Top 3 Stocks for Safe Returns Now and Into Next Year

Key Points

• As 2024 comes to an end, some topics and issues might cause some volatility to start in 2025, making these safe stocks a must-have.
• With a mix of safety and growth, investors can align their portfolios for a great start to the year.
• Wall Street analysts and institutional investors agree on the potential upside built into this list today.

As the year comes to an end, many issues remain to be solved in 2025, such as potential new trade tariffs, conflicts in the geopolitical arena, and a new United States presidential inauguration. Each of these topics breeds volatility in the stock market, so investors really need to tread carefully in the coming months to avoid falling into potential traps and volatility pockets.

This is where today’s list of consumer staples stocks becomes useful, as it offers both safety and low volatility. As every portfolio needs a potential growth source on top of this safety, there is also a worthy addition in the financial sector that might benefit from the current trends in the real estate space. Safety, growth, and the ability to start 2025 on the right foot so that the rest of the year is an open field ahead for individual plays and isolated gains.

Making this list are stocks like McDonald’s Co. NYSE: MCD for stable and predictable demand, making it easier for analysts to value and project the company’s financials. Then there is the most sought-after real estate investment trust (REIT), Realty Income Co. NYSE: O, and its monthly dividend payment, which currently outpaces inflation rates and GDP growth projections. Finally, the potential mortgage rebound could boost shares of Rocket Companies Inc. NYSE: RKT.

Why McDonald's Stock Offers Great Value at Its Current Price

Value propositions from McDonald’s don’t just come from their affordable prices for customers; they also apply to investors today. As the stock lowered to only 87% of its 52-week high while the broader S&P 500 stood right at its all-time highs, investors understanding the nature of low beta stocks will call for closing down this gap.

With a beta of 0.7, McDonald’s stock isn’t one to give investors a wild ride in the coming months, but that is the entire point of keeping this name for portfolio protection and stability in the future. This is why Wall Street analysts still highly regard this company, no matter what the business cycle is.

Particularly, analysts at Truist Financial now have a Buy rating on McDonald’s stock, with a price target of up to $342 a share. They call for a net upside of as much as 16% from where it trades today, which is not an easy feat for a company that trades at a $214 billion market capitalization today.

Other benefits of owning McDonald’s come from the company’s dividend, a $7.08 a share payout today that offers up to 2.4% in annualized yields. These yields are not quite up to par with inflation rates of 2.7%, but they still give investors a near breakeven rate to inflation on top of the double-digit upside potential through price appreciation.

Ultimately, institutional investors are another gauge to give retail investors an idea of the sentiment for McDonald’s stock. Geode Capital Management boosted its holdings by 1.4% as of November 2024, bringing its net position up to $4.8 billion today, or 2.2% ownership in the company.

How Realty Income Stock's Dividend Can Boost Your Buying Power for 2025

A monthly dividend can benefit investors who allocate to Real estate Income in two ways. First, it allows them to keep buying more shares every month and let the effect of monthly income compound. Second, it builds up liquidity and buying power for investors to take advantage of opportunities that might come up later in 2025.

As of today, the company offers shareholders a net payout of $3.16 a share, which translates into an annualized yield of 5.8%. This one doubles inflation rates, so investors have a nice premium on their cash and buying power moving into 2025. However, the benefits of owning Realty Income stock don’t end there.

Analysts at the UBS Group have reiterated their Buy rating on realty Income stock as of November 2024. This time, they placed a price target of $71 a share on the company, which calls for a net upside of as much as 29.3% from where the stock trades today.

Why Rocket Companies Stock Could Soar as the Mortgage Industry Rebounds

Now that the Federal Reserve (the Fed) is set to cut interest rates again in December 2024, where the CME Group’s FedWatch tool is now pricing in over 96% chances of a rate cut, the mortgage industry might see some tailwinds coming up. As rates come down, so do mortgage rates, allowing some would-be homebuyers to step off the sidelines.

This is especially the case as the mortgage market index is now at 1996 lows, meaning the risk-to-reward setups in mortgage stocks are incredibly attractive today. That’s where Rocket Companies stock comes into play today and where Wall Street analysts see an upside, as those from Morgan Stanley see a price tag of $18 a share.

To prove these views right, the stock would have to stage a rally of up to 47.5% from where it trades today. This attractive upside potential is backed by the earnings per share (EPS) projections for the next 12 months, where analysts are looking for $0.14 in earnings compared to today’s $0.08, a net growth rate of 75%, to act as a tailwind for the stock.