Investors don’t have to look for small-cap stocks to realize significant gains. Going the familiar route and choosing mega-cap stocks for stability can lead to steady returns over the long run. This strategy has worked for many years.
A small number of mega-cap stocks are driving the stock market higher. Mega caps are corporations that have market caps above $250 billion. They’re household names, but some stocks are better than others. These are some of the top mega-cap stocks for stability to consider.
Visa (V)
Visa (NYSE:V) is the smallest corporation on this list but still has an impressive $560 billion market cap. The credit and debit card leader has a 35 P/E ratio and a 0.75% dividend yield. Visa regularly raises its dividend by at least 10% yearly and has the cash flow to back up the hikes.
The company makes money from each credit and debit card transaction. Financial reports offer a glimpse into the strength of the U.S. consumer. Even when consumers cut spending on various product categories, they still use their credit and debit cards to purchase.
Visa reported 9% year-over-year revenue growth and 17% year-over-year net income growth in the first quarter of fiscal 2024. These financials helped the company reach a 57.0% net profit margin. The fintech firm had enough cash left over to initiate $4.4 billion worth of stock buybacks and dividend distributions. Shares are up by 79% over the past five years.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is a semiconductor and software giant poised to become a trillion-dollar company. The corporation currently has a $611 billion market cap and a 49 P/E ratio. The stock also has a 1.59% dividend yield and regularly raises its dividend by at least 10% per year.
The recent acquisition of VMware has already bore fruit for the tech giant. The corporation posted a 34% year-over-year improvement in revenue to start fiscal 2024. Broadcom also reinvested $8.29 billion into stock buybacks. Strong demand for VMware Cloud Foundation and AI data centers fueled the company’s growth.
Broadcom is a top performer that regularly outperforms the stock market. Shares are up by 111% over the past year and have gained 339% over the past five years. The stock is rated as a “Strong Buy” among 22 analysts with a projected 20% upside. The highest price target is $1,720, and even the lowest price target is $1,405, which implies further upside.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the most valuable publicly traded corporation thanks to its $3.1 trillion market cap. It’s hard to beat against a company that has delivered a 53% gain over the past year and a 5-year gain of 257%.
Copilot has been an amazing growth driver for Microsoft. The AI tool integrates with Microsoft’s other offerings and has allowed the firm to offer more choices to its consumers. An analyst even referred to Copilot as Microsoft’s “iPhone Moment” while raising his price target to $500.
Many analysts agree that Microsoft presents a good buying opportunity. The stock has a “Strong Buy” rating from 34 analysts with an average price target that implies an 11% upside. Microsoft is your largest holding if you only invest in a fund that mirrors the S&P 500 or the Nasdaq 100. It isn’t uncommon to find funds with more than 10% of their portfolios allocated toward Microsoft stock.
On this date of publication, Marc Guberti held long positions in MSFT and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.