At surface level, the concept of finding the best retirement stocks to buy is a patently obvious one: acquire shares of stable blue chips that have a long history of consistent and robust dividend payouts. Then, just sit back during your golden years while these corporate giants work hard for you for a change.
While carrying plenty of truth, the reality is that retirement stocks represent a tricky subject because retirement itself is fraught with uncertainty. In prior generations, people could simply depend on the unprecedented strength of the U.S. economy during the post-World War II era. Frankly, no one could challenge this nation. But the rise of China along with shifting societal and technological trends suggest that American hegemony is no longer dependably viable.
For instance, banking on the rise of personal computers would have been a great opportunity if you were heading into your golden years during the 1980s and 1990s. Nowadays, the rise and rapid proliferation of smart mobile devices have made investing strictly on legacy tech platforms an incredibly risky proposition. Therefore, retirement stocks don’t just face outside threats but internal headwinds as well.
Further, the outlook for American society is not clear cut because of the potentially lingering impact of the novel coronavirus pandemic. As The Wall Street Journal pointed out, life expectancy fell by 1.5% in 2020, “the biggest decline since at least World War II.” In addition, the financial devastation — particularly against underprivileged and at-risk communities — may drag the economy for years to come. This too will affect retirement stocks.
Still, some industries or sectors benefit from paradigm shifts that are so great in magnitude that wagering on them offers a higher probability of success. While you should always maintain vigilance with your money whether you’re just starting out or calling it a career, for those who want a measure of confidence in their exiting of the rat race, these retirement stocks should fit the bill.
- Coca-Cola (NYSE:KO)
- Dominion Energy (NYSE:D)
- Horizon Technology Finance (NASDAQ:HRZN)
- Public Storage (NYSE:PSA)
- H&R Block (NYSE:HRB)
- Innovative Industrial Properties (NYSE:IIPR)
- Exxon Mobil (NYSE:XOM)
A mixture of universally famous brands along with companies tied to burgeoning trends in both U.S. and international markets, the above retirement stocks offer dividend payouts plus a chance for capital upside due to their underlying pertinence. Nevertheless, with the market continuing to cook red-hot, the same principles of smart money management apply to retirement planning as it does any other investment-related endeavor.
Retirement Stocks to Buy: Coca-Cola (KO)
Admittedly a strange company to lead off with, Coca-Cola isn’t exactly what you call a groundbreaking innovator. Sure, the company makes delectable beverages and treats that have fans the world over. But if cola soft drinks were somehow banned everywhere, the earth will keep rotating on its axis.
Plus, as a USA Today report noted, “Millennials tend to be more health-conscious – half of the demographic believes they eat healthier than the average…” In addition, “Over 60% of millennials surveyed think their generation is more focused on health than any other generation.” So, why KO for retirement stocks to buy?
First, there’s a solid chance that the health-conscious image of young consumers is more myth than reality. A “2016 Department of Defense report found that nearly 75 percent of young Americans are unable to serve in the military, mostly because they weigh too much.”
Of course, the military has higher standards of what they consider overweight. Still, if millennials view about themselves aligned with reality, you’d expect our service branches to have a larger potential recruiting pool.
Second, 42% of Americans reported unwanted weight gain, “with an average gain of 29 pounds.” Again, that’s more evidence the health angle is overrated, which bodes well for KO stock.
Dominion Energy (D)
One of the crowd favorites for retirement stocks to buy, Dominion Energy — not to be confused with that other company with a similar name — makes sense for your portfolio irrespective of your ultimate purpose. For example, even if you’re a growth investor, you should consider adding some D stock to your holdings.
Why? Primarily, Dominion and other retirement stocks in the utilities field are tied to indispensable businesses. With consumer tech innovations constantly arriving on the scene, society needs a way to power them all. Not doing so obviously imposes a critical headwind.
Secondly, circumstances go awry when people flip the switch and nothing happens. I’m not just talking about crime. Rather, power failures serve as a painful lesson on the fragility of life and the struggle of sentient beings for resources. If you think about it, Dominion helps prevent us from asking ourselves probing sociological inquiries.
On a much more positive note, Dominion made a commitment to clean energy, reducing carbon emissions by 50% and methane emissions by 25% over the past decade-and-a-half. Therefore, the company’s outlook is incredibly relevant, useful if you’re seeking retirement stocks to buy.
Retirement Stocks to Buy: Horizon Technology Finance (HRZN)
Billed as a “leading venture lending platform that thoughtfully and creatively provides structured debt products to life science and technology companies,” Horizon Technology Finance is essentially the financier for some of today’s top biopharmaceutical innovations. Providing debt capital to smaller enterprises with promising potential, Horizon Technology has always been relevant. But the pandemic has made it more so.
Suddenly, everyone realized that threats don’t always have to take the form of overt tangible ones like terrorism. Instead, an invisible virus temporarily brought the world economy to its knees, showcasing just vulnerable we are. At the same time, the public health crisis has been a boon for smaller biotech firms specializing in vaccine research and development.
As an article posted on Statnews.com reminded us, luck is not a viable strategy. Therefore, the world community needs to collaborate to stop the next big threat. As the coronavirus proved, a virus can start in one place and wreak havoc everywhere else.
But picking individual biotech winners is a hazardous proposition, especially for retirement stocks. Therefore, HRZN stock makes sense as an indirect play. Plus, a bonus: Horizon Technology pays a monthly dividend.
Public Storage (PSA)
Easily among the most startling developments during this pandemic and its resultant economic aftershocks is the nutty real estate market. Initially, almost everyone feared that Covid-19 would spark a global recession, if not an outright depression. Such a deflationary environment would not facilitate robust housing prices.
Instead, the opposite happened. Responding to the threat, central bankers artificially suppressed interest rates, which dramatically lowered borrowing costs. Moreover, concerns about open houses processes led to a sharp decline in inventory, which boosted prices.
Eventually, though, many baby boomers will want to downsize, incentivized additionally by a seller’s market. But what about all the stuff they own? Well, companies like Public Storage offer a cheap solution, which is partially the reason why PSA stock has been bonkers.
But it’s not just baby boomers that makes Public Storage a viable name among retirement stocks. As the WSJ reported, “The storage facilities around the country have brought the biggest returns to investors in public real-estate stocks this year. Many people moved, and for those who stayed put, a desire to have more space in their homes because of remote learning and working also spurred demand for self-storage.”
In the messiness of the housing sector, storage remains a shiny light — and it may be for quite a while.
Retirement Stocks to Buy: H&R Block (HRB)
Admittedly one of the riskiest ideas for retirement stocks, I’ve nevertheless plugged H&R Block whenever I felt it was appropriate to do so. Primarily, I’ve been bullish on HRB because of the gig economy. According to data from Statista.com, analysts project that in 2023, the “projected gross volume of the gig economy is expected to reach 455.2 billion U.S. dollars.”
Now, it’s confession time: my pounding on the table for HRB stock has been inside an echo chamber. Still, the dynamics of the Covid-19 crisis embolden me once again. With so many corporate employees getting a taste of the gig life, many will want in. Arguably most companies won’t allow telecommuting to go on indefinitely, which then supports H&R Block’s business.
How so? Independent contractors (the fancy term for gig workers) have more complex tax profiles than a W2 employee. And this segues into my second point: this complexity will only increase because of cryptocurrency holdings.
As CollegeFinance.com reported, over one in three college students and recent grads started investing in 2020, while 11% started this year. Interestingly, 62% of college students see their cryptocurrency investments as long-term holdings, while only 14% do so for quick profits.
You know what’s more complicated than a gig worker’s taxes? Yup, cryptos. It’s a longshot but HRB could be a surprisingly viable idea for retirement stocks.
Innovative Industrial Properties (IIPR)
Perhaps the most controversial of names on this list of retirement stocks (what I’m going to talk about next might usurp it), Innovative Industrial Properties isn’t exactly dinner room conversation for everyone. Don’t get me wrong, Innovative is performing a necessary service, providing real estate capital for the alternative health sector.
By alternative, I mean cannabis — and here’s where the controversy kicks in. To be 100% clear, the company only deals with medical-use cannabis. Besides, the Pew Research Center revealed that “Americans overwhelmingly say marijuana should be legal for recreational or medical use.” Still, the sector carries with it a reputation. Even if the societal overhang didn’t exist, marijuana stocks aren’t exactly known for their stability.
That is, unless you look at IIPR stock. While so many other green plays faltered, Innovative Industrial has a long history of delivering the goods for stakeholders. Since December 2016, IIPR is up 1,076%, a darn good investment for early stakeholders.
Better yet, it’s one of the very few cannabis-related companies that pays a dividend. Granted, you’re not going to get rich off the yield. But a combo of capital gains potential and passive income makes IIPR one of the most interesting retirement stocks.
Retirement Stocks to Buy: Exxon Mobil (XOM)
If you didn’t think some weed in your retirement stocks was a bad idea, you might object to big oil firms like Exxon Mobil in your portfolio. True, fossil fuels remain the most relevant catalyst in our personal transportation network today. Certainly, electric vehicles have gained serious ground. However, when you look at the numbers in total, EVs only make up a small fraction of worldwide automobile sales.
Before we get carried away with the EV narrative, we’ve got to realize the facts. As Pew stated, as of 2020, “nearly 1.8 million EVs were registered in the U.S., more than three times as many as in 2016.” But 1.8 million is a small figure when you consider that in California alone, people and enterprises had registered over 15 million vehicles in 2018.
Further, the world average for share of new vehicle registrations for EVs is 4.6%. It’s not for a lack of wanting. Rather, they’re expensive and the infrastructure just isn’t there for many countries.
Whether we like it or not, big oil is here to stay for an extended term — even with President Joe Biden touting “his plan to make half of all U.S. passenger vehicles sold by 2030 to be electric.” It’s just not realistic, which is why XOM is worth consideration, even for the long haul.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.