Best Mega Cap Stocks Right Now

If a company makes enough of a financial impact, it may eventually reach mega-cap stocks status. A mega-cap stock is a stock issued by a company with a total market capitalization of over $300 billion. These stocks are household names and may employ thousands of people.

Mega stocks are some of the most stable stocks on the market. When it comes to making safe investments in companies that will remain profitable in the future, it’s hard to beat these stocks. Though you won’t find any stocks under $5 on the coveted mega-cap list, we’ll help you identify the stocks worth your investment.  

Quick Look at the Best Mega-Cap Stocks:

• Walmart
• Adobe
• Abbott
• Thermo Fisher Scientific
• Fifth Third Bancorp

Overview

To qualify as a mega stock, a stock must have a total market capitalization at or above $300 billion. You can calculate a stock’s capitalization by multiplying its current share price by the number of outstanding shares. If a stock has a market cap of at least $10 billion but less than $300 billion, it’s usually considered a “large cap” stock.  

Very few companies will reach a market cap of over $300 billion. Mega-cap stocks represent major corporations that have significant influence over the economy. Most mega-cap stocks are household names — about 10 mega-cap stocks in the U.S — and each employs thousands of people.

Investing in mega-cap stocks can get expensive — most have share prices of over $100, and some (like Amazon.com) have average share prices of over $1,000. However, investing in mega-cap companies comes with a number of benefits:

• More stability: Mega cap stocks have a proven track record of positive sales data, growth and influence. Even if a mega-cap company has a rough sales year or quarter, the stock price is unlikely to drop significantly because these companies have track records of success.
• More potential for dividends: Mega-cap companies have high profits and can often pay out more in dividends to investors. A dividend is a portion of a company’s profits paid out to shareholders. Though very few companies are obligated to pay dividends, many large and mega-cap stocks elect to pay shareholders to encourage them to hold onto their stock.
• Easier to find information: Mega cap corporations are well-known companies, which means that it’s easy to find investor information, expert opinions and information on the company’s financial data. It’s nearly impossible for a mega-cap stock’s price to be artificially inflated or manipulated — a possibility with small and nano cap stocks. 

Best Online Brokers for These Stocks

No matter if you’re searching for mega-cap stocks to add to your portfolio or only interested in finding a few stocks under $20 to pick up while they’re undervalued, you’ll first need to open an account with a broker. A stockbroker is a person or company who is authorized to buy and sell stocks on your behalf, as members of the general public cannot directly buy or sell stocks.

If you don’t already have a brokerage account, consider a few of our favorite online brokers below.

Features to Look for in Mega Stocks

These stocks can be expensive, so it’s worth the effort to do your homework before you invest. Some of the characteristics you should look for when you compare mega-cap stock options include:

• A market capitalization above $300 billion: Market capitalizations of companies can change on a weekly or even daily basis. For example, in 2008, natural gas giant ExxonMobil (NYSE: XOM) had a total market cap of over $500 billion and was considered one of the largest mega-cap stocks. Today, the company’s stock prices have been on a steady decline as natural gas demand sinks, and ExxonMobil has lost its status as a mega-cap stock. Today, ExxonMobil has a market capitalization of less than $200 billion.

Before you invest in a mega-cap stock, be sure to check its most recent market capitalization data. You may also want to monitor each company’s total market cap to make sure it still qualifies as a mega-cap stock.

• A safe, sustainable dividend yield: Many investors turn to these stocks because they assume major companies will pay out the highest dividends. This isn’t always true — mega stocks like Amazon (NYSE: AMZN) and Facebook (NASDAQ: FB) don’t currently offer any form of a dividend.

If you are investing for dividends, make sure your mega stock offers them before you buy. Look for a company’s “dividend yield” percentage while you’re doing your research. The dividend yield is calculated by dividing a company’s current annual dividend by its current stock price. Dividend yields above 10% are considered to be riskier investments because the dividend may not be sustainable.

• Consistent earnings per share value: A company’s earnings per share (EPS) value is calculated by dividing its total revenue minus dividends by its current number of outstanding shares. Though these stocks don’t typically have the high growth potential of smaller companies, a consistent EPS typically indicates that the company is doing well financially. 

Adding Mega Cap Stocks to Your Portfolio

These stocks represent some of the largest companies in the world — and their share prices often reflect this size and stability. If you don’t have the investment capital to purchase an entire share of a these stocks, consider investing in a mega-cap ETF like the Vanguard Mega Cap ETF or the iShares S&P 100 ETF. These funds trade like regular shares of stocks but give you access to a bundle of fractional shares of the billion-dollar companies you want.