Will These Safe Stocks Let the Cautious Join the Rally?

Following the 2008 collapse of world markets, the most cautious investors have been reluctant to get back into the stock game. Yet analysts see income potential in stocks that are relatively impervious to change — the so-called “safe” bets like Johnson & Johnson (NYSE:JNJ) and Procter & Gamble (NYSE:PG), two fundamentally sound companies whose products never go out of style. Would these staple stocks be the answer for conservative investors?

While no investment comes without its risks, analysts recommend healthcare stock for those who want dividends above 3 percent and a stake in a growing market. The Affordable Care Act will remain the law of the land, positioning Pfizer (NYSE:PFE) and Merck (NYSE:MRK) as two of the winners in an industry where the consumer pool is growing. As more patients see doctors for the first time in years, new prescriptions will be filled and a strong industry is likely to become even stronger.

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While health care laws have an effect on that industry, companies producing consumer staples rarely fall below their markers. Proctor & Gamble dividend yields are stronger than its bond yields, a trait shared by Johnson & Johnson. Stimulus efforts by the Federal Reserve have kept bond yields so low that these stock moves are a smart — and safe — move for even the most conservative players…

Strong interest in these sound investments is part of the reason for the S&P 500′s record-setting year, which continues to astonish analysts and force them to revise their bearish predictions for the index. Troubling news on the jobs front and the Cyprus fiasco have failed to cool off the S&P, which faces its next challenge when more Q1 earnings report this week.

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Nonetheless, a portfolio featuring Merck and Bristol-Meyers Squibb (NYSE:BMY) could be the ticket for investors hoping to hedge their bets as the economy continues to grow, no matter how slowly the pace. Investors face risks when stock prices start rising in short order, leading to profitable the potential for profitable sell-offs. Favorable job data and fundamentally better prospects for the U.S. economy would likely prevent that from happening.

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