Fortunes Have Been Made From These Low-Risk Shares

The 358% profit at Paypoint plc (LON:PAY) is why some people love gas bills…

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Wahey! It seems summer is finally here… with blue skies and blazing sunshine prompting a mad dash for dodgy shorts and emergency aftersun if the Fool office is anything to go by.

The super weather may have sparked a mad dash back into shares, too, as I see the FTSE has surged 500 points following last month’s ‘correction’. In fact, an incredible 192 points were gained during just one day last week.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

I did say a rebound could occur as quickly as June’s falls… and that you wouldn’t want to be sitting nervously on the sidelines then, would you?

So… 7,000 here we come – perhaps! A celebratory office conga – complete with dodgy shorts – would round off the summer very nicely.

Correction, what correction? These stocks have trounced the market

Actually, I bet some investors have been celebrating in the sunshine already. You see, despite June’s correction and all the other market ups and downs, some shares have been recently hitting fresh all-time highs.

Now both you and I could have easily bought these tip-top shares some years ago. I know this because the companies involved aren’t small, obscure, high-risk names that only the most sophisticated, knowledgeable and experienced stock-pickers would ever dig up.

Instead, the companies involved are all straightforward, dull businesses that – on the face of it – offer little prospect of excitement or growth. And yet, fortunes have been made by sensible long-term investors holding these low-risk shares.

Let me reveal just three of the stocks in question.

Quite possibly the market’s most boring blue chip

Bunzl (LSE: BNZL) is quite possibly the most boring share within the FTSE 100 index.

The group tries to sex up what it does by describing itself as “providing outsourcing solutions and service-oriented distribution”. But in reality, Bunzl sells items such as plastic bags, paper napkins, toilet mops and safety goggles.

Nonetheless, this company has been a wonderful performer for anyone that dislikes racy businesses and portfolio worries. Indeed, anyone buying at the 492p low a few years ago would now be sitting on a fat 179% profit.

What’s more, Bunzl’s dividend never missed a beat during the financial crisis, with the payout rising from 19p to 28p per share between 2007 and 2012.

One of the two certainties in life provides a 202% profit

Now to what must surely be the market’s most predictable sector… funerals.

Indeed, the last five years has seen the number of deaths in Britain vary only slightly between 539,000 and 553,000 per annum. It’s meant steady trade for Dignity (LSE: DTY), the country’s largest funeral group that owns more than 600 funeral directors.

As you’d expect, Dignity has been a very reliable performer for anyone that enjoys low-risk businesses and ultra-predictable returns. Indeed, underlying earnings per share have nearly doubled since 2007 as the group expanded its network and lifted its prices.

And anyone smart to enough to buy at the 496p low a few years ago would now be sitting on a superb 202% profit.

This is why some people love gas bills

Completing the trio is Paypoint (LSE: PAY), which you might say is a business in decline. That’s because the firm processes cash payments for household bills at corner shops and convenience stores. Surely that line of work is dying out as everyone these days uses direct debit…

…well, perhaps not. In fact, between 2007 and 2013, the number of transactions on Paypoint’s networks jumped 50% while the total value of the transactions surged 166%.

The performance has meant Paypoint has been an astounding performer for anyone that likes the regularity of people paying gas bills. In fact, anyone that spotted the 236p low a few years ago would now be sitting on an incredible 358% profit.

Lounging around the pool and grinning at their huge gains

You won’t find shareholders of Bunzl, Dignity and Paypoint worrying about recent market falls and wondering whether the global economy is headed for further trouble.

That’s because they’ve backed simple companies that offer basic services and products that people will always need, whatever happens to interest rates, the Chinese economy or the price of gold.

Indeed, the dependability of such companies – rather than their business growth rates – has been recognised by the market through some enormous, FTSE-thumping returns.

As I say, I bet the holders of these shares have been celebrating in the sunshine already…

…in fact, I can imagine them now, lounging around the pool and grinning at how their shares have hit all-time highs and how they’ve enjoyed such huge gains from such low-risk companies.

Fancy joining them poolside this summer? Well, the cleverest stock-pickers the Fool has ever employed have recommended many predictable, lower-risk shares for you to choose from.

The names of the shares are available to members of Motley Fool Share Advisor and – similar to Bunzl, Dignity and Paypoint – would also seem to be straightforward, dull businesses that, on the face of it, offer little prospect of excitement or growth…

Of course, I’d like to think these recommendations will soon be hitting fresh highs and delivering handsome gains to sensible investors like you.

You can join Motley Fool Share Advisor and see every share the Fool experts are recommending by clicking here right now.

> Maynard does not own shares in any of the companies mentioned. The Motley Fool owns shares in Paypoint.

More on Company Comment

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Rolls-Royce shares are trading for pennies. Should I buy them today?

Just because Rolls-Royce shares cost pennies doesn't make them cheap. Its troubles aren't over yet.

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

8.5% and 9.5% dividend yields! 2 FTSE 100 stocks to buy today

The dividend yields at these brilliant blue-chips sit very close to double digits. I think they could be too good…

Read more »

Investing Articles

Tesco vs Royal Mail: which cheap FTSE 100 share should I buy?

The Tesco and Royal Mail share prices both seem to offer great value at recent levels. So which cheap FTSE…

Read more »

Investing Articles

2 FTSE 100 dividend-paying stocks to buy in an ISA

The deadline for new money going into Stocks and Shares ISAs is just around the corner. Here are two FTSE…

Read more »

Business man on stock market crash financial trade indicator background.
Investing Articles

2 dividend paying banking stocks to combat inflation in 2022

With inflation taking off in the US, the Fed may have to raise rates. Stephen Bhasera believes these banking stocks…

Read more »

Various denominations of notes in a pile
Investing Articles

A high-dividend stock I’d buy now

Why this high-dividend stock is potentially more than just a sleepy cash-cow business and growth looks set to kick in…

Read more »

Investing Articles

2 FTSE 100 dividend stocks I’d aim to never sell

I wouldn't try to hold all my investments forever, but these two FTSE 100 dividend stocks both have many qualities…

Read more »

Scene depicting the City of London, home of the FTSE 100
Investing Articles

With £2,000 to invest, I’d buy these FTSE 100 shares with big dividends

Several FTSE 100 shares pay out big dividends, but I'd start my research with these defensive operators in a growing…

Read more »