While turning 40 puts you just 25 years away from retirement, you still have plenty of time to beef up your nest egg by putting your savings to work each month. For at least another decade, most of a 40-something investor’s retirement portfolio should still be exposed to the stock market. There’s still some room to take risks, but especially in today’s market, it’s wise to choose financially sound stocks to invest in.
According to Xavier Gabaix, a Professor at Harvard University, 40-something investors can pretty much bet on a market crash at some point before they retire. Gabaix’s research shows that there’s a 67% chance that the Dow Jones Industrial Average will experience a one-day drop of 15% at some point over the next 30 years. Over the same time period, according to Gabaix, investors will experience “18 daily drops of at least 5%.”
No one beats the market all the time, and everyone will have to struggle through a market downturn at some time. With U.S. markets near all-time highs and many cautioning that a recession is on the way, it can be daunting to choose the best stocks to buy.
However, that shouldn’t keep you out of the market. Instead, the top stocks for people in their 40’s are those with the fortitude to not only survive a downturn, but thrive while the competition falters. Here’s a look at 10 stocks to invest in today if you’re in your 40’s.
Microsoft (NASDAQ:MSFT) stock has had an impressive year so far as investors have continued to gain confidence in the tech firm’s long-term prospects.
Not only did we see Microsoft beat out Amazon (NASDAQ:AMZN) for a $10 billion cloud contract with the U.S. Department of Defense, but the firm has been able to secure several other big-name customers for its cloud business. In fact, Wedbush analysts Daniel Ives and Strecker Backe say MSFT is likely to be a winner in the next phase of cloud spending.
By no means is MSFT stock a cheap stock to invest in, but it’s worth the premium. The firm’s healthy balance sheet and market position make it a great long-term pick.
AT&T (NYSE:T) is at the top of my list of stocks to invest in at any age, but investors in their 40’s are likely to get the most benefit out of the telecom giant’s turnaround plans. So far this year, T stock is up 24%, but the share price is still 12% off of its all-time highs.
AT&T is in the midst of a large-scale turnaround that should see margins improve as the firm builds out service plans that customers are willing to pay a premium for. Part of that will be AT&T’s 5G network, but the firm’s WarnerMedia streaming service is also likely to play a role in acquiring and holding on to customers.
Plus, T stock offers investors a 5.2% dividend yield that will make waiting out the bumps much easier.
Love it or hate it, Walmart (NYSE:WMT) isn’t going anywhere. The firm’s impressive staying power — due in large part to management’s ability to pivot the firm’s strategy when necessary — is what makes WMT one of the best stocks to invest in.
While its dividend yield of 1.75% is nothing to write home about, the firm is poised to continue closing the gap with Amazon in the years ahead. WMT has been able to build out an online presence that rivals Amazon’s over the past few years, and its online grocery offerings have been enough to steal marketshare as the two vie for customers.
Another company with impressive staying power and a bright future is Disney (NYSE:DIS). The firm’s newly released streaming service has generated a lot of buzz and will likely provide a bump to the stock in future quarters. Disney+ offers the firm a brand new growth runway — one with a lot of potential when you look at the company’s enormous portfolio of quality content.
Disney owns a wide variety of much-loved franchises that should draw in loyal fans. However those franchises also present an opportunity for DIS to develop new content based on fan-favorites. The unique offerings coupled with the firm’s low price-point of just $6.99 per month means Disney+ is likely to grow rapidly over the next year.
Another tried and true stock to invest in is Apple (NASDAQ:AAPL). Many worried that the iPhone was AAPL stock’s last innovative new product, so the stock was a dud. But the firm has proven that it still holds a lot of potential. Apple’s dominance in the smartwatch space proves that the firm still has the ability to deliver products that people love, and are willing to pay a premium for.
What’s more is AAPL stock looks poised to make a major shift toward a subscription model. On top of its music streaming and storage subscriptions, AAPL has rolled out a video service that is becoming a fast favorite. Wedbush analyst Daniel Ives says he sees the firm picking up 100 million streaming customers over the next three-to-four years as customers increasingly cut out traditional cable and pick up a variety of streaming services instead.
Some have speculated that AAPL will move its hardware products onto a subscription service as well, which could be a boon for AAPL stock in the future.
Costco’s loyal members make it a unique stock in the retail industry, especially since the majority of the firm’s revenue comes from membership dues rather than product sales. The trust that COST has established with its shoppers keeps them coming back, and that has resulted in incredible renewal rates of over 90%.
The firm recently opened its first Chinese location, where customers lined up around the block and waited hours just to park. That underscores the firm’s growth potential in China, a previously untapped market for COST.
Like most of its retail peers, Costco would likely feel the burn of a recession, but customers’ belief that they’re getting the best deal possible each time they shop is likely to ease that pain somewhat.
Beverage maker Coca-Cola (NYSE:KO) has long been a favorite of Warren Buffett, and for good reason. Although the stock has had some peaks and valleys over the past five years, it has consistently delivered gains to long-term shareholders. Plus, KO stock boasts a respectable 3% dividend and a strong balance sheet, two qualities that make it a solid long-term bet.
KO management is also committed to making the firm into a “total beverage company,” which has led to the introduction of an energy drink as well as the acquisition of Costa Coffee. All in all, CEO James Quincey’s focus on improving the firm’s portfolio of drinks has been a boon for KO stock and has significantly widened the firm’s growth runway.
Tanger Factory Outlet Centers (SKT)
Tanger Factory Outlet Centers (NYSE:SKT) stock is a real estate investment trust that has been beaten down by worries about brick-and-mortar retail and the potential for a recession to stunt consumer spending.
Tanger, like most of its retail peers, has felt the burn of dropping traffic at shopping malls and that has put a strain on the firm’s cashflow. However, the firm has been able to support a consistently rising dividend even throughout a period of instability, which underscores its long-term stability.
Tanger’s outlet malls see occupancy rates above 90% as stores try to move their unused inventory at lower prices. Plus, SKT’s position owning lower-priced outlet stores means customers will be more willing to shop there to find bargains in the event of a recession. Of course, SKT could see some turbulence in the event of a downturn, but if you have a timeline of 20-plus years, it looks like a long-term winner. This is especially true when you factor in the firm’s 8.7% dividend.
Exxon Mobil (XOM)
Now is a great time to add oil stocks to your long-term portfolio because uncertainty in the industry has kept share prices low. Exxon Mobil (NYSE:XOM) has long been a leader in the oil industry and the firm’s juicy 5.1% dividend yield makes it an attractive choice for long-term investors.
One of the biggest reasons XOM stands out in the energy sector is the company’s management. The firm is conservatively run and in times of trouble when oil prices are low, management is laser focused on trimming the fat and investing in the future. That means the firm will come out the other side stronger and more profitable than ever.
While crude prices are likely to continue weighing on XOM in the near-term, it is a good pick for a long timeline. The firm’s dividend will pad the lean quarters while investors wait for management’s investments to pay off in the future.
Southern Company (SO)
Another safe bet for the long-term is Southern Company (NYSE:SO) stock. As one of the largest utility companies in the U.S., SO has a large, stable customer base that makes its revenues relatively predictable. While the firm’s fee-based service makes for predictable revenue streams, it’s worth noting that the firm’s business is relatively diversified as well.
The firm provides electric, natural gas and renewable power to customers across the country. SO is also investing in nuclear power, which sets it apart from many of its peers.
Another big draw for SO stock is the firm’s 4% dividend yield, which has been safe to count on because of the fee-based business.
As of this writing, Laura Hoy was long XOM, AAPL and T.