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My 3 Largest Stock Holdings, and Why I Love Each One

Many financial writers, myself included, write about dozens of stocks on a regular basis. While I believe in every recommendation I make, there's no possible way that I could own every single one of them. With that in mind, here are the three largest stocks I own in my personal portfolio, and why I love each one as a long-term investment.

(Note: If you want to see all of the stocks I own, they are all disclosed on my profile page.)

Image source: Getty Images.

One of the market's best dividend stocks

My single largest stock holding is Realty Income Corporation (NYSE: O), which shouldn't come as much of a surprise to anyone who reads my work regularly. I've written many times about the stock, in regard to how I believe it's possibly the best all-around dividend stock in the market.

Realty Income is a real estate investment trust that primarily invests in freestanding retail properties whose tenants have a defensive component to their business. Just to name one example, dollar stores make up a large portion of Realty Income's portfolio, and these stores and other discount-oriented retailers tend to be rather immune to e-commerce competition and are also recession-resistant. Other tenants are service-oriented, meaning that customers need to physically go to them, and others sell non-discretionary goods, which work in any economic climate.

In addition, Realty Income's tenants sign long-term leases, with rent increases built in. And they agree to pay the variable costs of property ownership such as taxes, insurance, and building maintenance. Essentially, Realty Income just puts a tenant in place and enjoys years of predictable income. This is why the company has been able to increase its monthly dividend rate 93 times since its 1994 NYSE listing.

This bank is up 250% since early 2016

To be clear, I didn't intend for Bank of America (NYSE: BAC) to become one of my largest stock holdings when I bought it in early 2016. I was merely trying to take advantage of a market overreaction that sent shares plunging to less than $11.

Not even two years later, the bank's stock price has gone up by more than 250%, making it my second largest stock holding, even after selling some of my position earlier this year.

Although Bank of America's stock price has soared, it's well deserved. Revenue and earnings are higher, asset quality has dramatically improved over the past several years, and loans and deposits continue to grow impressively. Most importantly, the bank is now generating consistent profits and is doing so more efficiently thanks to cost-cutting and an emphasis on technology. Furthermore, tax reform, financial de-regulation, and rising interest rates could all prove to be major positive catalysts for the bank.

An excellent business model for value-creation

I own several real estate stocks, but Howard Hughes Corporation (NYSE: HHC) has my favorite business model of them all.

Specifically, the company is a developer of master-planned communities, or MPCs -- large residential developments with lots of amenities. One example of a Howard Hughes property is the massive, 22,500-acre Summerland community in Las Vegas, which has parks, trails, two dozen schools, three colleges, nine golf courses, and a vibrant downtown district.

The general idea behind the company's business is that it sells land within its MPCs to homebuilders, which creates a need for certain commercial properties and increases the value of the surrounding land. The company then develops commercial properties, such as office buildings and hotels, to meet the needs of the community, and generates cash flow from them. As the communities continue to grow, Howard Hughes Corporation continues to benefit from this cycle of value creation.

Are any of these good buys now?

There's a solid case to be made for all of these stocks at the current price, although I think Bank of America is starting to look fairly valued, as opposed to cheap. In fact, I added to my Realty Income position a few weeks ago to take advantage of the retail-fueled weakness in the stock's price.

The bottom line is that I think these are three places investors can still find value in the current expensive-looking stock market. However, it's important not to jump into a stock simply because of a recommendation, or because someone else owns it. While these stocks are excellent fits for my investment strategy and risk tolerance, the same may not be true for you, so it's important to do your own research before investing.

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Matthew Frankel owns shares of Bank of America, Realty Income, and The Howard Hughes. The Motley Fool recommends The Howard Hughes. The Motley Fool has a disclosure policy.