CNBC’s Jim Cramer reckons boring companies are the shares to buy right now. He aired his opinion yesterday (Monday 13 June) on his Mad Money broadcast. It’s been hard to miss the market volatility recently. But Cramer thinks the best place to invest now is in companies that make things or produce services that people really need. So, for me, it’s out the window with whizzy dizzy businesses that sound exciting. Instead, it’s back to a workman-like, roll-your-sleeves-up approach to investing. And my grandad’s words will be ringing in my ears as I conduct my research — where there’s muck there’s money!
But, hang on, haven’t we heard this kind of advice before? We certainly have. I’d argue that investing in boring, proven, and steady businesses is the bedrock of billionaire investor Warren Buffett’s approach.
My boring pick number one
My first boring pick is communications company BT (LSE: BT.A). With the share price near 182p, the forward-looking dividend yield is just below 4.3% for the current trading year to March 2023. I think that’s handy income to collect. But it is always possible for any business to miss its estimates. Indeed, BT didn’t pay any dividend for the 2020 trading year when the pandemic struck the economy.
However, BT scores well against the boring scale. The company builds, owns, and operates the UK’s fixed and mobile networks as well as providing other communications services. And I reckon that’s an essential line of business that’s unlikely to slow down much because of any future recession.
In May with the full-year results report, chief executive Philip Jansen said he’s “confident” BT is on the right track. And he forecast revenue growth of “at least” £7.9m for the current trading year. As boring picks go, I think BT shares could be a decent home for some of my money. Although it’s worth me bearing in mind the company carries a lot of debt. And that’s probably because of the capital-intensive nature of its operations.
Boring pick two
If I can stifle my yawn, I’ll tell you a bit about my second boring pick. It’s Foresight Solar Fund (LSE: FSFL). The company invests in ground-based solar photovoltaic (PV) electricity generating assets and battery storage systems.
In today’s world, I like the idea of investing in renewable energy assets and believe the fund is well-placed to sustain a healthy flow of shareholder dividends. With the share price near 118p, the forward-looking dividend yield is just above 8% for 2022. But, as always, forecasts are never guaranteed.
A couple of risks spring to my mind with this one. The first is that energy prices can be volatile as we’ve seen lately. It’s possible the company could see lower returns from its assets in the future. And secondly, governments do like to intervene in the energy market with grants, regulations, and tax regimes among other things. Again, it’s possible that the business could become less attractive in years to come. And those risks could affect the flow of shareholder dividends.
Nevertheless, I’d be inclined to embrace the risks and add this boring dividend-paying stock to my diversified portfolio now.
