Every investor should look for stocks for early retirement. Investing in the stock market is a great way to build wealth for the long term and lead to a large sum of capital in retirement. One of the most critical steps to take when investing in the stock market for retirement is what companies to pick and invest in for many years to come.
Start investing early and be consistent. That can be one of the most excellent tools for retiring early. It is much easier to grow a robust investment portfolio when you are 20 years old rather than 30 years old. The compound growth gained year-over-year in an investment portfolio shows that investing early is one of the most critical pieces to a possible early retirement.
Below, I have listed seven companies that would be great for long-term investors looking to maximize their capital and minimize their losses in retirement preparation. I choose companies from various sectors because diversification is vital to a robust investment portfolio. You only want to have some of your eggs in one basket. All the companies mentioned in this article have been trading publicly for the last 20 years with a proven track record and consistent growth.
Stocks For Early Retirement: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a software development provider with products such as Microsoft 365, a bundle of their Microsoft Office-themed software through a subscription-based model, LinkedIn, which is a social media platform primarily for business-to-business relationships, and Microsoft Azure is their cloud computing service provider. It also provides PC products and Xbox content.
Microsoft is one of the largest and most well-known tech companies listed on the stock market, with a market cap of nearly $2.5 trillion. Microsoft has seen substantial growth over the last five years, which has seen a growth in share price that has more than doubled in that time. Within the previous year, its share price has risen by 48% due to the recovery of many tech stocks along with Microsoft, which is coming out of a rough 2022 in which high-interest rates and inflation issues caused the stock to fall.
Their most recent earnings report for the three months ended June 30 stated a growth in total revenue of 8% compared to the previous year. Its EPS also grew by 20% to $2.69 per share within the same time period. Microsoft saw a decent increase in revenue of 17% year-over-year for its server and cloud services products segment. But, on the other hand, its device’s earnings dropped by 20% year-over-year.
It was reported on September 19 that Microsoft would be increasing its quarterly dividend by 10% to 0.75 per share. The ex-dividend date is November 15 and is payable December 14. Thus, it is one of the best stocks for early retirement.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) is an upstream oil and natural gas company that focuses on exploring and extracting resources and trade and transport. The company also provides other specialty products such as resins, lubricants, and waxes.
Exxon is the largest energy company trading publicly, with a market cap of $440 million and a solid annual dividend of 3.3%. The share price of Exxon over the past five years has seen growth of 30%. That’s why it is one of the best stocks for early retirement.
In their most recent earnings report, Exxon reported a drop in total revenue of 28% due to lower natural gas realizations and refining margins. Exxon also mentioned that it experienced the highest throughput for the second quarter of the last 15 years for the refinery segment and improved production within its properties in the Permian Basin and in Guyana.
Exxon recently made huge news when it reported on October 11 that it would acquire Pioneer Natural Resources (NYSE:PXD), an independent energy company with a large footprint in the Permian Basin in Texas. The merger agreement is an all-stock transaction of $59.5 billion or $253 per share.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is an integrated media company that provides products such as Google Maps, Gmail, Google Play, YouTube, and Google Chrome. It also operates a Google Cloud segment of its business, which provides cybersecurity capabilities and machine learning AI.
Alphabet has grown by 40% in the past year due to a similar situation as Microsoft, in which the stock experienced a downturn in 2022 following the increased interest rate environment and has seen a substantial recovery since.
Its second-quarter earnings release stated an increase in revenue of approximately 7%, and net income grew by 15% compared to the year before. In the earnings report, the Alphabet CEO reiterated a sentiment from other tech and communication companies of increased focus and innovation in generative AI development.
The Home Depot (HD)
The Home Depot (NYSE:HD) is a retail company focusing on home improvement products. Home Depot also provides customers with a wide range of installation services, which include cabinetry, flooring, windows, water heaters, and countertops. It also allows customers to access equipment rental services.
The stock saw massive growth during the pandemic until the end of 2021. In that time, between late March 2022 and December 0f 2021, Home Depot’s stock price more than doubled due to the increase in customers buying home improvement products during the pandemic. Over the past year, its share price has seen marginal growth of just 5% due to the higher inflation and interest rates, leading consumers to spend less, especially on more expensive items.
In their most recent earnings report, released on August 15, Home Depot stated that their total earnings fell by 2% and net income dropped by 10% compared to the second quarter of 2022.
It still offers a reasonable dividend yield of 2.8%; the quarterly dividend stands at $2.09 per share. Plus, Home Depot has seen dividend increases for the last 14 years.
Realty Income (O)
Realty Income (NYSE:O) is a REIT that invests in properties such as convenience stores, restaurants, and home improvement stores. Some of their top clients include Dollar General (NYSE:DG), Walgreens (NASDAQ:WBA), and 7-Eleven (OTCMKTS:SVNDY).
Realty Income as a REIT has to return to its shareholders 90% of their taxable income in the form of dividends. This makes REITs so attractive to dividend investors; it’s a sector that offers some of the greatest dividend payouts.
Realty Income is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies with at least 25 years of consecutive dividend growth. Just recently, Realty Income broke that mark and has seen 25 years of dividend growth. Realty Income is also known as the monthly dividend company; most dividend companies only pay out quarterly, but Realty Income is one of the few companies that pays a dividend to investors every month. At this point, it has a monthly dividend payout of $0.26 or 6.03% annually.
Its second-quarter earnings report saw a 27% increase in overall revenue and a slight drop in net income of approximately 12.5%. With a drop in Realty Income’s stock price over this last year, and financials still remaining strong, it may be a great buying opportunity for a stock that offers such a significant dividend payout. Thus, it is one of the top stocks for early retirement in my eyes.
Caterpillar (NYSE:CAT) is a construction machinery manufacturer with products such as forestry machines, tractors, gas turbines, excavators, and mining trucks. Caterpillar also provides equipment and parts maintenance, financial leasing, and other related loan services.
Its stock price continues to climb year-over-year. It is the largest industrial company based on a nearly $150 billion market cap. Over the past five years, their stock price has doubled, and since last year, it increased by 51%. And there is still plenty of room to grow.
Caterpillar saw an increase of 22% in their overall revenue for Q2 2023 compared to the previous year. Caterpillar has a decent dividend payout of 1.9% on an annual basis. And with consistent financial strength and projected growth of the industry. This makes Caterpillar a great buy-and-hold company.
Casey’s General Stores (CASY)
Casey’s General Stores (NASDAQ:CASY) operates as a convenience store chain that offers a wide range of products, including pizza, tobacco products, breakfast foods, soft drinks, coffee, automotive products, household items, and ATM services. Casey’s is primarily located in the Midwestern states.
Over the last five years, the company has seen its stock price more than double in that time, and within this last year, it has increased by approximately 30%.
Following the release of their recent earnings report for the quarter ended July 31, Casey’s stock price rose by 17%. It stated mixed results: their revenue fell by 13%, and their net income grew by 11%. However, the CEO announced positive news regarding their growth plan in which Casey’s has agreed to acquire 125 stores. It is one of the best stocks for early retirement, at least in my book.
As of this writing, Noah Bolton held a LONG position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.