Many professionals in the trading industry find diversification to be a vital component of an investment portfolio. In fact, most of them agree that even though the technique does not give absolute reassurance against loss, diversification is a key factor in meeting long-term goals while reducing risk.
That is why it is important to have a variety of investments in stocks, bonds, as well as investments in shares of companies coming from different industries and sectors.
Some companies though, can diversify your portfolio by themselves. With their vast range of revenue flows, these companies are strong players on the stock market and are often unaffected from huge swings in share price.
Most of these companies are usually large, multinational corporations that bring in billions of dollars in revenue. The ones known as blue chip stocks, which include a number of big names and some that might not be that familiar.
Let’s take a look at some of the most diversified US companies and what they could contribute on your investment portfolio.
Johnson & Johnson (J&J)
J&J has been a solid performer on the US stock market, showing steady annual growth of its dividend to shareholders for 55 years straight and consistently surpassing its targets.
In terms of diversity, this consumer goods-maker takes it to heart, since it got to where it is today by diversifying within a single industry.
That strategy became the key to J&J’s evolution from a maker of surgical dressings to a broadly based company with business segments, each big enough to be an industry leader on its own.
Diversification helps minimize risk—as one business goes down, another may go up. That underlying principle has turned out well at J&J, where the percentage of revenue thrown in by each industry varies from year to year.
Besides manufacturing a huge selection of healthcare items, this biotech firm also has a medical equipment unit that includes surgical devices as well as a sport performance research institution for athletes.
J&J even created a supplier diversity program in 1998 and has invested in initiatives such as the Scientist Mentoring & Diversity Program (SMDP) to allow students and employees incorporate diversity when they work together.
Formerly known as the Minnesota Mining and Manufacturing Company, this US group founded by five people in 1902 has now grown into a multinational conglomerate that manufactures just about everything.
From Post-It notes to semiconductors, 3M to date offers over 60,000 products for both businesses and consumers, and brings in more than $30 billion in annual revenue.
This Minneapolis-based company has also showed higher dividend on a yearly basis for six decades. Share prices may have fallen this year, but 3M has constantly outdone the S&P 500 over the last ten years.
The Walt Disney Co.
There are several factors to like about Disney. TV (ABC and ESPN), movies (Marvel superhero and Star Wars franchises), theme parks and resorts (Disneyland), and a great number of characters (Mickey Mouse) that it can leverage for long periods of time.
Disney is not only a strong and notable brand, but it is also a profitable one. For 2017, the company generated more than $55 billion in revenue. As of this year, it is close to acquiring the film and tv assets of American mass media group 21st Century Fox.
Berkshire Hathaway is a holding firm for a huge number of companies. Founded by the Oracle of Omaha Warren Buffett, the company has grown to be one of the biggest in the world in terms of market capitalization. As of June 2018, Berkshire Hathaway has a market cap of $491.9 billion.
Insurance subsidiaries usually represent the largest sections of the Omaha-based group, but Berkshire Hathaway now runs hundreds of diverse businesses across the globe including utilities, manufacturing, and railroad.
For its second quarter results, the company posted operating income of $22 million in its insurance-underwriting sector.
As an aggressive investor, the company’s holdings include notable investments in industries ranging from technology (Apple Inc.), banking (Wells Fargo & Co.), food and beverage (Coca-Cola), energy (Phillips 66), insurance (GEICO), as well as clothing (Fruit of the Loom).
Berkshire Hathaway most valuable stake is currently in Apple. After the iPhone -maker became America’s first trillion-dollar company this year, Berkshire Hathaway’s 5 percent stake is now worth $47.2 billion.
GE (General Electric Co.)
GE was formed in 1892 as a result of a merger of rival companies Edison General Electric Company and the Thomson-Houston Electric Company.
With its overall revenue beyond $122 billion in 2017, GE at present is one of the biggest corporations in the world and one of the most diversified.
Originally focused on power industry-related items such as light bulbs and refrigerators, the firm’s business activities today cover a broad range of areas including aircraft engine manufacturing, appliances, medical devices, and finance.
The Boston-based conglomerate also owns several research and manufacturing companies across the globe. It even once became the owner of television network NBC (National Broadcasting Company).
Widely recognized as the parent or holding company of search behemoth Google LLC, Alphabet has expanded its operations not only the tech industry, but the not-so-tech industries as well.
Since its institution in 2015, the California-based firm has overseen several projects and businesses. Today, Alphabet has grown into a massive corporation that offers nearly everything from internet-beaming hot air balloons to autonomous vehicles to Google Cloud.
In terms of revenue, the company generates it from a range of areas including online advertising, mobile phone manufacturing, as well as life sciences and biotechnology. In addition to its driverless car initiative, Alphabet was a major early investor in ride-hailing firm Uber Technologies Inc.
This science and tech innovator can definitely run a diverse group of businesses.
Started as a real estate investment trust, the US conglomerate shifted its focus on the manufacturing industry where it currently has four segments including environmental and applied solutions, dental, life sciences, and diagnostics.
Danaher expands its business portfolio through acquisitions which have long been a key foundation for the company’s sustained growth. Danaher has bought hundreds of businesses since 1984 and more than 50 percent of its overall revenue today has been acquired in the past seven years.
Some of Danaher’s notable additions to its portfolio include Cepheid Inc., Integrated DNA Technologies Inc., AVT (Advanced Vision Technology), and Pall Corp.
Honeywell International Inc.
Honeywell runs a diversified technology and manufacturing business across the globe. The multinational conglomerate was formed in 1886 by inventor Albert Butz who created the predecessor device for the modern thermostat.
Completing merger after merger, Honeywell has grown to become one of the world’s largest aerospace company.
As a Fortune 100 company with $40.5 billion in sales last year, Honeywell has created a strong record of financial performance over time and has been a solid stock performer for long periods of time.
The US company generates its revenue today from its four divisions which have seen stable growth: Aerospace, home and building technologies, performance materials and technologies, and safety and productivity solutions.
With over 130,000 employees, Honeywell can build everything from aircraft wheels to packaging for pharmaceuticals.
Consider these companies when diversifying your investment portfolio as they could help ease the process. These firms have grown so much that they can diversify your portfolio on their own.
They are also capable of generating substantial revenue through a number of sources which is good for investors, as it suggests that these companies are solid performers in the stock market.
If you want to learn new things and learn strategies about the market, BWorldpedia is the site you should visit! We provide profound and useful insights about the market and across a plethora of topics related to it. Also, register an account now with BWorld and start your investment journey.