Editor’s note: “9 Stocks to Buy to Profit off the Baby Boomer Generation” was previously published in April 2020. It has since been updated to include the most relevant information available.
Mainstream publications of various genres tend to focus on millennials and for good reason. As the largest generation in the U.S. workforce today, this demographic is not only relevant but will remain so for many years to come. However, when figuring out which stocks to buy, you may want to shift your sights on an older demographic.
Though they’re hitting retirement age en masse, baby boomers still leverage substantial societal and economic influence. Representing the surge in population rates following World War II, baby boomers were once the biggest generation in the country. But at over 29% of the population, this demographic is still a force to be reckoned with, especially in terms of searching for stocks to buy.
According to research from Deloitte, baby boomers are currently the wealthiest generation in the U.S. They will hold onto this lofty status for at least the next ten years. Currently, these Americans own 50% share of total net household wealth. It will only decline to below 45% by 2030, demonstrating this group’s tremendous affluence.
Because of the unique needs of boomers combined with their wealth, this makes for great opportunities in stocks to buy. First, with riches comes the need to protect those assets. Therefore, insurance companies and financial firms should benefit from demographics-based demand.
Second, money and time considerations promote leisurely activities. Unfortunately for boomers, money can’t buy time. It can, however, buy experiences they can cherish while they’re on this Earth.
Of course, the coronavirus has put a serious dent in some of these names, but that just makes these 9 stocks to buy less expensive, not less a good bet for the future;
Stocks to Buy: American International Group (AIG)
No many people like to think about death, therefore, I imagine life insurance is a tricky subject for most. But for baby boomers, this is an unavoidable subject. Therefore, you may want to consider American International Group (NYSE:AIG) among your potential stocks to buy.
First, let me get something out of the way: AIG stock suffered tremendously during the fallout from the 2008 financial crisis. The company received a massive government bailout because federal authorities ultimately viewed AIG as “too big to fail.” So, if you’re not into controversial names, you may want to skip out on this one.
At the same time, the company’s efforts to get back into the good graces of the American people has created opportunities; namely, cheap life insurance rates for older clients. With boomers hitting retirement age at a rapid clip, it might be a good time to check out AIG stock.
One of the greatest things about being a senior citizen today is the advances in medical care.
However, Americans and especially the elderly remain afflicted with long-term degenerative diseases. Here, biotechnology firm Alector (NASDAQ:ALEC) may offer hope to millions.
Alector specializes in next-generation therapies against neurodegenerative disorders, such as Alzheimer’s disease. Specifically, the biotech utilizes immune-neurology, or the practice of leveraging the body’s immune system to attack these crippling diseases.
Better yet, the company has made significant progress over the years, resulting in a massive skyrocketing of ALEC stock.
Earlier this year ALEC stock shot up more than could justify a heavy position. But now that shares have come down, you may want to include Alector in your list of stocks to buy.
Ameriprise Financial (AMP)
As I mentioned near the top, baby boomers are the wealthiest generation in America. Because of this fact alone, financial services firms like Ameriprise Financial (NYSE:AMP) stand to benefit significantly.
Even if you didn’t include this demographic, we’re living in a low-interest-rate environment. Naturally, this benefits AMP stock due to broader equity market sentiment.
But with youth comes exuberance and perhaps some hubris thrown in. Put another way, younger investors think they know it all. And if they mess up, they have time on their side.
On the other hand, baby boomers have to be extremely smart with their money. In this situation, they may see the value in letting educated professionals handle their financial needs. Thus, I see substantial upside for AMP stock over the next ten years.
Zillow Group (Z, ZG)
According to conventional wisdom, home ownership represents the pinnacle of the “American Dream.”
It’s also a pain in the butt. From plumbing issues to appliance replacements, homeownership is costly and stressful. Such factors make it not worthwhile for seniors to own a huge house. Thus, the ironic opportunity in Zillow Group (NASDAQ:Z, NASDAQ:ZG) and Z stock.
With the kids out of the house and doing their own thing, very little incentive exists for boomers to hold their McMansions.
Instead, downsizing to a smaller house – one with fewer physical liabilities – is a more viable option. Therefore, this mass-scale activity in the real estate market should benefit Z stock.
One other point that should make you consider Zillow for your stocks to buy list: many boomers will probably relocate to cheaper regions of the U.S., giving Zillow opportunities on both sides of the fence.
United Airlines (UAL)
Being a boomer isn’t all about boring stuff like protecting assets and seeking insurance policies. In one’s golden years, this is a time to enjoy the rewards of a life of hard work. In the long run, this will boost the profile of United Airlines (NASDAQ:UAL) and UAL stock.
I say “long run” because currently, the sentiment for UAL stock looks tremendously negative. With the pandemic continuing to rage, travel-related stocks to buy have encountered volatility. Given the context, it’s not surprising that United Airlines took a massive hit.
Still, I think this is a discounted opportunity. Eventually, the coronavirus crisis will fade. When it does, an army of retirees will want to explore the world, boding well for UAL stock.
Royal Caribbean Cruises (RCL)
Although traveling to new countries is always exciting, the flight over to far-flung places typically isn’t.
However, cruise liners offer both the exploration aspect as well as unparalleled luxuries getting there. And with more boomers wanting to check off items on their bucket list, this should bolster the case for Royal Caribbean Cruises (NYSE:RCL) and specifically, RCL stock.
Still, the coronavirus has hurt many would-be stocks to buy, and Royal Caribbean is no exception. Cruise lines look as if they’re in for a very long recovery, given the difficulties and bad publicity from both the number of infected that were trapped on ships in the beginning and the industry-wide play for U.S. stimulus money.
But as with United Airlines, this headwind should eventually fade. Besides, boomers have a good ten years at least to enjoy their wealth. Therefore, keep RCL on your longer-term wish list of stocks to buy.
Las Vegas Sands (LVS)
In doing my research for stocks to buy that can benefit from the baby boomer demographic, I decided to look for where retirees prefer to vacation.
According to Money.com, Las Vegas ranks highly in fourth place on their list. Part of the reason is that at an average cost of $1,620 for a five-day trip for two, Sin City is very affordable. And this brings me to Las Vegas Sands (NYSE:LVS).
Now, I’m not going to pretend to know what old people like. But from my anecdotal experience, they seem to prefer the classy joints under the Las Vegas Sands umbrella, such as The Venetian. With a multitude of entertainment options, Las Vegas Sands offers seniors bang for their buck, boosting LVS stock.
And because the cost of living is comparatively reasonable in Vegas, LVS stock may also benefit from the snowbird effect.
At some point, all baby boomers will get to an age where they just can’t party away their retirement funds. When that time arrives, Welltower (NYSE:WELL) exists to serve their needs.
A senior-care specialist, Welltower provides three vital services: senior housing, post-acute care and outpatient medical solutions. Based on the projected number of retirees needing such specialized care, WELL stock sits atop a demographic gold mine.
Furthermore, a new trend has emerged this century: millennials taking care of their aging parents. Of course, senior-care facilities are not cheap. In many cases, young workers are replacing the role of care specialists.
However, I imagine as millennial wealth grows, so does the incentive to foot the bill for their parents’ retirement solutions.
It’s cynical but I believe this dynamic will also boost WELL stock.
Service Corporation (SCI)
Finally, we have come to the end. I mean that literally. Although it’s not dinner table talk, everyone dies. Because of this inevitability, we need specialists to intern the remains somewhere. This is where Service Corporation (NYSE:SCI) provides an uncomfortable but vital facilitation.
Considering the circle of life, though, SCI stock is one of the most relevant boomer-related stocks to buy ever. In the immediate post-World War II period, publicly traded companies specializing in childcare products were likely all the rage. Today, it’s the deathcare industry.
According to the U.S. Census Bureau, the record population surge will create booming demand for final arrangements. Therefore, assuming that Service Corporation doesn’t do anything stupid, SCI stock is a near-guaranteed long-term bullish play.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.