The hunt for the best retirement stocks is like the hunt for the best pizza — much of it is a matter of taste. Do you want income or capital appreciation? Large caps or small caps? Safe versus speculative? How about domestic stocks … or are international plays more your style? There’s no “correct” versus “wrong” answer when you consider that retirement could last anywhere from a few to 30 years.
Clearly, bonds and other fixed-income investments should be a consideration in your overall retirement portfolio, but today, I want to address the equity component, whatever percentage you ultimately choose.
Typically, any discussion around retirement stocks usually includes well-known names such as The Coca-Cola Co (NYSE:KO), Johnson & Johnson (NYSE:JNJ) and McDonald’s Corporation (NYSE:MCD). These are Fortune 500 companies with huge global operations paying healthy dividends yielding 3% or more.
While it’s more than OK to own these types of stocks in your retirement portfolio, sometimes it pays to follow the road less traveled. Contrarian investors like David Dreman made a career (and a fortune) out of doing the unexpected.
To qualify for this list of the best retirement stocks, these picks must yield at least 1.5%, have a market cap of at least $2 billion and recorded an operating profit in each of the past five years. That will help ensure quality. However, these stocks also all have average daily volumes of less than 500,000 — in other words, they’re not widely traded, and as a result, they’re typically not widely covered.
These retirement picks might not be popular in social media, but they’ll get the job done. And that’s the only thing that really matters.