15 Best Low Risk High Reward Stocks in 2022

Intro

Risk is significant to investment; no discussion of returns is relevant without some mention of the risk involved. The trouble is figuring out where the risk lies and the differences between low and high risk. Knowing this can help investors spot possibilities for higher profits.

While this is correct, the amount of return you may earn is determined by how much risk (and loss) you are willing to take; successful investors make their careers by balancing these two factors.

Because you cannot decide how much risk you are prepared to accept as an investor, we have put together this piece to show you some of the low-risk high-reward stocks accessible.

However, keep in mind that while they are low-risk investments, they are not risk-free.

What Are Low Risk High Reward Stocks

Low-risk, high-return businesses are those that offer the potential for a high degree of reward without a high amount of risk, as the name implies. 

The juice is well worth squeezing with these firms. They don't require a lot of money to get started, have fewer obstacles to entry than other business models, and have high-profit potential, making them an excellent choice for people who wish to start their own company without risking everything.

15 Best Low Risk High Reward Stocks

1. Dollar General

Dollar General Corporation (NYSE: DG) is a discount retailer that sells a variety of items such as consumables, seasonal home goods, and clothing. They've had a strong year thus far in 2022, up roughly 22% year to date.

As the discount retailer remained open as a necessary business during the stay-at-home orders, shop sales jumped 21.7 percent, and earnings per share increased 73 percent in the first quarter. Last year, the firm opened nearly 1,000 additional locations.

A vital metric indicates whether a retailer is expanding and developing through performance. Dollar General has a low five-year beta of 0.53, indicating that the company is stable. It is currently trading at 222.39 USD +0.68 (0.31 percent), putting it in the low-risk, high-reward category.

2. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK-A) and Berkshire Hathaway (NYSE: BRK-B) are two international conglomerates that possess about 60 corporate entities, including GEICO Duracell and others. 

Many of these plants may grow in any environment. Berkshire Hathaway has given its shareholders an average annual growth in book value of 19.0 percent since 1965 (compared to 9.7 percent for the S&P 500 with dividends included for the same period) while using enormous amounts of capital and little debt.

In a word, holding Berkshire is similar to owning multiple investments in one stock. It qualifies as a low-risk, high-reward stock.

3. Apple

Apple Inc. is a multinational technology company located in Cupertino, California, that designs, develops, and sells consumer gadgets, computer software, and online services. Along with Amazon, Google, Microsoft, and Facebook, it is regarded as one of the Big Tech technological giants.

Apple (NASDAQ: AAPL) has a long-term edge in terms of an exceptionally dedicated client base and an ecosystem of goods built to work best together. In other words, iPhone users tend to stick with the brand.

4. Procter & Gamble

The Procter & Gamble Company is a global consumer goods conglomerate. It specializes in a wide range of personal health/consumer health products divided into different categories such as Beauty, Grooming, Health Care, Fabric & Home Care, and so on.

Pringles' product portfolio includes foods, snacks, and beverages before it was sold to Kellogg's. Procter & Gamble has grown its dividend for 63 consecutive years, demonstrating how constant the company's operations have been over time. One of the most dependable dividend payers in the entire stock market. In 2020, revenue was expected to reach US$70.95 billion. Procter & Gamble (NYSE: PG) is a low-risk, high-reward company that trades at 144.36 USD 0.030 (0.021 percent) on the New York Stock Exchange.

5. Annuities

The term "annuity" refers to a form of the insurance contract that guarantees the contract buyer periodical income payments. A fixed annuity is the most basic type of annuity. Fixed annuities require you to pay into the annuity in exchange for a certain amount of income.

This money is normally paid out on a monthly basis, and it can last as long as you live. Your risk is reduced if you receive a form of guaranteed return. The insurance company that holds your annuity is responsible for it.

According to Blueprint Income, a fixed annuity marketplace, fixed annuity interest rates range from roughly 1.0 percent to 3.60 percent as of mid-August 2020. Keep in mind that higher interest rates are frequently associated with less reputable insurers, which means They're more prone to fall behind on their payments.Social Security and pension schemes are examples of annuities.

6. Treasury Funds

Treasury bills, notes, and bonds are examples of treasury funds. These securities rules are affected by whether or not inflation rises or falls. The US Treasury Department issues them. It's critical to remember the following when it comes to treasury funds. Treasury notes have a one-year or shorter maturity period. The notes can be used for up to ten years.

Treasury bonds can last up to 30 years before they expire. You can buy or sell Treasury securities directly or through mutual funds or wait for them to mature. You will not be able to postpone your maturity date. Unless you buy a negative-yielding bond, you will not lose money if you hold Treasury bonds until they mature. These investments are also among the safest, and you may be able to deduct your earnings from your taxes.

7. Starbucks

The Starbucks Corporation (NASDAQ: SBUX) is a worldwide coffeehouse and roastery corporation. It has built to become the world's largest coffeehouse chain, with headquarters in Washington.

Its well-known brand offers it a price edge over competitors, and its huge scale also affords it efficiency advantages. In other words, Starbucks can charge a higher price while still reaping the cost savings that come with being such a massive corporation. Starbucks' revenue continues to rise year after year; in 2019, the company's revenue totaled $26.50 billion.

8. Walt Disney Company

The Walt Disney Company  is a multibillion-dollar international media and entertainment giant in California's Walt Disney Studios complex.The value of Disney's movie franchises is among the highest in the world, and its streaming businesses are generating a steady stream of revenue.

As we've witnessed, Disney hasn't been immune to the COVID-19 outbreak. The theme parks have been shuttered for months and will continue to operate at a reduced capacity for the time being. 

The Disney cruise line is still closed, as are most movie theatres. However, Disney's brand and significant intellectual property make it a safe investment in the long run.

9. Moody’s

Over the last decade, few stocks have been as dependable as Moody's (NYSE: MCO). For banks, corporations, and investors, the company provides credit ratings, research, and analysis on fixed-income securities, other debt instruments, and quantitative credit risk assessment services.

The fact that Moody's is one of only three major companies in its business, together with S&P Global and Fitch Ratings, contributes to its strength. The three companies dominate 95% of the market, with Moody's and S&P 500 leading the pack with around 40% market share apiece.

As of today, Moody is trading at 290.12 USD +0.89 (0.31 percent). All of this demonstrates that it is a stock with a low risk and a big payout.

10. McCormick

McCormick (NYSE: MKC) is a spice and flavorings firm with a diverse product line. Since 2008, the company hasn't had a negative annual return, implying that its stock price has risen every year for the past 12 years.

While McCormick's historical EPS growth rate is 12.2%, investors should focus on the predicted growth rate. This year, the company's EPS is predicted to increase by 7.7%, which is something that not many companies can boast about. Even though the S&P 500 is down around 4% and the food goods market is down about 6% this year, McCormick is up approximately 6%.

Another indicator of its constancy is its dividend, which has increased for 33 years in a row. McCormick's low beta of 0.36 indicates that it is less susceptible to market movements. The Mccorwick stock price is currently trading at 200.96 USD +1.57. (0.79 percent ). It has been a model of consistency in every market, making it a low-risk, high-reward investment.

11. Money market funds

Money market funds are diversified risk pools made up of CDs, short-term bonds, and other low-risk investments provided by brokerage firms and mutual fund providers.

Unlike a CD, a money market fund is a liquid, which means you can withdraw your money at any moment without incurring penalties. 

According to Ben Wacek, founder and financial counselor of Guide Financial Planning in Minneapolis, money market funds are usually fairly safe. "The bank informs you what rate you'll earn, and the idea is to keep the value per share over $1," he explains.

12. Corporate bonds

Companies can also issue bonds, ranging from low-risk (issued by large profitable enterprises) to high-risk (issued by smaller, less successful companies). 

High-yield bonds, sometimes known as "junk bonds," are debt securities with a high yield are the lowest of the low. "There are low-rate, low-quality high-yield corporate bonds," explains Cheryl Krueger of Growing Fortunes Financial Partners in Schaumburg, Illinois. 

• Interest-rate risk: As interest rates change, the market value of a bond might fluctuate. Bond values grow when interest rates decrease and fall when interest rates rise.

• Default risk: The corporation might not follow through on its commitment to pay interest and principal, You'll get blank in exchange for your money.

• Investors can choose bonds that mature in the next several years to reduce interest rate risk. 

  
  

Longer-term bonds are more susceptible to interest rate movements. Investing in high-quality bonds from reputed multinational corporations or buying funds that invest in a broad portfolio of these bonds can help reduce default risk. Although neither asset type is risk-free, bonds are typically believed to be less risky than stocks.

13. Preferred stocks

The credit rating of preferred equities is lower than that of regular stocks. Their prices may alter substantially if the market crashes or interest rates rise. Preferred stock, like a bond, pays a regular cash dividend. On the other hand, companies that issue preferred stock may be entitled to suspend the dividend in particular circumstances, albeit they must normally make up any missing payments. In addition, before dividends may be paid to common stockholders, the corporation must pay preferred stock distributions.

Preferred stock is a riskier version of a bond that is safer than a stock. Preferred stockholders are paid out after bondholders but before stockholders, earning them the moniker "hybrid securities." Preferred stocks, like other equities, are traded on a stock exchange and must be thoroughly researched before being purchased.

14.Dividend-paying stocks

Stocks aren't as safe as cash, government bonds, or savings accounts, but they're less risky than high-risk assets such as options and futures.

Dividend stocks are safer than high-growth stocks because they pay cash dividends, which reduces but does not eliminate volatility. As a result, dividend stocks will fluctuate with the market, although they may not fall as far when the market is low.

Stocks that pay dividends are regarded as less risky than those that don't. One risk for dividend stocks is that if the firm runs into financial difficulties and declares a loss, it will be forced to reduce or abolish its payout, lowering the stock price.

15. Money market accounts

A money market account looks and functions similarly to a savings account in appearance and features many of the same features, such as a debit card and interest payments. On the other hand, a money market account may have a greater minimum deposit than a savings account.

Money market account rates may be greater than savings account rates. You'll also have the freedom to spend the money if you need it, though the money market account, like a savings account, may have a monthly withdrawal limit. You'll want to look for the greatest rates here to make sure you're getting the most bang for your buck.

How to Find Safe Stocks to Invest in?

When you decide to choose stock picking, your goal is to locate a company with solid fundamentals and an undervalued stock - especially if you expect to hold an asset for a long time. However, before you place your trust in a company, you should conduct an extensive study into its operations to establish its intrinsic value and whether it merits a place in your portfolio. You are becoming a part-owner of a corporation. Therefore, this isn't a simple buy. Before you invest your hard-earned money, here are seven things you should know about a publicly traded corporation.

Here are some of the most important elements that influence how much a stock moves:

1. The industry in which it works;

2. The degree of operating leverage in its business model; 

3. The amount of financial leverage on the balance sheet;

4. The company's size;

5. The current valuation multiple is one of the most important elements influencing how much a stock moves.

Many investors are looking for current income concentrated almost entirely on the dividend yield, payout ratio, and even the price-to-earnings ratio ("P/E").

The Secret for Investing in Safe Stocks

It's just as vital to develop good habits as it is to avoid bad ones when it comes to investing, and the stakes have never been higher. The longest bull market in history is already in its 11th year, with significant volatility, an uncertain economy, and cautious market sentiment. 

On the other hand, long-term investors should rise above the fray and concentrate on the fundamentals. You already know not to buy shares based on a recommendation from your Uncle Fred. But it's even more crucial to set realistic goals, save on a regular basis, and track your success. Don't be too hard on yourself if you make a mistake now and again.

• Make a strategy.

• Early and frequent savings are recommended.

• Put your investments on autopilot.

• Maintain a low cost structure

• Diversify

• Avoid falling through traps.

• Withdraw slowly and carefully.

Final Thoughts on Low Risk High Reward Stocks

Low-risk, high-return enterprises offer the potential for a high degree of reward without a high amount of risk, as the name implies. 

The juice is well worth squeezing with these firms. When you're establishing a new business, you want to offer yourself the best chance of success possible—and you want to do so with as little risk as possible. Get out there and build a low-risk, high-rewards business for yourself, and you will find success.