The U.S. government is distributing another round of stimulus payments to many Americans. If you’re in a strong financial position with a sufficient emergency fund, you may want to consider investing that check of $1,400 or more. Although the stock market can be erratic, long-term investors can, and should, ignore short-term fluctuations and volatility.
Three stocks that can be pillars for your portfolio for many years to come are Johnson & Johnson (NYSE:JNJ), Palantir (NYSE:PLTR), and Mastercard (NYSE:MA). Spanning three different industries, these investments can help diversify your holdings while delivering long-term growth.
1. Johnson & Johnson
Johnson & Johnson is a popular name due to its FDA-authorized COVID-19 vaccine, but there’s much more to its business. Although vaccine sales could generate as much as $10 billion in revenue if it delivers a billion doses this year, that would still represent just 12% of the $82.6 billion it made in 2020. But there’s no guarantee that vaccine revenue will last beyond this year. Further, the company has pledged not to profit from the vaccine during the pandemic and is selling doses at cost. So the vaccine is not reason enough to buy the stock today.
The bulk of Johnson and Johnson’s revenue comes from pharmaceutical products, which in 2020 totaled $45.6 million in sales, or 55% of its top line. Johnson & Johnson products are recognized worldwide, and although its sales have been stagnant — remaining between $81 billion and $83 billion in the past three years — Johnson & Johnson hasn’t run out of ways to grow. Last year, it acquired Momenta Pharmaceuticals to boost its portfolio of autoimmune disease treatments and develop its pipeline. Management’s ability to uncover acquisitions and develop a vaccine amid a pandemic demonstrates the ability to adapt to changing situations.
This Dividend King has increased its dividend payments for 58 consecutive years, so investors can enjoy recurring cash. Today, the dividend yields 2.5%, which is higher than the S&P 500‘s average payout of 1.5%. Although long-term growth is still a big question mark for Johnson & Johnson’s business, the stock can be a solid income investment to hang on to.
Investing in technology like data analysis and artificial intelligence (AI) can help secure strong long-term returns. Many businesses have cut costs and reduced headcount during the pandemic and are trying to achieve the same results with fewer resources. Palantir’s AI software helps companies make better decisions. The federal government already utilizes Palantir’s offerings, even in counterterrorism operations.
In 2020, 56% of Palantir’s revenue came from government customers, and its government revenue increased 77% from the previous year while commercial customer sales rose by 22%. There are still many opportunities on both fronts, which will drive Palantir’s long-term growth. Revenue of $1.1 billion in 2020 rose by 47%, and the prior year, the company’s top line increased by 25%. The big knock against the business is that it isn’t profitable — incurring a loss of $1.2 billion last year, double the previous year’s loss of $580 million.
However, a lack of profitability shouldn’t discourage potential investors. This stock gives you exposure to AI — an industry that Grand View Research expects will grow at a rate of more than 42% until at least 2027. With any rapidly growing business, investors need to be patient as it may take time for profits to follow. But if you’re willing to wait, you could earn some impressive returns.
The credit card sector holds several promising investments. Mastercard consistently generates phenomenal numbers, keeping profit margins above 40% in the past two years.
While consumers were making more purchases online during the pandemic, Mastercard still had a tough year. Its sales totaled $15.3 billion in 2020, down 9% from the previous year, largely due to cross-border volumes declining by 29%. While the pandemic has halted much travel, that trend will likely reverse with increased vaccination and re-opening economies.
Investors who are bullish on Bitcoin (CRYPTO:BTC) should consider buying Mastercard because it plans to support cryptocurrencies with its network. In a February statement, Mastercard said this move is about choice and adapting to changing consumer preferences. At the time, it had 89 blockchain patents plus 285 pending applications.
There are still plenty of other growth opportunities due to recovering economies and a continued shift away from cash purchases. By 2028, the digital payment market could be worth more than $236 billion, growing at a compound annual growth rate of more than 19%, according to Grand View Research.
Mastercard’s eye-popping margins coupled with attractive growth prospects make this stock a lucrative addition to any portfolio and investors receive a modest dividend of 0.5%.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.