Disney+, Hulu, and ESPN+ streaming servicesDisney has created a massive recurring revenue stream that was virtually non-existent before the pandemic (Disney+ launched in late 2019).
Disney’s business is stronger than it was before the pandemic, and it should get even stronger as its streaming business evolves. And its stock is trading near its lowest level in five years.
Buy for the long term
All three are incredibly strong companies with profitable operations and long histories of success and growth. However, there are some serious economic headwinds right now, and it would be wise to expect volatility to continue for some time. I’m sure investors who buy them will be glad they did in a decade, and I have all three in my portfolio, but I expect some turbulence in the meantime.
10 stocks we like better than PayPal Holdings
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Matthew Frankel, CFP® has positions in FedEx, PayPal Holdings, Realty Income and Walt Disney. The Motley Fool holds positions and recommends FedEx, PayPal Holdings and Walt Disney. The Motley Fool recommends the following options: January 2024 long calls at $145 on Walt Disney and January 2024 short calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.