Do you want to be a high-risk, high-reward investor? Or do you want to play it safe and go for slow and steady wins? That’s among the first questions to ask when building wealth.
While high rewards sound great, that investment strategy isn’t for the faint of heart. While we have all seen the news headlines about the investor who purchased Tesla shares when it was trading at $1.50 (split adjusted), the odds of this happening are very slim.
For most of us, it is best to go for lower-risk investments to increase our returns on investment (ROI). This is where companies like Coca-Cola and Costco come in. Both companies are leaders in their respective industries and have been able to weather any storms that have come their way.
Why Should You Invest in Coca-Cola?
Coca-Cola (KO) is the largest beverage company in the world, and its products are enjoyed by people of all ages in every corner of the globe. The company has a well-diversified product portfolio holding over 200 brands, including water, sports drinks, juices, and sodas. This gives Coca-Cola a lot of stability, as it does not rely on a specific product for its success.
Not only is the product portfolio well diversified, but the company also holds some of the largest brands in the world, such as Coke, Fanta, and Sprite. These brands have loyal customer bases, which help to insulate Coca-Cola from changing consumer preferences.
Here are some reasons why Coca-Cola is a company worth investing in for those looking to “buy it and forget it.”
Coca-Cola is recession proof
People will still need to drink, even during a recession that is caused by a financial crisis, oil shock, or pandemic.
In fact, during tough economic times, people often turn to comfort foods and beverages as a way to cope with stress. This has been true throughout history and has helped Coca-Cola weather some of the most challenging economic conditions.
Coca-Cola continues to create strong partnerships
Coca Cola can also leverage its global brand to build strong partnerships.
One such collaboration recently announced is with the Whisky company Jack Daniels. This deal will see Jack Daniels become the official sponsor of the Coca-Cola Music Experience in Brazil.
It’s an excellent way for Coca-Cola to tap into the growing popularity of whisky while introducing its products to a whole new customer base.
Coca-Cola has a strong dividend history
A third reason to consider investing in Coca-Cola is because of the company’s strong dividend history.
Coca-Cola has increased its dividend for 60 consecutive years, which is impressive. This shows that the company is very committed to rewarding its shareholders and creates a great long-term hold for hands-off investors.
While we could go on about the strengths of Coca-Cola, you get the point. Its history, product portfolio, and partnerships make it a very appealing company to invest in.
Why You Should Invest In Costco
Another strong contender if you want to build wealth the lazy way is Costco (COST).
Costco is one of the largest membership-only warehouse clubs in the world and has been a consistently profitable company since it was founded in 1983.
Costco’s business model is based on bulk selling items at low prices, which has proven to be very popular with consumers.
So why buy Costco stock?
Costco has loyal customers
If the pandemic proved anything about Costco, the company has some of the most passionate shoppers in the world.
Costco was one of the few retailers that saw increased sales during the pandemic as people turned to bulk buying to stockpile supplies. This loyalty from shoppers is an excellent sign for Costco’s future and shows that the company is poised for continued success.
Costco memberships continue to rise
Costco has one of the more unique business models in that it relies on memberships for its revenue. Costco generated $3.9 billion in membership sales in 2021. These memberships allow Costco to charge such low prices for its products. This is a driving force for the company’s success that also creates a moat against competitors.
Not only that, but the amount of memberships is continually increasing. In 2021 there was a reported 111 million members worldwide, up over six million members since 2020.
This membership growth is essential because it provides a steady revenue stream for the company and helps to insulate Costco from changes in the retail landscape. For example, if online shopping becomes more popular, Costco will still thrive due to its large membership base.
Costco is changing with the times
A final reason Costco is a strong long-term hold is that it is adapting to the times.
Costco has been investing heavily in e-commerce and has even started to offer same-day delivery in some areas. Costco reportedly had e-commerce sales of $14.8 billion in 2021, projected to reach $25.5 billion annually by 2026.
2 Easy, Lazy Ways To Get Rich
There you have it, two of the best stocks for lazy investors looking to get rich slowly and surely.
While there are no guarantees in the stock market, these companies have proven reliable over a long period. So, Coca-Cola and Costco should be at the top of your list if you’re looking for an easy way to build wealth slowly.