I imagine that for most financial advisors, the job of recommending stocks for retirement is a relatively easy one. Indeed, the formula really hasn’t changed that much over the last several decades: pick blue-chip companies that have a proven track record and a history of dividend payouts and call it a day. Obviously, the idea here is to not rock the boat too much.
However, much evidence indicates that this concept may need a rethink. I’m not talking about wholesale changes. After all, sitting on top of a bunch of penny stocks isn’t exactly a recipe for long-term success and stability. Rather, the type of investments that retirees choose for their portfolio may require some tweaking because the economy is shifting.
During the post-World War II era, the biggest emphasis was on manufacturing prowess. Thus, the stocks for retirement focused heavily on America’s ability to produce stuff. Later, with the advent of telecommunications technologies and the internet, the economy gradually transitioned toward services, while manufacturing became increasingly outsourced. Despite recent efforts to bring back production of physical goods, the broader shift toward technology remains largely intact.
And that’s evident with the current economic and societal paradigm. Now, the focus is on taking various (and sometimes disparate) technological innovations and bringing them together to facilitate a new era of productivity. This connectivity of digitalization has already sparked fresh concepts, such as the gig economy. Therefore, stocks for retirement should be levered to these next-generation ideas.
As well, we must consider geopolitical realities. Frankly, as developing nations become increasingly advanced, many are unwilling to play along with American or western hegemony. Therefore, the present-day stocks for retirement should incorporate some exposure to international markets, as the below list demonstrates:
- NextEra Energy (NYSE:NEE)
- ManTech International (NASDAQ:MANT)
- York Water (NASDAQ:YORW)
- Robert Half International (NYSE:RHI)
- Toyota (NYSE:TM)
- Innovative Industrial Properties (NYSE:IIPR)
- China Mobile (NYSE:CHL)
- Service Corporation (NYSE:SCI)
- H&R Block (NYSE:HRB)
Finally, investors should appreciate that with changing demographics comes a weighting on topics that previously didn’t register highly. While retirees may not care about such issues personally, the fact is, so many of the emerging generations do. Therefore, these stocks for retirement may be unconventional, but they’ll keep your portfolio stay relevant for decades to come.
Best Stocks for Retirement: NextEra Energy (NEE)
When you’re dealing with stocks for retirement, energy infrastructure firms represent a no-brainer. It’s virtually guaranteed that outside of a thermonuclear apocalypse, the world will become even more digitalized than it is right now. And that means when people flip the switch, they expect the lights to turn on. If it doesn’t, they can go a little crazy. But how we get that power is what drives the case for NextEra Energy.
The electoral victory of Joe Biden wasn’t just a repudiation of the previous administration. Instead, it symbolized that people were ready for leadership that was willing to address the challenges of tomorrow. Now, there’s raging debate about the legitimacy of climate change and I don’t want to dive into this subject. But it’s safe to say that quite a many people believe in sustainability, which bolsters NEE stock.
To be clear, I don’t believe that renewable energy sources will completely overturn fossil fuels anytime soon. Simply, the latter has energy density that’s difficult to supplant, while the former is intermittent.
Nevertheless, rising population and its consumption demand requires multiple energy sources, which augurs well for NEE stock.
ManTech International (MANT)
Perhaps the most conspicuous impact of the novel coronavirus pandemic is the huge reduction in automotive traffic. Obviously, this dynamic stood out near the beginning of the crisis, when millions of Americans were ordered to work from home. But even recently, the congestion relative to the year-ago level has been impossible to ignore. That’s great for worker bees but poses problems for cybersecurity.
Fortunately, we have companies like ManTech International that’s leading the war against cyberterrorism. Focused on the defense sector and the federal civilian market, MANT stock may not get as much airtime as popular cybersecurity firms but maybe that’s by design. As we dive deeper into the 21st century, MANT will increasingly become one of the best stocks for retirement.
Gone are the days when our biggest nightmare was Soviet troops parachuting down onto Washington D.C. That concept might sell video games, but the pervading reality is that our vulnerabilities are largely digital. Because cyberattacks are relatively easy to execute, rogue and/or belligerent nations can lever an asymmetrical impact on the developed world.
It’s a stomach-churning paradigm, but it’s also what keeps MANT stock pertinent.
York Water (YORW)
As I alluded to earlier, public utility firms offer stability in terms of stocks for retirement. No matter how advanced we become as a society, we’ll never eliminate the need for food, water, power and infrastructures that wisk our waste products away. Certainly, York Water fits the bill. Nevertheless, not too many people may have heard about this company.
We all know that stocks for retirement tend to be old. But what if a company is so old that not even old people are aware of its existence? If any company would fit that description, it’s York Water. Founded in 1816, the organization came to life under the administration of President James Madison. According to Senate.gov, it was Madison’s Virginia Plan that outlined the core elements of the U.S. Constitution.
You want stability and a proven track record? Look no further than YORW stock!
Better yet, for such a geriatric firm, York Water has been rather spritely. YORW stock is just below cracking double-digit returns for the year. As well, the company has the longest record of consecutive dividend payouts and guess what? From Dividend.com, the company is increasing them.
Robert Half International (RHI)
When you’re done working, the last thing you probably want to think about is work. While this is an understandable sentiment, for building a portfolio of stocks for retirement, staffing service agency Robert Half International deserves consideration. True, the nature of corporate America may have changed on at least a semi-permanent basis due to the pandemic. However, at some point, a good chunk of the labor force must return.
Although some corporations claim that productivity has increased, many others report a different experience. Logically, I’m not really sure if a majority of businesses can keep up remote operations. For instance, training new people is always a challenge. Doing it remotely takes this to another level. Therefore, the in-office environment may not go the way of the dinosaurs, offering upside potential for RHI stock.
Another factor to consider is that this is now an employer’s market — and they’re looking for the best. Prior to the pandemic, unemployment was at multi-year lows. This contributed to a concept known as ghosting; basically, the professional equivalent of standing someone up. That’s not happening right now and may not happen again for quite some time, helping the bullish case for RHI stock.
This is going to sound politically incorrect so prepare yourself. Many older Americans tend to have difficult feelings about Asia. For instance, the novel coronavirus pandemic shifted public opinion unfavorably toward China. But the demographic that disliked the country the most was unsurprisingly the 50-plus crowd.
Now, I can appreciate why older Americans generally have a distrusting view of Asia due to the many wars and conflicts in the region. Therefore, I’d imagine that a company like Toyota may not rank highly among stocks for retirement. Still, if you’re following global trends, TM stock is an investment you can’t ignore.
Of course, Toyota is most known for its fleet of budget-friendly and reliable cars. What’s great about this corporate philosophy is that Toyota is 99% all business. What I mean is, its cars are boring. But boring sells. That’s why the automaker didn’t invest too much in its latest Supra model, choosing instead to partner with a German rival.
Unlike boring sedans and SUVs, sports cars don’t sell well. Toyotas do, however, which is why you ought to consider TM stock. In terms of rewarding stakeholders, management isn’t going to let you down.
Innovative Industrial Properties (IIPR)
Among the most remarkable ideological shifts in the U.S. recently has been the debate over marijuana legalization. For decades, politicians pushed the narrative that cannabis was a gateway to harder narcotics. But early pioneers stressed that the maligned plant offered many therapeutic benefits beyond the recreational experiences.
Today, according to the Pew Research Center, two-thirds of Americans support marijuana legalization. But are we ready for cannabis to be incorporated as part of our stocks for retirement? On the surface, this notion sounds absolutely ludicrous. As you know, weed stocks have a reputation for extreme volatility. However, Innovative Industrial Properties has bucked this trend because IIPR stock is a play on green infrastructure. As the leading provider of real estate capital for the medicinal marijuana subsegment, Innovative Industrial takes some of the “bad boy” image out of the cannabis sector. Further, with the disruption to our medical supply chain now very evident, there’s an incentive to explore holistic (and domestic) therapeutic solutions.
Granted, older people are the most resistant to marijuana legalization. But the green wave won’t be denied, which makes IIPR stock a contrarian long-term investment.
China Mobile (CHL)
Because of the red ink recently splashed all over the charts, China Mobile is the riskiest name among this list of stocks for retirement. Frankly, I wouldn’t suggest jumping into CHL stock now because it’s akin to catching a falling knife.
Plus, let’s be real — China isn’t everyone’s cup of tea following the devastation of the coronavirus. Here’s another politically incorrect observation: we know this because among the restaurant categories that have been hit hard, Chinese restaurants have borne the brunt of the damage. It would be incredibly naïve to assume that anti-China sentiment hasn’t at least contributed to some of the business disruption.
Still, at some point, Covid-19 will fade into the rear-view mirror, either through the vaccines that we’re about to distribute or perhaps through dumb luck. When it does, you’ll want to consider CHL stock for the long run. Simply, the Asia-Pacific region is and will continue to be the relevant market. Therefore, not including viable Asian plays in your stocks for retirement would not be wise.
Further, with the Biden administration, we could be looking at the normalization of U.S.-China relations. That alone could help boost CHL.
Service Corporation (SCI)
There are two guarantees in life: death and taxes. Specializing in the former, Service Corporation is a euphemism if there ever was one. And that’s why SCI stock may not rank highly among retirees, if they even have it in their portfolio at all. You don’t need to be an expert psychologist to understand that few people like to talk about the ultimate inevitability. Still, this is about enjoying stability and profits now.
Without deliberately trying to sound callous, death is a big business. No matter how young and healthy we are now, no matter how many followers we have on social media, we all die. About the only thing that allows us to “live forever” is the impact we make on others.
But the most important point when it comes to investing is that demographic trends suggest a huge pathway for the final services industry. Again, it’s not a pleasant topic to discuss, but it’s a huge profitability base for SCI stock.
H&R Block (HRB)
The other guarantee in life is of course taxes. Everyone hates them but we all have to pay them. Apparently, according to many right-leaning media outlets, the Biden administration will make sure that we’ll pay more than ever. Therefore, the upcoming Georgia runoff races are super-critical. If the Democrats can win both races, President-elect Biden can really push his agenda.
Naturally, Republicans are in uproar but I’m not sure what they can do. Basically, you have a coward and an alleged inside trader to keep alive conservative power. Cynically, though, this makes the case for H&R Block. Taxpayers will want to maximize their refund, which augurs well for HRB stock.
However, I’m thinking longer term. Now that millions of worker bees have had a taste of the telecommuting life, more will want this as a permanent transition. It’s doubtful that all companies will agree to this arrangement, which means we should see an influx of independent contractors.
Here’s where it gets interesting — the taxes for independent contractors (i.e., gig workers) are much more complicated than W2 employees, all other things being equal. Therefore, I see significant rewards for those willing to bet on HRB stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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.