In this article, we discuss the 11 best widow and orphan stocks to buy. To skip the detailed analysis of widow and orphan stocks, go directly to the 5 Best Widow and Orphan Stocks To Buy.
Widow and orphan stocks are well-established blue-chip companies that pay out stable dividends, have low volatility, and grow steadily over time. These companies are most suitable for vulnerable investors with a low knowledge of the stock market, like retirees, widows, and orphans. The term was coined in the 1930s for stocks that are mature enough to weather economic turbulence. Widow and orphan stocks is an outdated term for low-volatility investments.
One of the most attractive features of widow and orphan stocks is that these companies have the ability to maintain their dividend payments during tough times. For example, The Procter & Gamble Company (NYSE:PG) has been increasing its dividend for the past 67 years, which means that the company was able to sustain itself through several recessions, including the Black Monday of 1987, The Great Financial Crisis, and the COVID-19 recessions along with the aftermath of Russia-Ukraine war.
While widow and orphan stocks might be considered safe investments, they still have their drawbacks. These companies have stable growth, but in a bull market, these stocks cannot take advantage of favorable market conditions like growth stocks due to their low volatility. This might not apply to a few companies on our list, such as Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM), as these companies have recorded major profits and losses in the last few decades. However, these oil Supermajors have still maintained their dividends for decades despite heavy losses suffered in 2016 and 2020 as they are fundamentally strong.
Widow and Orphan Stocks in the Current Economic Environment
The stock market has performed better than expected in 2023 as the S&P 500 is up over 19%, and the NASDAQ-100 is up 47.5% year-to-date (YTD) at the time of writing on November 28. Despite the strong performance due to the boom in the technology sector, some analysts still believe that a recession could hit the US economy in 2024. If we consider their prediction, investing in safe and stable companies like the widow and orphan stocks can safeguard investments. Widow and orphan stocks are also perfect investments for beginners with little knowledge of the stock market.
For this article, we made a list of large- to mega-cap stocks with at least 15 years of consecutive dividend increases. From this dataset, we chose 11 companies with strong fundamentals and positive analyst ratings. Furthermore, we chose the stocks with either low volatility or the companies that have shown resilience during rough macroeconomic conditions in the past.
We listed the companies in ascending order of their hedge fund sentiment, which was taken from Insider Monkey’s Q3 database of 910 elite hedge funds.
Texas Instruments Incorporated (NASDAQ:TXN) is a Texas-based semiconductor company that also manufactures and sells different integrated circuits. The company has multiple global operations, including 15 manufacturing sites, with 12 wafer fabs, and 7 assembly and test factories.
In the third quarter, 53 hedge funds held a stake in Texas Instruments Incorporated (NASDAQ:TXN)’s stock. David Blood and Al Gore’s Generation Investment Management was the most prominent stakeholder of the company, with 4.286 million shares worth approximately $681.524 million.
Texas Instruments Incorporated (NASDAQ:TXN) is one of the best widow and orphan stocks to buy along with Walmart Inc. (NYSE:WMT), Exxon Mobil Corporation (NYSE:XOM), and The Procter & Gamble Company (NYSE:PG).
Diamond Hill Capital mentioned Texas Instruments Incorporated (NASDAQ:TXN) in its third-quarter 2023 investor letter. Here is what it said:
“Shares of semiconductor manufacturing company Texas Instruments Incorporated (NASDAQ:TXN) underperformed as revenue guidance was slightly below market expectations. We believe these demand trends to be transitory and have a favorable view of the company’s long-term prospects and superior competitive position.”
The Coca-Cola Company (NYSE:KO) is a multinational beverages company that primarily manufactures and sells non-alcoholic beverages through multiple brands, including, Coca-Cola, Fanta, Sprite, Minute Maid, Georgia, Powerade, Del Valle, Aquarius, Minute Maid Pulpy, and Dasani.
Over the last three months, 18 Wall Street analysts covered The Coca-Cola Company (NYSE:KO)’s stock, and 12 kept a Buy rating on the shares. The average price target of $63.76 of The Coca-Cola Company (NYSE:KO) represents an upside of 8.62% at the time of writing on November 28.
On October 30, Truist analyst Bill Chappell decreased the price target on The Coca-Cola Company (NYSE:KO) to $65 from $75 and maintained a Buy rating. The firm increased its FY23 EPS view by 6c to $2.67 and mentioned that there are still a few contractions affecting the beverages industry.
Target Corporation (NYSE:TGT) is a famous American retail chain operator headquartered in Minnesota.
On November 15, Target Corporation (NYSE:TGT) posted its Q3 non-GAAP EPS of $2.10, which beat the analysts’ estimates by $0.62. The revenue of the quarter was $25.4 billion, surpassing the estimates by $160 million.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 58 hedge funds had investments in Target Corporation (NYSE:TGT) in Q3, up from 45 in the previous quarter. Diamond Hill Capital was the company’s biggest shareholder after it increased its stake by 57% to 2.84 million shares worth $313.925 million.
Target Corporation (NYSE:TGT) was mentioned in Madison Investments’ third quarter 2023 investor letter. Here is what it said:
“Target Corporation (NYSE:TGT) has seen a traffic slowdown as discretionary spending by consumers has softened with inflation as well as spending on services. Although we are disappointed with top line trends, we view the stock as attractive at 11.9x consensus earnings for 2024.”
NextEra Energy, Inc. (NYSE:NEE) is a Florida-based energy infrastructure corporation that has operations in 49 U.S. states and four Canadian provinces.
NextEra Energy, Inc. (NYSE:NEE) was covered by 18 Wall Street analysts over the last three months, and 14 maintained a Buy rating on the shares. The average price target of $70.81 had an upside of 21.10% at the time of writing on November 28.
On November 9, HSBC analyst Meike Becker decreased the price target on NextEra Energy, Inc. (NYSE:NEE)’s stock to $75 from $90 while keeping a Buy rating. The analyst calls the company attractive based on it being a superb regulated utility and renewables developer.
Madison Investments commented on NextEra Energy, Inc. (NYSE:NEE) in its third quarter 2023 investor letter. Here is what it said:
“Although NextEra Energy, Inc. (NYSE:NEE) reported an in-line second quarter, the stock has been weak primarily because of rising interest rates. NextEra also reported slower renewables backlog growth than expected. We do not view this as an issue as we expect the development pipeline timeline may not be as predictable as investors would like. The environment for renewables remains favorable both from a demand perspective as well as cost perspective.”
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications conglomerate with approximately 1,500 retail locations, and its services are offered in more than 150 countries.
On November 10, according to DealReporter, Verizon Communications Inc. (NYSE:VZ) is among the bidders expressing interest in the sale process under the strategic review initiated by United States Cellular Corporation (NYSE:USM).
On November 16, it was reported that Verizon Communications Inc. (NYSE:VZ)’s division, Verizon Business, entered into an agreement with the Norfolk International Terminal to develop a Verizon Private 5G Network at its Virginia facility.
Mairs & Power mentioned Verizon Communications Inc. (NYSE:VZ) in its third quarter 2023 investor letter. Here is what it said:
“Thanks to the excitement around AI, we are finding attractive opportunities in so-called old economy industries and/or value-orientated names. One such opportunity that we added to in the quarter was Verizon Communications Inc. (NYSE:VZ). Verizon is the largest wireless operator in the United States and benefits from large barriers to entry thanks to government regulation and the billions of dollars needed to maintain a cellular network. T-Mobile (TMUS) has historically been a thorn in Verizon’s side but recently has become more disciplined on pricing. In fact, T-Mobile’s most recent unlimited data phone plan is more expensive than both AT&T’s (T) and Verizon’s. We are also excited about Verizon’s fixed wireless access opportunity, in which the internet is delivered to consumers’ homes via cellular network instead of cable. In addition to long-term potential, Verizon offers an attractive 8% dividend yield.”
Lowe's Companies, Inc. (NYSE:LOW) is an American retail company focusing on home improvement products. The company is headquartered in North Carolina and serves customers in the United States and Canada.
On November 10, Lowe's Companies, Inc. (NYSE:LOW) declared a $1.10 quarterly dividend, payable by February 7 to the shareholders of record on January 24. The company has been raising its dividends for over five decades and has a yield of 2.20% at the time of writing on November 28.
In the third quarter, 63 hedge funds had a stake in Lowe's Companies, Inc. (NYSE:LOW) at a combined value of $3.157 billion. Bill Ackman’s Pershing Square owned over 7 million shares of the company worth nearly $1.47 billion, making it the largest investor of Lowe's Companies, Inc. (NYSE:LOW).
Walmart Inc. (NYSE:WMT), Exxon Mobil Corporation (NYSE:XOM), and The Procter & Gamble Company (NYSE:PG) are some of the best widow and orphan stocks along with Lowe's Companies, Inc. (NYSE:LOW).
Madison Investors Fund made the following comment about Lowe’s Companies, Inc. (NYSE:LOW) in its Q3 2023 investor letter:
“The bottom five individual contributors were Dollar Tree, Fiserv, Analog Devices, Lowe’s Companies, Inc. (NYSE:LOW), and Alcon. Both Analog Devices and Lowe’s Companies saw end-market demand moderate (in semiconductors and home improvement products, respectively) relative to the strong levels over the last couple of years. Despite these near-term trends, we remain very confident in the long-term trends within both markets.”