Amazon.com Inc. (NASDAQ: AMZN) has several moats that make it hard for competition to effectively attack it. Despite the tech sell-off, its shares remain recommended by most analysts who follow the company. With a market cap of $787 billion, it ranks first among U.S. public companies, ahead Alphabet and Microsoft.
Amazon is best known for its huge e-commerce operations. However, it also operates one of the world’s largest streaming media businesses through its Prime subscription service, and its consumer electronics products have become a critical part of its revenue base. Perhaps more important than any of these, Amazon leads the hot cloud computing market with its Amazon Web Service division.
Safe harbor stocks are defined by those of companies that have large market share, huge revenue and rock-solid balance sheets. Most investors add dividend payouts that are long-lived and create a large yield. Few stocks fit this role as well as Verizon Communications Inc. (NYSE: VZ). Verizon dominates the wireless market in the United States along with AT&T. Between them, they have little competition.
Last year, Verizon made $30 billion on $126 billion in revenue. Although neither of these figures are rising rapidly, the company has a $2.41 payout, which is a yield of 4.21%. Its $113 billion in debt is spread over a payment period that should not affect its margins.
McDonald’s Corp. (NYSE: MCD) is another safe harbor stock. It’s 14,000-store footprint puts it at the lead among fast-food companies in America, and it has over 37,000 locations worldwide. In the most recent quarter, same-store sales worldwide jumped by a healthy 4.2%. McDonald’s has staked out a strong position in the breakfast market, a challenge to Starbucks and Dunkin’ Donuts. Many of its locations operate 24 hours a day.
McDonald’s is famous for share buybacks. In the three years that ended in 2016, its share repurchases totaled $20 billion. McDonald’s $4.64 dividend drives a yield of 2.58%.
Microsoft Corp. (NASDAQ: MSFT) currently ranks as America’s second most valuable company based on market cap. Its success in the cloud, hardware and traditional server and operating systems has driven a turnaround under CEO Satya Nadella, who took over the job in 2014. In the most recent quarter, revenue rose a strong 19% to $29.1 billion. Revenue in its Intelligent Cloud business was $8.6 billion, which was a 24% increase.
Microsoft also has put a huge sum into buybacks. In the most recent quarter, the buyback plus dividend commitments reached $6.1 billion. With a $1.84 dividend, Microsoft sports a 1.80% yield, unusual for a tech growth company
Shares of Merck & Co. Inc. (NYSE: MRK) are up more than any other of the Dow Jones industrial average components this year, higher by 35%. The pharmaceutical giant posted strong third-quarter earnings. Sales were $10.8 billion, up from $10.3 billion in the year-before period. Net income results were much stronger. Merck made $2 billion, compared to a loss of $50 million.
The pipeline for its oncology drugs is highly promising. Merck reported sales of its Keytruda cancer treatment was the cornerstone of this improvement. Merck also announced a $10 billion share buyback and raised its dividend roughly 15% to $2.20 a share.