The money you save now can help you have a more prosperous retirement. While putting money in your bank account is better than discretionary spending, your savings account will lose value each year due to inflation. Inflation reduces the purchasing power of the dollar. Many consumers turn to investments in retirement like stocks and real estate to beat inflation and grow their funds.
Retirement stocks are less risky than growth stocks. You can certainly retire much sooner if a high-growth stock takes off at the right time, but these assets can also lose value rapidly if things go wrong. Retirement stocks offer more insulation and steady cash flow for people who hold onto their shares. Investors looking to build their retirement portfolios may want to consider these top retirement stocks.
Broadcom (NASDAQ:AVGO) hasn’t lived up to the artificial intelligence hype in the same way that Nvidia (NASDAQ:NVDA) has. The company’s revenue only went up by 5% year-over-year (YOY) in the third quarter of 2023. Net income only increased by 7.5%. Shares have still gained 54% year-to-date (YTD) and are up by 242% over the past five years. Broadcom’s three key strengths for long-term investors are its dominance in the semiconductor industry, a 18.5 forward price-to-earnings (P/E) ratio and a 2.15% dividend yield.
Broadcom has a superb record of growing its dividend, a move that can reward long-term shareholders by the time they retire. Broadcom raised its quarterly dividend per share from $4.10 to $4.60, marking a 12.2% YOY increase.
Broadcom’s upcoming acquisition of VMware (NYSE:VMW) will give it exposure to cloud computing and cybersecurity. This gives Broadcom an opportunity to tap into a new sector which should provide further benefits for investors.
Let’s call a spade a spade. Prudential (NYSE:PRU) is not the right stock for investors who want to generate meaningful long-term returns. Shares have declined by 3% over the past five years. Despite the poor stock price performance, many investors still recommend Prudential as a retirement pick. The company’s 7x forward P/E ratio and 5% dividend yield offer a better picture of why investors flock to this stock.
When investors treat Prudential stock like a high-yielding corporate bond, it’s easier to see why the stock is popular among retirees. Prudential’s quarterly dividend per share went from $1.20 to $1.25 in 2023, representing a 4.2% YOY increase. It’s not a high increase, but the 5% yield compensates for low dividend growth.
Some investors chase high yields and end up with stocks like Verizon (NYSE:VZ). Sure, Verizon has a 7% dividend yield. However, the company’s stock price has dropped by 38% over the past five years. Prudential’s flat price and high yield make it a retirement stock worth considering.
Visa (NYSE:V) has rewarded long-term investors with a 63% gain over the past five years. Shares are also up by 18% YTD. The financial services company makes money from credit cards, debit cards, loans and other financial products.
Visa enjoys some of the best profit margins in the industry that regularly fall between 45%-55%. Visa’s net profit margin exceeded 50% in the third fiscal quarter. The company also reported 12% YOY revenue growth and 22% YOY GAAP net income growth. Visa currently has a dividend yield that falls below 1%. It’s not the best choice for dividend income investors who need a high yield now. However, Visa’s dividend growth can make it a worthy high-yielder in the future. The company raised its quarterly dividend from 37.5 cents to 45 cents last year, marking a 20% YOY improvement.
Visa’s healthy profit margins and the durability of its brand can support high dividend hikes in the future. Investors can grab shares of the blue-chip stock that has been around for over 60 years.
On this date of publication, Marc Guberti held a long position in AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.