What Are the Most Diversified Companies?
When investing, it’s always important to have a diverse portfolio. This means holding a mix of stocks, bonds, and other investments, and also investing in shares of companies of varying sizes and from different industries and sectors.
Some individual companies, however, have such a wide variety of businesses and revenue streams that they can, by themselves, help make your portfolio more diverse.
Most of these companies are large, multinational corporations with billions of dollars in revenue. They are often referred to as “blue chip” stocks, and they include some household names as well as some you may not have considered. Because of the diversity of their revenue streams, these companies are very solid stock market performers and are often immune from big swings in share price.
Let’s examine some of the most diversified U.S. companies and their potential impact on your investment portfolio.
Johnson & Johnson [NYSE: JNJ]
We think of Johnson & Johnson as the maker of Band-Aids, baby shampoo, and other home health products, but this company does so much more. In addition to producing a wide range of prescription and over-the-counter drugs, it has a robust medical device segment featuring instruments used in major surgeries. Johnson & Johnson also has a sports performance research institute for athletes. It’s no wonder the company has been one of the most consistently solid performers on the New York Stock Exchange, increasing its dividend to shareholders every year for 55 consecutive years.
3M [NYSE: MMM]
At this point, most people don’t even remember what 3M stands for. Founded in 1901 and formerly known as the Minnesota Mining and Manufacturing Company, it’s now a huge conglomerate that makes everything from Post-It notes to semiconductors. This Minneapolis-based company has more than 60,000 products for both businesses and consumers and boasts more than $30 billion in annual revenue. It has also raised its dividend every year for six decades. Share prices have slumped in 2018, but this company has consistently outperformed the S&P 500 over the last decade.
Berkshire Hathaway [NYSE; BRK]
Founded by famed investor Warren Buffett, Berkshire Hathaway’s holdings include big investments in industries ranging from technology (Apple), banking (Wells Fargo, Bank of America), airlines (Delta, Southwest), food and beverage (Coca-Cola) and energy (Phillips 66), insurance (GEICO) and even clothing (Fruit of the Loom.) No wonder the company reported revenues of $242 billion in 2017. Of course, a single share of Berkshire Hathaway costs nearly $300,000, so save your pennies.
GE [NYSE: GE]
This company may be the very definition of a conglomerate. The firm still makes light bulbs and refrigerators but is also involved in businesses ranging from energy to weapons, to finance and aircraft engines. It even once owned the television network NBC. With revenues of more than $122 billion in 2017, it’s one of the largest companies in the world and one of the most diversified.
Alphabet [NASDAQ: GOOG]
We think of Alphabet as simply the holding company for the search engine Google. But this company has broadened its revenue base by delving into all things tech and some even not-so-tech. In addition to generating revenue from Internet advertising, it operates the Android operating system and has manufactured phones of its own. Alphabet has also made money from life sciences and biotechnology, was a huge early investor in ridesharing company Uber, and has its own driverless car initiative. Its CEO once said that he expects Alphabet to soon have more than two dozen subsidiaries, and that may even be conservative.
The Walt Disney Co. [NYSE: DIS]
This company is more than just Mickey Mouse. Disney has theme parks and resorts. It has movies, including all of the Marvel superhero and Star Wars franchises. It owns ABC and the ESPN networks and recently launched a direct-to-consumer video service. As of June 2018, it was looking for approval to acquire the film and TV assets of 21st Century Fox. It’s also one of the most recognizable brands overseas. No wonder it reported a whopping $55 billion in 2018.
Danaher [NYSE: DHR]
While not as large as some companies on this list, Danaher can certainly boast of a diverse set of businesses. The company has four divisions, all broadly focused on manufacturing: environmental and applied solutions, life sciences, diagnostics, and dental. The company makes dental implants and graphic arts software. It makes microscopes and water treatment equipment. Danaher enjoys adding to its business portfolio through acquisitions—it prefers to keep its cash than pay a hefty dividend—and will probably have purchased another company by the time you finish reading this article.
Honeywell [NYSE: HON]
This company refers to itself as a “software-industrial” conglomerate, but that hardly gives a good sense of the breadth of its businesses. Honeywell employs more than 130,000 people building everything from aircraft wheels to packaging for pharmaceuticals. The company was founded in 1886 as the maker of the first crude thermostat, and through a series of mergers evolved to become one of the world’s largest aerospace firms.
Most of Honeywell’s revenue comes from four segments: Aerospace, home, and building technologies, performance, and materials technology, and safety and productivity solutions. All of these segments have seen steady growth, and the overall company has been a solid stock market performer for decades. Honeywell is projecting more than $43 billion in revenue in 2018, and investors should love to see all that money coming from so many different sources.