Consider this column a twist on all those “30 Under 30” lists that business news outlets are so fond of publishing. In short, this is “7 Over 30″ but in this case, we’re looking at stocks to buy for those born before 1992.
When looking for buy-and-hold stocks that can fund a comfortable retirement, you want to focus on a few characteristics. You want companies that dominate their industries.
Companies with strong profit margins. Ones which pay rising dividends and have capital allocation policies that reward their shareholders. And you want these companies to have an enduring competitive moat that will last for decades.
As we’ve seen over the past two years, there are a lot of hot ideas that are popular for a minute or two. Cryptocurrencies, SPACs, electric vehicles, FinTech, and the list goes on. However, these have all crashed and burned because they failed to have several of the key traits mentioned above.
To be sure, there is nothing wrong with speculating in riskier ideas. However, for building a solid retirement portfolio that can withstand any economic shock, you need to aim higher. These seven retirement stocks to buy after age 30 fit the bill.
|AMT||American Tower Corporation||$252.01|
|JNJ||Johnson & Johnson||$175.74|
Visa (NYSE:V) is the world’s largest credit card network. In some ways, it’s the perfect financial business. Visa takes no credit risk. All the downside around credit goes to the backing bank or credit union behind a card. Rather, Visa is simply there to collect a small fee on each and every transaction.
Visa earns a much higher transaction fee on cross-border purchases involving foreign currencies. As a result, Visa has seen muted profits since the onset of the pandemic. Throw in uncertainties around the economy now, and V stock is near its lowest point in several years.
That makes it a bargain now. Over the longer-term, the trend from cash to plastic will only gain strength, particularly in emerging markets. Visa has plenty of robust growth years ahead of it, and shares will pick back up as soon as global travel normalizes.
Diageo (NYSE:DEO) is the world’s second-largest spirits company. It is known around the globe for leading brands including Smirnoff, Captain Morgan, Baileys, Don Julio, Crown Royal and Aviation Gin among many others.
In some ways, alcoholic beverages are the perfect industry. It’s always 5 o’clock somewhere. Even during the pandemic, the alcohol industry saw sales rise slightly. With bars closed, consumption simply picked up at home to offset the loss of on-premise sales.
And spirits are attractive, in particular. They are far less susceptible to craft competition than beer. Unlike wine, there’s little weather concern; the inputs for spirits tend to be much less finicky than grapes. With huge profit margins, brands that last for generations, and a healthy generous dividend policy, Diageo is a perfect centerpiece of a retirement portfolio.
Ecolab (NYSE:ECL) is the world’s largest provider of hygiene and sanitation services. It provides these across a number of channels. Think about hotels, cruise ships, fast food restaurants and other such places that need spotless working conditions to keep food safe. Ecolab is the leading supplier there.
It also does pest control, water and chemical treatment for factories and data centers, and a variety of other such fields.
Ecolab is four times as large as its next biggest peer, Diversey Holdings (NASDAQ:DSEY). And, since this field remains fragmented around the world, Ecolab has a long growth trajectory ahead of it in buying up local and regional sanitation and hygiene companies.
ECL stock has had a rough go of it since the onset of Covid-19. Large customers such as hotels have downsized operations due to the virus. This makes Ecolab an interesting economic reopening play as the global travel industry picks back up.
Ecolab, like others on this list, has a long history of generating increasing free cash flow and using that to pay increasing dividend payments to shareholders. With ECL stock down 36% year-to-date, shares are a strong buy here.
American Tower (AMT)
American Tower Corporation (NYSE:AMT) is the leading private sector owner of telecommunications infrastructure sites around the world. American Tower, in fact, now owns more than 200,000 such facilities.
This is a great business model. American Tower can rent each location to multiple telecom carriers, thus engineering significant economies of scale. And the business has low recurring cost. Once the land is acquired and the tower is built, the amount of ongoing capital to run the business is minimal.
This is wonderful in inflationary conditions such as now. American Tower is protected from inflation with built-in rent adjustments in its contracts. And the value of its debt obligations diminishes as inflation weakens the value of the dollar.
REITs tends to fare alright during inflation, and American Tower is among the best positioned. Throw in a dividend — now yielding 2.32% — that historically has increased at a rapid rate, and this is a great growth and income pick today.
These are rough times for consumer products companies with significant exposure to China. And Nike (NYSE:NKE) isn’t completely immune.
As China has re-entered Covid-19 lockdowns, demand has dried up. More broadly, there are serious questions around the health of China’s economy and real estate market.
This has contributed, to a major degree, to the stunning slump in Nike shares. The worldwide footwear and apparel giant has seen shares plummet 35% year-to-date. And yes, Nike faces major obstacles in Asia. U.S. sales could also see declining profitability amid high inflation and persistent supply chain issues.
Stock watchers are bracing for less-than-stellar results next week when the shoemaker reports fourth-quarter earnings on June 27.
However, this is Nike we’re talking about. A company that has grown earnings at 13% per year and free cash flow at 16% a year compounded over the past decade. And it’s a company that can use those robust cash flows to support share buybacks and a rapidly increasing dividend. Thinking about investing in Nike now? As the motto goes, “Just do it.”
3M (NYSE:MMM) is a diversified industrials company with product lines covering safety and industrial, transportation and electronics, healthcare and consumer products. The company sells everything from Post-It Notes to safety helmets, airplane tray tables, dental adhesives and thousands of other such niche products. And, no doubt the company’s N95 masks saved countless lives over the past two years.
MMM stock has fallen from a peak of $250 a few years back to just $130 today. That has come amid supply chain and inflationary issues, some product liability concerns, and also general fears around an impending recession.
However, for investors concentrating on building their retirement assets, this is a great opportunity. Incredibly enough, shares are now going for just 13 times earnings for this industrial powerhouse, and that’s with earnings still expected to grow nicely over the next two years.
Meanwhile, shares are paying a mouth-watering 4.6% dividend yield. And, 3M has increased that dividend payment every single year dating back to 1959. Now that’s consistency right there.
Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) has long been a one-stop shop for healthcare. The company has dominant franchises across pharmaceutical drugs, medical devices, OTC treatments and consumer products. J&J takes a holding company approach to its product portfolio, with individual operations having a great deal of autonomy.
This has allowed J&J to ride the healthcare waves for more than a century now. When one business — such as medical devices during the pandemic — struggles, another tends to see results pick up.
In any case, Johnson & Johnson has managed to increase its dividend an admirable 59 years in a row. This makes the company a bedrock of any future retiree’s growth and income portfolio. And with shares selling for less than 17 times forward earnings, JNJ stock is currently on offer at an attractive price.
On the date of publication, Ian Bezek held long positions in V, DEO, ECL, AMT, NKE, MMM, and JNJ stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.