Give Up These 3 Vices for Lent, but Keep Them in Your Portfolio
It's that time of the year again -- the first days of Lent, when Catholics, and many Protestants as well, challenge themselves to forgo for 40 days a food, activity or product they love. The sorts of things "given up for Lent" tend to resemble the usual subjects of New Year's resolutions -- like smoking and soda consumption -- but recently even the use of social media has become fodder for 40 days of self-denial.
However, just because overindulging in such things is considered bad for you doesn't mean that you should sever all ties to the companies that produce these earthly distractions. Some of these vices can be downright virtuous for your portfolio.
The companies behind these popular guilty pleasures all have their strong points, but which is the best stock? It ultimately depends on what kind of investor you are.
Facebook
Anyone paying the slightest bit of attention to the stock market during the past year remembers how spectacularly Facebook's IPO imploded. It had all the trappings of a classic Wall Street drama: overblown investor interest, epic computer glitches, and plummeting stock prices. You'd think the fiasco would be enough reason to stay away from Facebook (FB) forever, but you might be wrong.
Despite the colossal setbacks, Facebook is still holding its own in the market. Its stock enjoyed a recent price spike thanks to the unveiling of Graph Search, social media's answer to Google (GOOG).
Facebook also released its first 10-K on Feb. 1, which explained that its revenue has improved 150 percent since 2010. Considering that the company makes the majority of its money from advertising and the sale of virtual goods, $5 billion in annual revenue is genuinely impressive.
For investors interested in hopping on board a potentially disruptive, rule-breaking tech stock, Facebook could have your name written all over it.
Coca-Cola
Many people give up soda for Lent. And as a peddler of unhealthy beverages, Coca-Cola (KO) has experienced its fair share of controversy over the use of aspartame, a sugar substitute that reportedly has the counter-intuitive effect of promoting weight gain. However, this hasn't stopped the company from holding its own as a Wall Street titan.
Coca-Cola has long been the best-known soda brand in the world, but somehow the market isn't saturated with Coke -- the company has managed a spectacular growth in profits over the last few years. In 2012 the company brought in over $45 billion in revenue, a stunning 50 percent rise from its 2010 sales.
Coke's margins are just as fizzy as its sales. The company had 22 percent profit left over for its operating income in 2012, along with a net profit margin of 19 percent. That's is an impressive statistic for any consumer goods company, and for Coke, it resulted in over $9 billion of profit last year.
For investors looking for a classic, stalwart stock with fat margins, increasing revenues, and a sinfully sweet dividend, Coca-Cola is worth considering as an addition to your investment diet.
Altria
Altria (MO) is the parent company of Philip Morris, and has made a profit for decades off the taboo product of tobacco. While its products cause a host of diseases, Altria's yearly revenue has been the picture of health, holding steady at $23 billion to $24 billion for the past three years.
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Like Coca-Cola, Altria also has a robust dividend. Its payout rings in at a 5.1 percent yield compared to Coke's 2.7 percent. However, the cigarette distributor's payout ratio is almost maxed out at 85 percent, whereas Coca-Cola, at a 53 percent payout, still has room to grow. For investors who like fat dividends, Altria will not disappoint.
Motley Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Facebook, and Google. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days.
