The stock market always presents opportunities for investors to make money. Even in bearish markets, some stocks manage to reward investors. However, it is in moments of fear that investors can build sizable positions that benefit from the next bull rally.
Investors with longer time horizons and eyes set out for retirement in a few years have more time to ride the volatility. They can buy reliable companies knowing they have a vast market share and offer steady dividend payments.
While not every retirement stock pays a dividend, it is a common trend and one you will find in the stocks listed in this article. Investors looking to strengthen their retirement portfolios may want to consider these three attractive retirement stocks to buy.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a tech conglomerate with large market shares in highly profitable industries. Cloud computing, video games, PCs, remote work tools and social media are some of the company’s verticals.
Microsoft shares give investors a blue-chip company spread across various fields, including high-growth industries like artificial intelligence (AI). Microsoft has invested over $10 billion into OpenAi and may even be working on its own in-house AI chips. That’s just a rumor for now.
Microsoft offers a dividend yield approaching 1% and has the financial resources to support and grow the offering. Shares have gained 33% year-to-date and have rewarded investors with a 184% gain over the past five years.
Microsoft is still achieving respectable revenue and earnings growth, which makes the 32 P/E ratio seem reasonable. It’s a staple stock in many funds and is worth a good look for investors building retirement portfolios.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) is a reliable oil giant that traces its roots back to Standard Oil, John D. Rockefeller’s conglomerate that was split up in 1911. Exxon Mobil has been known as a haven for years due to its high yield and the continuous demand for oil.
The share price has rallied in recent years and is up by 30% over the past five years. Exxon Mobil gives investors high profits and a low valuation. The stock has a P/E ratio below 10. Investors shouldn’t expect the P/E ratio to soar higher, but it is less risky than high-flying growth stocks with high revenue growth and no profits.
Exxon Mobil already has a great business model, but the stock price can receive a boost due to higher oil prices. The cost per barrel is making its way to $100. Higher oil prices help Exxon Mobil secure higher revenue and profits. Rising inflation can also lead to higher oil prices, strengthening Exxon Mobil’s financials.
iShares Gold Trust (IAU)
Inflation can throw a wrench into many company’s financials. Corporations with larger moats and market shares along with reasonable valuations can weather inflation better than average. However, some stocks are positioned to benefit from inflation.
Some investors flocked over to various cryptocurrencies in an effort to protect themselves from inflation. The argument for cryptocurrencies, especially Bitcoin (BTC-USD), is that the supply is limited. Since there can only be 21 million Bitcoins in the world, the asset is a useful inflation hedge.
That theory has been debunked a few times, especially in 2022 when Bitcoin traded like a tech stock. Tech-focused indexes and Bitcoin both performed poorly in 2022 and rallied strongly to start 2023.
While investors may chase trendy assets like Bitcoin, tried-and-true investments are more reliable. Few assets have withstood the test of time as well as gold, an asset that has been a unit of exchange for thousands of years.
Investors can get direct exposure to gold bullion price changes through the iShares Gold Trust (NYSEARCA:IAU). While most gold ETFs buy a collection of gold mine stocks, this asset mirrors the price movement of the actual commodity.
IAU barely budged in 2022 and is up by 50% over the past five years. Gold is less vulnerable to stock market crashes and can thrive in those environments. Rising inflation can send this ETF soaring in 2024.
On the date of publication, Marc Guberti did not hold (either 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.
