There is never a bad time to check out the best retirement stocks to buy. It is because you can always start thinking about your retirement regardless of age or career stage.
Furthermore, exploring stocks for retirement investment can provide an excellent opportunity to analyze some of the most successful companies.
Investing for the long term can seem intimidating in today’s fast-paced world. Recent events, such as the pandemic, supply chain, inflation crisis, war in Ukraine, and bank collapses, have left investors uncertain about what to do next. Consequently, everyone is looking for safer investments to ensure stable returns. As a result, buying forever stocks has never looked this good as investors look to avoid a market crash.
Concentrating on businesses with established histories of consistent profits and cash flows can be a viable solution. Enterprises that have weathered prior economic downturns are more likely to thrive in the face of future market fluctuations.
Moreover, diversifying across various sectors and industries can aid in securing a stable and growing dividend income for investors in the future.
Consequently, retirement stocks are very attractive if you are looking for potential investments to buy. Here are three options you need to consider if you are looking to plan for your retirement and secure your future.
Retirement Stocks to Buy: Cisco Systems (CSCO)
Although hardware companies face low margins compared to software, Cisco Systems (NASDAQ:CSCO) has transformed into a leading software provider. The company offers security, network monitoring, and collaboration software add-ons to its networking equipment. Consequently, Cisco is set up for long-term success, so it is folly to ignore this one when researching retirement stocks to buy.
During the second quarter of fiscal 2023, which ended on Jan. 28, the company’s revenue increased by 7% to $13.6 billion compared to the previous year.
Furthermore, Cisco’s adjusted earnings went up by 5% to $0.88 per share, surpassing the consensus forecast by two cents.
Cisco’s strong results compared to its competitors during the recent technology demand slump highlights the effectiveness of its business model as it offers fundamental products essential for modern internet operations whose demand remains stable.
Cisco’s growth in H1 of fiscal 2023 was driven by its secure and agile networks unit, comprising networking hardware like switches and routers. Supply chain disruptions hit this segment in 2022. Those issues have eased, allowing Cisco to meet the rising demand for its hardware as companies upgrade their infrastructure.
CEO Chuck Robbins highlighted that despite macro headwinds, demand remained consistent, and win rates were stable during the conference call. Additionally, the growth of Cisco’s Internet of the Future unit stabilized after acquiring Acacia Communications last year. The end-to-end security unit continued to perform well, powered by its unified threat management and zero-trust services.
At a last look, Cisco Systems’ price-to-earnings ratio is 18.98x, higher than its median of 16.64x over the past 10 years. Although the company’s highest P/E ratio in the last decade was 695, its current valuation is much more reasonable. Overall, Cisco’s P/E ratio indicates that the company’s stock may be slightly overvalued but within a reasonable range.
JPMorgan Chase & Co. (JPM)
Opting for significant financial institutions with astute management teams is beneficial when times are tough. JPMorgan Chase (NYSE:JPM) excels in both aspects, earning high scores. The corporation adeptly managed the 2008 financial crisis and survived the COVID-19 shock without significant harm. That is why it is one of the top retirement stocks to buy.
The banking crisis drives deposits from smaller regional banks to JPMorgan Chase, increasing business and profitability. Furthermore, the bank remains highly profitable and is likely to raise dividends in the future.
Following the 2008 financial crisis, investors became wary of relying on the financial sector for dividend earnings. However, banks and insurance companies still offer a significant source of income in the S&P 500, making them worth considering for investment.
Furthermore, experience is worth its weight in gold in the banking sector. SVB Financial (OTCMKTS:SIVBQ) and Silvergate (NYSE:SI) failed to position their balance sheets appropriately for the rising interest rates and suffered significant unrealized bond losses leading to their collapse.
Jamie Dimon, CEO of JPMorgan Chase, successfully steered the bank through the Great Recession, highlighting the strength of the institution’s balance sheet. During the pandemic, JPMorgan regained its resiliency, further bolstering Dimon’s reputation as one of Wall Street’s most respected CEOs.
While other banks invested excess deposits in government bonds to enhance yield and earnings during a sluggish lending activity, Dimon kept JPMorgan’s cash holdings higher, avoiding significant bond investments.
JPMorgan Chase’s current P/E ratio stands at 10.63x, which is below its ten-year median of 11.61x. The company’s P/E ratio has ranged from a low of 7.39x to a high of 18.62x over the past decade, indicating fluctuations in its valuation. It is worth noting that JPMorgan Chase’s current P/E ratio is below its median, potentially indicating that the company is undervalued.
Verizon Communications (VZ)
Telecom is a stable industry, impervious to economic downturns, making it a preferred choice for conservative investors. Irrespective of financial conditions, individuals require their phones, sustaining demand.
Telecom stocks, including Verizon, have declined recently due to the significant investment cycle in 5G. Nonetheless, these investments should commence generating profits in the upcoming years, leading to a surge in long-term profitability.
Verizon’s high fixed costs for network expansion result in high margins on revenue, similar to software firms. Despite a 0.7% drop in service revenue to $109.6 billion in 2022, the gross margin was still impressive at 74%, while the wireless equipment segment had a negative 12.1% gross margin. Fortunately, wireless service revenue is expected to rise by 2.5% to 4.5% in 2023.
Verizon must find innovative ways to use its network, including promoting its fixed wireless broadband service with over 1.4 million subscribers. In the last three months of 2022 alone, Verizon added 379,000 customers to this segment. Bundling smartphones, broadband, and streaming services can create new revenue streams and high margins.
Furthermore, Verizon can boost cash flow by growing service revenue with fixed wireless and reducing capital expenditures. However, it operates in a competitive space, and others may also seize these opportunities. Despite the risks, Verizon’s low P/E ratio of 7.8 times and a high dividend yield of 6.58% make it an attractive investment option.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.