I love to get creative with portfolio construction, whether we’re talking straight-ahead retirement portfolios or a subject that’s a little more esoteric. 

As we’re heading into the summer after a very long year enduring the pandemic, I thought I’d mix it up a little. My goal is to identify 10 stocks that would be good for most retirement portfolios. 

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So, I’ve looked up InvestorPlace.com articles with the word “retirement” in the headline. I’ve decided to take one stock from 10 of these articles. I’ll also try to ensure sufficient diversification in terms of themes, market capitalization, dividend-paying, growth or value, etc. As such, I’ve selected the following:

• NextEra Energy (NYSE:NEE)
• Darden Restaurants (NYSE:DRI)
• Alibaba (NYSE:BABA)
• B. Riley Financial (NASDAQ:RILY)
• Kraft Heinz (NASDAQ:KHC)
• CVS Health (NYSE:CVS)
• PayPal Holdings (NASDAQ:PYPL)
• Electronic Arts (NASDAQ:EA)
• Apple (NASDAQ:AAPL)
• Starbucks (NASDAQ:SBUX)

These are retirement stocks that I think will get the job done over the next 10-20 years. Let’s take a closer look.

Stocks to Buy for Retirement Portfolios: NextEra Energy (NEE)

InvestorPlace’s Vince Martin recommended the Florida utility and renewable energy powerhouse on April 6, along with seven other possibilities to buy in any market conditions.

As Vince points out, utilities are very popular with retirees because they pay consistent dividends. NextEra, because of its renewable energy bent is expected to grow revenues over the next few years near or at 10%. Don’t just take Vince’s word for it, I also recommended NEE in December 2020 as a stock to buy for 2021 because its renewables business generates 40% of its overall earnings.

It’s not cheap at 27 times its forward earnings, but sometimes you have to pay more for quality. NextEra is definitely that.   

Darden Restaurants (DRI)

This next one is a bit of a changeup. InvestorPlace’s Chris Markoch included the multi-chain restaurant operator on a list of seven stocks that shouldn’t be in your portfolio. I’m going to go against his advice by saying it should. Here’s why. 

My colleague’s argument is that Darden has too much net debt on its books — $4.1 billion as of Q3 2021 (total debt of $5.1 billion less $990 million in cash) — making it tough for the company to raise its dividend in future quarters. Up 140% over the past 12 months, Markoch feels it has run too far, too fast. 

I don’t see it that way. 

As CEO Gene Lee reiterated in Darden’s Q3 2021 conference call, the company has significantly reduced the number of items on its menus, which has simplified its processes in the restaurant, transforming its business. As a result, hourly labor productivity has improved by 20-30% over the past year.

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As business reopens, the changes it has made will last for years, not weeks. Darden’s a diamond in the rough despite its expensive valuation.

Alibaba Group (BABA)

This next one is another that one of my collogues didn’t support. InvestorPlace’s Tom Taulli argued at the end of March that the Chinese e-commerce behemoth could sabotage your portfolio. His rationale is that the Chinese government’s push for the company to be broken up so that it can’t exert too much pressure on the Chinese population is legitimate.

And while several issues didn’t exist a year ago, such as the government’s concern to reduce Alibaba’s influence, the reality is that it’s something that can’t be swept under the rug. 

That said, I don’t think there’s any doubt that Alibaba remains a cash flow machine. In the trailing 12 months (TTM), Alibaba had free cash flow (FCF) of 164.4 billion Chinese Yuan ($25.1 billion). That’s 103% of its net income (TTM).

I’ll take that every day and twice on Sunday.

Riley Financial (RILY)

Rather than buy investment banks such as Goldman Sachs (NYSE:GS) or Morgan Stanley (NYSE:MS), InvestorPlace contributor Faizan Farooque recommended the independent investment bank recently because it generates huge gross margins and operating margins, leaving it with lots of cash to pay its dividends. That’s despite RILY stock gaining 41% so far in 2021.

For me, there are a few reasons to be bullish about RILY stock. But one of the main reasons is that it’s relatively independent. Its CEO owns 18.4% of the company and it has a special purpose acquisition company (SPAC) that’s being reasonable about the size of the company it will buy with its $150 million in cash it raised from investors in February. 

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 Up 260% over the past year, its asset-light business model has been delivering outsized returns for more than a decade.

Kraft Heinz (KHC)

In the middle of March, InvestorPlace’s Tom Taulli put the maker of food staples such as macaroni and cheese dinner and ketchup on his list of high-yield stocks for your retirement nest egg.

Tom reasoned that it managed to reduce costs over the past year while continuing to grow its sales, in part, by simplifying the number of products it offered its customers. The old “less is more” trick. Not to mention its stock was still cheap at 14.9 times forward earnings. 

The one thing I look at with stocks is free cash flow. That’s especially true with consumer goods companies like Kraft Heinz. In fiscal 2020, it generated $4.33 billion in FCF, which means its current FCF yield is 8.8%. I consider anything above 8% to be in value territory. 

It didn’t look as though Warren Buffett’s bet on KHC was going to pan out. However, it is now Berkshire Hathaway’s (NYSE:BRK.A, NYSE:BRK.B) fifth-largest equity holding with a market cap of $13.1 billion. Berkshire owns 26.6% of KHC.

Buffett paid approximately $30 per share for his stake in Kraft Heinz. At $40, as I write this, Berkshire appears to have finally arrived on the right side of the trade. If you own BRK stock, that’s excellent news. 

CVS Health (CVS)

I thought about going with InvestorPlace contributor Tezcan Gecgil’s retirement pick of Procter & Gamble (NYSE:PG) because I use so many of the company’s products. However, I think health and wellness will continue to be one of the most important aspects of any person’s life in the years to come, and CVS is right in the middle of it. 

In 2020, the company managed to increase its net income by almost 9%, in large part because it has a diversified health services model that’s able to endure whatever the world’s got in store for it. 

With the kind of scale a company like CVS Health has, it can help the communities where it does business. On April 6, it announced that the company had made more than $200 million in affordable housing investments in California.

The more than $43 million it invested in California over the past year will see more than 850 affordable homes built in 10 different cities, with 31% dedicated to seniors housing.

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Healthy communities mean healthy businesses, which translates into healthy profits.

PayPal (PYPL)

Although I’d probably go for Square (NYSE:SQ) over PayPal, there is no question that InvestorPLace’s Louis Navellier has selected an excellent company. 

As Navellier points out, its online payments platform brings to the table more than 300 million consumer and merchant customers worldwide. Simultaneously, its Venmo cash app added more than 73 million new users in the past fiscal year. 

The pandemic did little to slow PayPal. On March 8, PayPal announced that it had acquired Israel-based Curv, a provider of cloud-based infrastructure for digital assets and currencies. Dovetailing with its acquisition was its March 30 launch of “Checkout with Crypto,” where PayPal provides its customers with a seamless way to pay for items using cryptocurrencies. 

Over the past 12 months, PayPal has generated $5 billion in FCF from $4.2 billion in net income. That’s an FCF conversion ratio of 119%. Not shabby. And its FCF is likely to keep growing thanks to its healthy revenue gains in recent years.    

Electronic Arts (EA)

One industry that benefited from the pandemic was the gaming industry. Whether we’re talking Electronic Arts — its video game franchises include Madden NFL, EA Sports FIFA, Battlefield and Apex Legends — or one of its peers, engagement was up, as was the mobile games business. 

How did this increased engagement show up on its financial statements?

Well, there’s a quarter left in EA’s 2021 fiscal year. Over the past 12 months through the end of December, its net bookings were 8% higher than the previous 12 months at $5.96 billion. For those same 12 months, it generated cash from its operating activities of $2.06 billion, a company record. 

For all of fiscal 2021, it expects net revenue of $5.6 billion, up slightly from $5.54 billion in 2020. However, it expects net bookings of $6.08 billion, 16.6% higher than a year ago. In gaming, net bookings are the operational metric investors pay attention to because it gives a better picture of a company’s true sales.

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Long-term, a gaming stock like EA is a smart move for any retirement portfolio, and if you use their products, it will keep your mind young. That’s reason alone. 

Apple (AAPL)

InvestorPlace’s Brett Kenwell recently discussed why it makes sense to hold Apple during retirement. My colleague cited the triple B’s in his explanation: Best brand, best balance sheet and best business. Dividend aside, it’s darn near perfect. 

While its iPhone business is nice, it is the services segment that really primes the profit pump. As Brett points out, it’s growing faster and twice as profitable. 

What’s not to like?

What I find really impressive about Apple is that it generated $80.2 billion in FCF in the past 12 months, 126% higher than its net income. If that $80.2 billion were its market cap rather than its FCF, Apple would still be the 100th largest company in the S&P 500.

Of course, it’s not market cap; it’s free cash flow. That’s what makes Apple a must-hold for any portfolio. And if it’s good enough for a 90-year-old Warren Buffett, it ought to be good enough for you.  

Starbucks (SBUX)

I don’t know what was tougher for Starbucks in 2020: The pandemic or losing Chief Operating Officer Roz Brewer to Walgreens Boots Alliance (NASDAQ:WBA). 

It’s ironic that Brewer, who Howard Schultz personally recruited to the company, was then recruited away from Starbucks to become the first Black female CEO of a Fortune 500 company.  

As Schultz explains his belief in her abilities, “Having personally recruited Roz to Starbucks and seen first hand her leadership skills and many contributions to Starbucks business I know that Roz will make a great public company ceo. I wish her great success in the future.”

Fortunately, Starbucks has a strong and talented bench. While Brewer is a tough person to replace, I’ve followed the company for a long time. It always moves forward. 

As for the pandemic, it has given the company valuable insights into its customers’ thoughts about take-and-go coffee and food. They like it. As a result, the company is opening more convenience-led stores and being more responsible about the square feet it rents in certain locations.

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If there’s a company that rolls with change, Starbucks is definitely it.   

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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Investors looking for retirement stocks in 2021 need to keep 2020 in mind.

Last year might well have been the craziest year in the history of the stock market. Yes, we saw a massive crash in 2008-2009. Before that, the “dot-com bubble” burst in 2000, sending the Nasdaq down an incredible 78%.

But those declines were of a piece with the history of the market. Crashes happen. They aren’t usually — in fact, weren’t ever — followed immediately by massive rallies.

2021 has had its own weirdness. The GameStop (NYSE:GME) rally of course tops the list, with Reddit’s power now extended to dozens of other stocks. But we also have interest rate worries, massive government stimulus and stretched valuations in equities and cryptocurrencies.

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There’s a lot of noise. Investors need retirement stocks that can power through that noise. Here are eight of those stocks:

• Amazon (NASDAQ:AMZN)
• Dollar General (NYSE:DG)
• Amgen (NASDAQ:AMGN)
• Verizon (NYSE:VZ)
• Zoetis (NYSE:ZTS)
• NextEra Energy (NYSE:NEE)
• McCormick (NYSE:MKC, NYSE:MKC.V)
• Cooper Companies (NYSE:COO)

Retirement Stocks: Amazon (AMZN)

Obviously AMZN stock is not what investors usually think of when they think of retirement stocks. AMZN long has had a reputation for being expensive. Sometimes prohibitively so. The stock doesn’t pay a dividend, and likely won’t for some time to come. More broadly, tech stocks — even the best tech stocks — aren’t usually thought of as being “safe.”

But slowly but surely, after months of flat trading AMZN’s valuation is coming in: shares trade at just 46x forward earnings. The importance of a dividend (which, of course, reduces the stock price) is far less in a world with zero-commission trading and fractional share ownership.

And as for being safe, one thing investors can count on is that Amazon still has plenty of growth ahead. Think about the retirement stocks investors might have targeted a decade ago, as the market was recovering from the financial crisis. The likes of IBM (NYSE:IBM), Anheuser-Busch (NYSE:BUD), Altria (NYSE:MO) and General Electric (NYSE:GE) were all supposedly “safe” dividend payers. All have underperformed — at best — over the past ten years.

In a changing, volatile world, “safe” isn’t the same thing it used to be. AMZN is finally at a reasonable valuation, which means it’s a lot safer than some investors might realize.

Dollar General (DG)

Admittedly, some investors might not be ready to jump into AMZN just yet. There are other choices in retail.

Walmart (NYSE:WMT) is another stock that has flatlined recently. But the choice here is Dollar General, despite its lack of an e-commerce business.

DG stock has also struggled in recent months, dropping 2.7% over the past six months. But at this level, its valuation looks attractive. DG stock is at 22x the midpoint of earnings-per-share guidance for the current year.

Results this year admittedly look soft, with Dollar General guiding for a decline in revenue. But, of course, this year’s results are being compared against a pandemic-driven fiscal 2020 (which ended Jan. 29). Two-year growth rates still look solid, and longer-term, Dollar General still has new markets to enter.

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Investors figured that out quickly after DG sold off following earnings. The recovery should have further to go in the short term, while the long-term outlook remains bright.

Amgen (AMGN)

Historically, traditional pharmaceutical names like Pfizer (NYSE:PFE) and Merck (NYSE:MRK) were on any list of retirement stocks. But both pharma names have struggled to keep up; even MRK is flat to late 2018 highs. There simply hasn’t been enough innovation or value-creating acquisitions to drive long-term shareholder value.

But biotech Amgen looks more attractive. The company still is driving growth, including a 12% increase in adjusted EPS during 2020. Valuation is reasonable at 15x forward earnings. Acquisitions continue apace, including recent agreements to buy oncology startup Five Prime Therapeutics (NASDAQ:FPRX) and privately held Rodeo Therapeutics. Add in a 2.8% dividend yield and AMGN looks like a long-term winner.

Verizon (VZ)

There are some attractive old-fashioned retirement stocks out there. VZ stock is one of them. The stock is cheap, at about 11x forward earnings. A 4.3% yield adds income as well.

There are some concerns here. Notably, Verizon’s wireline business remains in permanent decline. The company has lagged cable companies like Comcast (NASDAQ:CMCSA) in video as well.

But the wireless business is what really matters. And there, Verizon looks like a winner. A larger T-Mobile (NASDAQ:TMUS) might be a threat after its merger with Sprint, but Verizon continues to take share from AT&T (NYSE:T). Given a years-long integration for T-Mobile and Sprint, and AT&T’s persistent debt, management and execution concerns, I’m not ready to believe Verizon is going to suddenly fall behind.

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This is not a flashy, “beat the market” play. It’s a defensive, safer play with a solid yield. Those retirement stocks — that truly are safe, rather than just looking like it — are hard to find in this market. VZ should be on any investor’s list.

Zoetis (ZTS)

Zoetis stock is not cheap. A 0.64% dividend yield is not going to get dividend investors excited. And with a sharp rally from an eight-month low reached early last month, some investors might look for a better entry point.

But ZTS still looks good enough. It’s the largest animal health company in the world. Companion pet adoption rose sharply during the novel coronavirus pandemic — and those pets will be around for years to come.

Growth is impressive. Margins are excellent. And Zoetis doesn’t really have a competitor at scale. There are few businesses in the world that are better examples of the well-known Warren Buffett maxim that “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Add in the defensive nature of the business and ZTS, even after the rally of the past few weeks, looks like a solid long-term buy.

NextEra Energy (NEE)

Utilities are common parts of any retirement portfolio. The sector is defensive. Nearly all utility stocks pay healthy dividends. Valuations never get out of hand (not even in a zero-interest rate environment).

The sector isn’t flashy, and usually offers little growth, but most utility stocks are considered safe.

NextEra stock is a bit different. Thanks to an impressive renewable energy portfolio, the company has significant growth potential. Adjusted earnings per share in fact rose more than 10% year-over-year in 2020, and Wall Street sees high single-digit growth the next two years.

NextEra stock admittedly is priced as such. A 27x forward price-to-earnings multiple is far and away the highest among major utility stocks, while a 2% dividend yield is among the lowest.

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But, as I wrote late last year, this is a case of paying up for quality. NEE stock might not be a traditional utility stock — but that’s hardly a bad thing.

McCormick (MKC)

Historically, CPG (consumer packaged goods) and food manufacturers have been considered safe stocks as well. That’s changed in recent years.

Supermarkets increasingly are looking to private-label and store-brand options to boost their own options. Smaller, more focused competition has sprung up and fragmented the market. Consumer preferences have changed: companies like Campbell Soup (NYSE:CPB) and General Mills (NYSE:GIS) have been forced to diversify away from what were once their strongest categories.

McCormick, however, is in a far better position. Demographics actually are in its favor: unlike cereal or soup, younger customers like spices and seasonings more than their parents. McCormick has a big private label operation; those sales aren’t quite as profitable, but at least they’re not lost.

Like the other retirement stocks on the list, MKC stock isn’t cheap. But investors are better off paying 28x earnings for MKC than 18x earnings for a business at risk of declines. Once again, this seems like a case of paying up for quality.

Cooper Companies (COO)

The contact lens business doesn’t get a lot of attention, but it’s one of the most attractive out there. U.S. market growth is stable, yet there is a massive opportunity in developing markets. Competition is stiff but relatively limited, with four major players.

All four have intriguing bull cases. Bausch Health (NYSE:BHC), given a still-heavy debt load, doesn’t quite make the cut for retirement stocks, but does have potential upside. Johnson & Johnson (NYSE:JNJ) remains a solid long-term pick.

But the two pure-plays look the most attractive. Those are Cooper and Alcon (NYSE:ALC).

Alcon has slightly higher potential as it tries to execute a years-long turnaround following its split from Novartis (NYSE:NVS). But that creates higher risk as well.

So as far as retirement stocks go, COO looks like the pick. Growth has been impressive. Cooper has taken share. Profit margins are enormous.

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This is a business that can grow for decades to come — and one that can be a strong foundation of a retirement portfolio.

On the date of publication, Vince Martin held a long position in AMZN.

After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.

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Editor’s Note: This article was updated on March 31, 2021, to correct occupancy numbers for Federal Realty Investment Trust.

Let me start by saying that you should seek out the counsel of professionals to decide on your plan for a comfortable retirement. With that out of the way, it’s fair to say that today’s retirees are likely to dedicate a significantly larger portion of their portfolios to equity investing than prior generations.

That’s because the investing axiom stocks beat bonds; bonds beat cash has literally never been truer. But investing in stocks still carries risk. And the risk I’m writing about today is from stocks that, for lack of a better term, I’ll call impostors.

By that I mean these stocks have some qualities that investors should typically look for as part of a retirement portfolio. But they have some less-attractive qualities as well. In some cases, the company is out of phase with its core market. Some businesses have been critically damaged by the novel coronavirus pandemic.

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However despite these flaws, many of these stocks have performed quite well over the last 12 months. And some are being seen as recovery stocks as the economy reopens. In this article, I’ll attempt to explain why each of these stocks appears to be an impostor, particularly for investors who need to maximize the total return of their portfolio (and honestly, who doesn’t).

Let’s take a look at seven stocks that may be best for you to avoid if you’re at or nearing retirement.

• Harley-Davidson (NYSE:HOG)
• Darden Restaurants (NYSE:DRI)
• NOV (NYSE:NOV)
• Xerox Holdings (NYSE:XRX)
• Nielsen Holdings (NYSE:NLSN)
• Federal Realty Investment Trust (NYSE:FRT)
• Simon Property Group (NYSE:SPG)

Stocks To Avoid in Your Retirement Account:: Harley-Davidson (HOG)

As the baby boom generation ages, they may be looking at Harley-Davidson as a nice recovery stock. More Americans are likely to be hitting the open road this year. And, for some, they’ll be doing so on the back of a motorcycle.

That may be true. However the problem for Harley-Davidson is that the baby boomers who may want to invest in the stock are not the ones buying the bikes. The company has an aging customer base and a pricey product.

HOG stock is only down 6% in 2021 and in the last 12 months, the stock price has grown approximately 120%. That puts the share price back to pre-pandemic levels. That’s the good news. The bad news is that the stock was in a five-year downtrend prior to the pandemic.

Harley-Davidson paid (and increased) its quarterly dividend on March 19, 2021. The current yield is only 1.74%. The company slashed its dividend during the pandemic; there’s no shame in that. And the fact that they raised the dividend now shows it cares about its shareholders. But it would be easier to buy HOG stock as a retirement investment if it looked to offer a little growth along with the value. That looks to be just about maxed out.

Darden Restaurants (DRI)

Restaurant stocks would seem to be among the safest of stocks to own as the economy reopens. That may turn out to be true. And it may also be true that Darden Restaurants will not be one of those stocks.

One of the most significant issues that Darden is facing is debt. It has about $1.54 billion in current liabilities (typically due within 12 months) compared to just $777 million in cash. And the company has nearly $6 billion in other debt on the books.

As the economy reopens, it’s fair to say the company should start to improve its cash position but servicing the debt will eat into earnings. That will also mean it’s less likely the company will significantly raise the dividend that it slashed in 2020.

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Further complicating things the case for DRI stock as a retirement stock is that it has already had an impressive run. The stock is up 25% for the year and a whopping 146% in the last 12 months. That suggests to me that the stock may already have its vaccine rally priced in.

NOV (NOV)

Rumors of the oil and gas industries demise may yet turn out to be true. But, for now, the sector has received a shot in the arm from rising oil prices. NOV, formerly National Oilwell Varco, makes components and tools that are used in oil and gas drilling and production. As oil producers look to increase efficiency, investors might be looking to NOV stock as a recovery play.

NOV is rated by 19 analysts. And while the stock does have 11 buy ratings, it also has 2 sell opinions (which are very rare) and the company’s current stock price is right about in line with the consensus price target.

The stock is essentially flat for the year, but is up 25% in the last 12 months. However, NOV is down nearly 45% from its pre-pandemic level. And, the stock was in a downspin in the four years leading up to the pandemic. Like many companies, NOV suspended its dividend during the pandemic. And without that, there are simply better choices as a retirement stock in the oil and gas sector.

Xerox Holdings (XRX)

Xerox makes this list for a couple of reasons. But first, let’s give the company credit where credit is due. XRX stock is up 27% in the last 12 months. And the company was enjoying a bit of resurgence in 2019, so the stock is about 31% off its pre-pandemic levels.

The company is also one of the darlings of dividend investors with an attractive yield of over 4%. And xrx STOCK managed to maintain its dividend in 2020, a commendable accomplishment.

Now the bad news. Environmental, social and governance (ESG) issues are becoming a larger consideration for investors. This is particularly true of millennial investors who are having increasing influence on the market. And as my InvestorPlace colleague Josh Enomoto wrote, Xerox falls flat on ESG issues.

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Plus, as our Louis Navellier wrote, Xerox is trying to position itself as a play on the artificial intelligence (AI) sector. But while AI can be used in many sectors, it doesn’t mean that every company that offers a form of AI is a worthwhile investment.

Nielsen Holdings (NLSN)

A few weeks ago, Roku (NASDAQ:ROKU) announced a partnership with Nielsen that sent the audience data firm’s stock soaring. Nielsen will be sharing its addressable advertising technology with Roku.

However this deal looks much better for Roku than for Nielsen. The stark reality for Nielsen is that their ratings, while once one of the key metrics for determining ad revenue, are becoming irrelevant in the age of streaming television.

The reason is simple. Streaming services have their own way to track the viewer data that’s important to investors. Add to that a company with significant debt and declining revenue and you have a bleak fundamental picture of NSN stock.

At this time, the stock is above the 12-month consensus price target. Once the sugar high from the Roku deal wears off, NSN stock is likely to move back down, and possibly sharply. And while the company did manage to maintain its dividend in 2020, that was likely because it had cut its dividend sharply in 2019.

Federal Realty Investment Trust (FRT)

The last two stocks on my list of problematic retirement stocks are real estate investment trusts (REITs). REITs have generally held up well as retirement stocks because they are required to return a significant portion of their earnings to shareholders by way of a dividend. However REITs like Federal Realty Investment Trust face some unique challenges as the economy reopens, particularly the REITs that had exposure to brick-and-mortar retail and entertainment businesses.

FRT stock is the first of these two. The company’s properties are concentrated in the Northeast and Mid-Atlantic states with additional properties in Florida and California. If you exclude Florida, you have some of the states that retained some of the strictest mitigation efforts during the pandemic.

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The harsh reality is that the company occupancy levels had dropped to 92% from over 94% the year prior. And some of those businesses simply won’t be coming back. That will make it difficult for a company that has seen its stock decline over 35% in the last five years.

FRT stock had a nice rally of nearly 29% through mid-March. But that rally appears to be over and the stock is down 5.5% since then.

Simon Property Group (SPG)

Simon Property Group has taken an innovative approach to weathering the decline of brick-and-mortar retailers. It became the tenant. During 2020, the company — which had acquired Aeropostale in 2016 — added to its portfolio with Forever 21, Lucky Brand, Brooks Brothers, and JCPenney.

Perhaps self-servingly, Simon is upbeat about 2021. The company cites the flight of city dwellers to the suburbs. I’m not so sure I buy that. Last I checked Amazon (NASDAQ:AMZN) still delivers to the ‘burbs. But it’s fair to say that mall traffic will pick up. There has to be some pent-up demand.

There is a bullish narrative for SPG stock. This narrative centers on Authentic Brands, which operates the businesses that Simon has acquired. The thinking is that Authentic will be able to create value in these dormant brands.

Analysts seem less convinced. SPG stock currently has two sell ratings to go along with 10 hold ratings and the stock is currently about 3.5% below the $118 median target price . Furthermore, while Simon’s dividend remains reliable and juicy, at 4.53% yield, its payout has decreased by 17% over the last three years.

On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.

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The post 7 Stocks That You Should Leave Out of Your Retirement Portfolio appeared first on InvestorPlace.

Until recently, the markets looked unstoppable. But of course, things can changed fast, as stocks have come under pressure. And this can certainly make it tough for those planning their investment for retirements.

With interest rates rising, there has been a rotation away from high-growth stocks to those that are likely to benefit from the world’s reopening. Besides, there are a large number of stocks that have valuations that are stretched — even after the recent sell-off.

Now when these types investments start to fall, the downside can be particularly steep. This is fairly normal when the “bubble” pops.

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In light of this, what are some of the stocks to avoid now in your retirement portfolio? Well, let’s take a look at seven:

• GameStop (NYSE:GME)
• Tesla (NASDAQ:TSLA)
• Alibaba Group (NYSE:BABA)
• Rocket Companies (NYSE:RKT)
• DoorDash (NYSE:DASH)
• AMC Entertainment Holdings (NYSE:AMC)
• Lemonade (NYSE:LMND)

Retirement Stocks To Avoid: GameStop (GME)

Of course, GameStop has become one of this year’s hottest stocks. The shares went from $19 at in early January to a high of $483. Then after a big drop off, the shares have since gone on to pull off a big rally. GME stock is now trading at $120 and the market capitalization is a hefty $8.39 billion.

It’s true that there are some positives. The reopening of the U.S. economy will be a boost and there continues to be strength in the gaming markets. The company has also been cutting back its costs and has the backing of Ryan Cohen’s venture capital firm. He is the founder of Chewy (NYSE:CHWY) and will bring expertise with the e-commerce strategy.

But despite all this, the fact is that GME stock is facing some tough challenges as well. With the move toward cloud-based games, there is less need for brick-and-mortar locations. In fact, from fiscal 2012 to fiscal 2019 — before the pandemic hit — revenues went from $9.6 billion to $6.5 billion.

And finally, the valuation of GME stock is a nose-bleed levels. According to TipRanks, Wall Street analysts are estimating that the downside potential is 90%!

Tesla (TSLA)

Elon Musk is known for disrupting markets. He did this with PayPal (NASDAQ:PYPL), as the company has become the dominant player in electronic payments.

But the biggest play, of course, for Musk has been Tesla. He has upended the massive auto industry by focusing on electric vehicles, innovative distribution and advanced technologies like AI.

Yet there is a nagging issue: The competition is catching on and gaining momentum. If anything, Musk has provided a playbook for his rivals!

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Look at Ford (NYSE:F). The company has been able to get lots of traction with its Mustang Mach-E electric SUV. Since the launch last year, it has gained an impressive 12% of the EV segment in the U.S.

Then there is Volkswagen. Consider that the company has become the leader in EVs in Europe. The company is doubling down on an all-electric personal transportation future, Barron’s noted earlier this week.

Note that the competition will only get more intense — and this could easily weigh on TSLA stock. This is especially the case since the valuation is already stretched, with the shares trading at 24 times revenue.

Alibaba Group (BABA)

Alibaba has been able to successfully pursue various huge market opportunities in China. The company has a dominant position with its e-commerce marketplaces and the cloud business has been making significant strides. There has also been success with the entertainment and video platforms.

But the growth could come under pressure. And the reason is the changing politics in China. President Xi Jinping appears to be getting concerned about the power of tech giants like Alibaba and he is taking action.

For example, the government is looking at potential fines as well as requirements to help with government initiatives. Although, perhaps the biggest risk is that there will be restrictions on the business practice, including potential divestitures (the Chinese government has already asked Alibaba to unload entertainment assets). All in all, this could allow competitors to get an edge.

The result is that there will be much more uncertainty for BABA stock and this could limit the upside.

Rocket Companies (RKT)

Rocket Companies, which is the largest U.S. mortgage lender in the U.S. and operates Quicken Loans, pulled off its IPO in early August. The shares were offered at $18 and jumped 20% on the first day of trading. They have since logged a gain of 28%.

The company is highly profitable and as been growing at a rapid pace. The company even recently issued a one-time special dividend of $1.11 per share.

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But the growth could easily slow down. With rising interest rates, there is likely to be muted growth for mortgage issuances and refinancings.

Wall Street analysts also think RKT stock is fully valued. Based on the consensus price targets, the upside from current levels is only about 8%.

DoorDash (DASH)

DoorDash, which is the leading peer-to-peer delivery service, launched one of last year’s top IPOs. The company raised about $3.37 billion and DASH stock soared 86% on the first day of trading.

Founded in 2013, Door Dash has been a high-growth company from the start. But last year saw a major acceleration. With the Covid-19 pandemic, restaurants had to scramble to provide home delivery. During the latest quarter, revenues tripled to $970 million from about $300 million in the same period a year ago.

Yet it will likely be tough for DoorDash to keep up the growth ramp. With the rollout of the vaccines and the reopening of the U.S. economy, it seems likely that consumers will quickly shift to restaurant dining. Besides, home delivery is not necessarily cheap either and the market is seeing more competition, such as with Uber (NYSE:UBER) and Grubhub (NYSE:GRUB).

And with the valuation already a high levels, there could easily be considerable downside risk with DASH stock. According to TipRanks, the estimate is for a decline of 31%.

AMC Entertainment Holdings (AMC)

Late last year, the prospects for AMC looked grim. There was even the possibility of a bankruptcy filing.

But the company’s management was able to raise enough capital to stay afloat. And yes, in the new year AMC stock became a Wall Street darling. A big part of this was due to the buying from the Reddit investors.

With the reopening of the economy, AMC will definitely see a nice pick-up in business. But then again, it does look like much of this is already factored into the stock price. According to TipRanks, the consensus price target for AMC stock is $4.88, which reflects 64% downside from current levels.

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The company also has a high debt load, at 8.3 times 2022 forecast EBITDA (earnings before interest, taxes, and amortization). Then there is deferred rent of $450 million, which will need to be paid back. That will will a headwinds for profits.

Lemonade (LMND)

Founded in 2015, Lemonade is a next-generation insurance company that leverages AI and machine learning for better policy matching and pricing. The company primarily targets the millennial generation.

While growth has been strong, the revenue base is still fairly small. In the latest earnings report, sales came to $20.5 million.

But the valuation on LMND stock is far from small! Consider that the market capitalization is a hefty $5.4 billion.

Note that some Wall Street analysts are quite bearish on the company. Just look at Bank of America’s (NYSE:BAC) Joshua Shanker. He recently noted: “Lemonade’s guidance of $372-378mn in premium in-force seems aggressive … It is plausible that Lemonade could hit its target if it ramps marketing spend, but we believe such growth would be acquired a cost far higher than the lifetime value of the policies/customers.”

His price target on LMND stock is $29, which assumes 67% downside from current levels

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.

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Dividend investing is no longer as sexy as it used to be. The markets nowadays have gone hyperbolic. When most stocks are experiencing exponential capital appreciation, most investors are chucking dividend investing to the side. However, completely ignoring dividend stocks is not a recipe for success.

Only a company with solid fundamentals, stable business models and excellent outlooks can afford to keep paying out billions of dollars in distributions. With solid performances, capital appreciation will follow. Granted, it may not be as amazing as a Tesla (NASDAQ:TSLA) or Nio (NYSE:NIO). But it’s stable enough not to give you sleepless nights. Long term, it’s an effective way to decide where to put your capital and sets you up perfectly for retirement.

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  7 Retail Stocks That Are Far Too Close to Failing

When you are off to celebrate your sunset years, the last thing you need to worry about is news releases impacting your portfolio and burning away half your investment. That’s where these dividend stocks will make your life much easier. Plus, as the chart below shows, these stocks have also outperformed the S&P 500 by a fair margin, proving my point that capital appreciation will follow when performing well.

Before we go into our list here, it’s important to point out that none of the companies on this list are small-capitalization stocks. Several hidden gems are present in that segment. However, this list is not about those companies, primarily because a large market cap will give you a sense of stability and performance.

• Shell Midstream Partners LP (NYSE:SHLX)
• CoreSite Realty (NYSE:COR)
• Brookfield Property REIT (NASDAQ:BPYU)
• AT&T (NYSE:T)
• Gladstone Investment Corp (NASDAQ:GAIN)
• Pfizer (NYSE:PFE)
• B. Riley Financial (NASDAQ:RILY)

Dividend Stocks to Buy: Shell Midstream Partners LP (SHLX)

Dividend Yield: 14.7%

Midstream oil and gas companies are not everyone’s cup of tea because of the depressed oil prices. However, now that vaccines are rolling out throughout the world, we’re beginning to see a return to normalcy, and oil prices are also looking to go back to normal. That’s why it’s not surprising that SHLX stock is up 27.5% in three months. According to analyst estimates tracked by Refinitiv, revenues are expected to rise 9.8% and 17.4% in fiscal 2021 and 2022, respectively. It reinforces the narrative that there are sunnier days ahead for the oil and gas giant.

However, the important thing to note is that if you invest in SHLX stock, it has to be for the income opportunity and not capital appreciation. Dividends have grown by about 26% in the last five years. Despite the stressed outlook, the company chose to maintain its dividend distribution last year. That was a bold move, considering several companies completely halted or, at the very least, cut their distributions. With revenues returning to a healthy position this year, we can hope for an increase. SHLX trades at an enviable 8.6 times forward price-to-earnings.

CoreSite Realty (COR)

Dividend Yield: 4.3%

REITs, or real estate investment trusts, will always find their way onto lists of dividend stocks. To qualify as a REIT, an entity must distribute at least 90% of its taxable income to shareholders annually in the form of dividends. Hence, you will find several REITs in the portfolio of an income investor.

But there are several more reasons to invest in CoreSite Realty. For one thing, the company invests in data centers, one of the hottest growth areas in the world. According to one article, data center revenue is forecasted to grow at a compound annual growth rate (CAGR) of 6.7% to reach approximately a trillion dollars by 2030, more than double the $466 billion in 2020.

No surprises that CoreSite has reported four earnings beats in 2020, per Seeking Alpha data. Northern Virginia, Los Angeles and San Francisco are the areas where the company operates most of its 4.6 million net rentable square feet in operations.

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Now let’s talk about the juicy dividend yield, 4.3% as of this writing. Considering the business’s nature, it’s not surprising that COR stock is up 13.9% in one year. However, the excellent quarterly dividend of $1.23 per share also has something to do with it. Its enviable business model is one of the main reasons why the company managed to increase its distribution in 2020, one of the rare instances during Covid-19 times.

Brookfield Property REIT (BPYU)

Dividend Yield: 7.5%

Brookfield, like CoreSite, is also a popular REIT with income investors. However, its business model is quite different from that of CoreSite, since it focuses on retail properties and not data centers. Its portfolio includes 124 retail properties encompassing around 121 million square feet of gross leasable area.

Quite contrary to popular belief, retail isn’t dead. There is pent-up demand for shoppers looking to get back into the thick of things once the pandemic is over. E-commerce is a secular trend, and companies like Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA) will continue to do well long into the future. However, that doesn’t mean your local mall is going under any time soon.

However, regardless of what you think about the company itself and its prospects, this list is about dividend stocks. In that respect, BPYU is an excellent stock to have in your portfolio. The dividend payout is a solid 7.36%. Despite a stressed outlook, the company maintained its distribution last year. That kind of commitment is exactly what you need in your portfolio.

AT&T (T)

Dividend Yield: 6.9%

AT&T is the second-largest U.S. wireless carrier. Verizon (NYSE:VZ), T-Mobile (NASDAQ:TMUS), and AT&T have that segment under lock and key. An astounding 40% of its total revenue comes from that segment. However, AT&T is certainly not a one-trick pony. One of its biggest segments is consumer and entertainment, which includes WarnerMedia.

Under the umbrella, you have media assets like HBO, the Turner cable networks, and the Warner Brothers studios. Recently this segment has generated a lot of buzz due to HBO Max, a subscription video-on-demand streaming service launched by AT&T as an answer to Netflix (NASDAQ:NFLX). Warner Bros. has announced that it will release every single one of its movies in 2021 simultaneously on HBO Max and theaters. That should certainly help generate subscriber numbers.

Plus, 5G will become a big portion of the business moving forward. It’s one of the high growth areas that the company can exploit moving forward. The wireless carrier has the fastest nationwide 5G network based on Ookla data and is spending aggressively to acquire more 5G spectrum. Overall, the company is firing on all cylinders, and in the last three quarters, Refinitiv data shows that it reported earnings beat estimates.

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Now let’s talk about the dividend. For the last 10 plus years, the company has grown dividends consecutively. Considering the business model of the company, we can expect several more years of consistent dividend growth.

Gladstone Investment (GAIN)

Dividend Yield: 6.9%

It’s tough to categorize Gladstone as anything but an excellent investment considering its business model. A business development company, it invests in debt securities and equity securities that it deems attractive for its portfolio. This approach allows it to have a stable cash flow and earnings providing stockholders with long-term capital appreciation and dividends.

An important thing to note here is that the company is a monthly dividend payer with special dividends sprinkled in whenever appropriate. Much like several other members of this list of dividend stocks, the company did not cut its payout last year.

Pfizer (PFE)

Dividend Yield: 4.4%

Strangely, Pfizer is down 3.2% year-to-date. Pfizer and BioNTech’s (NASDAQ:BNTX) Covid-19 vaccine received Emergency Use Authorization (EUA) due to its 95% efficacy. Investment analyst Morgan Stanley projects that the pharmaceutical giant will receive $19 billion in 2021 and a further $9.3 billion in 2022 and 2023 for the vaccine. Considering all this, PFE stock should be soaring. But it’s not.

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I chalk that up to retail traders booking their profits after shares went hyperbolic last year. Regardless, PFE stock remains an excellent investment, not least because of its dividend. Payout grew 5.6% last year, and it has grown 6.9% on average in the last 10 years. Valuation is also enticing with this one. PFE stock trades at just 10.8 times forward price-to-earnings.

B. Riley Financial (RILY)

Dividend Yield: 2.5%

B. Riley Financial is an independent investment bank providing a range of services to corporate, institutional, and high net worth clients. Its capital markets segment makes the most revenue. However, several other business areas such as auction and liquidation, valuation, and appraisal services also drive the company’s revenue higher.

Considering the business’s asset-light nature, it’s not surprising that the diversified financial services company is doing well. In the past year, sales have grown 38.4%. Meanwhile, its gross margin and operating margins are an enviable 87.2% and 39.8%, respectively. They recently hiked their dividend by 33% and the payout is a very manageable 15.5%.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. 

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Today’s markets are certainly wild. The past few weeks have shown that things can fall quickly. And yes, this can make it tough when coming up with retirement stocks for your portfolio.

So, what should you do?  Well, one good strategy is to look at investments that have high yields, say over 4% or so. Of course, a good reason for this criteria is ongoing income, which can compound over the long-term. This can then provide a shield from taxes, so long as you have a vehicle like an IRA.

Next, companies that have high dividends usually have strong underlying businesses that generate solid cash flows. This means there is more firepower to buy back stock and make acquisitions.

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So, with those specifications in mind, what stocks look good for retirement?  Here’s a look at seven different names for your nest egg:

• AT&T (NYSE:T)
• Pfizer (NYSE:PFE)
• BHP Group (NYSE:BHP)
• Philip Morris International (NYSE:PM)
• Gilead Sciences (NASDAQ:GILD)
• Kraft Heinz (NASDAQ:KHC)
• IBM (NYSE:IBM)

Retirement Stocks to Buy: AT&T (T)

In 2015, AT&T shelled out $48.5 billion for DirecTV. Unfortunately, though, that deal turned out to be a huge mistake. The business has suffered ongoing erosion of its revenues and customer base, driven primarily by the trend of cord-cutting.

However, AT&T is now going to spin off DirecTV — as well as other video assets like AT&T TV and U-verse — into a new entity. The deal will involve a complex set of transactions that will result in an infusion of $7.6 billion from TPG Capital, which is a large private equity firm. AT&T will then get ongoing cash flow and retain 70% equity. Some analysts also believe that this deal will set the company up for a potential merger with another large operator in the future, such as Dish Network (NASDAQ:DISH).

For the most part, though, this transaction is a way for AT&T to diversify away from this business and focus more resources on growth areas. Perhaps the most important of these areas is streaming, which AT&T has access to through its subscriber-rich HBO Max service.

Of course, AT&T has a long-term opportunity in 5G, too. This could lead to new revenue streams from enterprise customers, such as for Internet of Things (IoT) deployments and even automated factories.

In the meantime, the core entertainment and mobile businesses behind AT&T remain strong generators of free cash flows. For 2021, free cash flow is expected to be about $26 billion.

And when it comes to T stock, it’s trading at just 9.48 times forward price-earnings (P/E). Plus, the dividend yield is an attractive 6.98%. That makes it a compelling name among retirement stocks.

Pfizer (PFE)

Pfizer’s development of a Covid-19 vaccine — along with the help of Biontech (NASDAQ:BNTX) — is a remarkable achievement. It is a demonstration of the company’s ability to work swiftly and meet enormous challenges. Pfizer’s vaccine was also an illustration of the power of messenger RNA (mRNA), which could prove effective for many other treatments in the future.

No doubt, Pfizer will generate substantial revenues from these efforts. In fact, the estimate is a whopping $15 billion in vaccine sales for this year alone.

Despite all of this, though, Wall Street has essentially ignored PFE stock. Since early December, the shares have gone from around $42 to $35.

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But it does look like investors are making a mistake. After all, Pfizer’s forward P/E is compelling, at only about 10.45. The dividend is also at a hefty 4.46%. All in all, this should be a pretty good name to pick from the retirement stocks.

BHP Group (BHP)

When looking at retirement stocks, it’s a good idea to diversify into commodities. This can help protect against inflation, which could be a potential problem in the years ahead.

Right now, one of the top players in the commodities business is BHP Group. Founded in 1885, the company has an extensive set of valuable assets across the world. BHP has mines are for things like copper, iron, coal, nickel and potash. The company even has a petroleum unit.

This company’s business generates significant profits. For the second half of last year, they came to $6.04 billion, up 16% on a year-over-year (YOY) basis. One major catalyst for this has been the rise in iron ore and copper prices. And, when Covid-19 fades away, there should be even more demand for commodities as economic growth resumes.

Even though BHP stock has had a nice rally, the valuation is still reasonable. Currently, the forward P/E ratio is 14.52. The dividend yield is 4.18%.

Philip Morris International (PM)

The past decade has seen the rise of so-called ESG (Environmental, Social and Governance) investing. Basically, more people want their investments to promote important causes.

No doubt, this has been a major issue for Philip Morris International. But the company has also been making changes with its product line in response. For example, it has set itself a goal of having “more than 50% of group revenues from smokeless products like its IQOS heated-tobacco sticks by 2025.” PM will also be making investments in more non-nicotine offerings.

It’s not clear that this will make much of a difference. However, these efforts are still a step in the right direction. Besides, this new strategy should help with the growth ramp.

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As far as PM stock goes, this pick of the retirement stocks is at compelling value levels, with a forward P/E ratio at 14.7 times. The dividend yield is 5.47%.

Gilead Sciences (GILD)

Gilead Sciences has many things going for it, but maybe most relevant is its drug, remdesivir, which has been critical in treating patients with the novel coronavirus. In fact, the company expects to make revenues of $2 billion to $3 billion from remdesivir in 2021. And while this drug may be facing a “short shelf life,” its success is encouraging, as it can be used for other indications.

On top of that, Gilead has some other promising candidates in its pipeline that can help with growth. For instance, Trodelvy looks like it will be effective against breast cancer. Annual revenues for that drug could come to around $1.8 billion.

Then there is lenacapavir, which is targeted at HIV. That drug can be administered via injection (twice a year) or by a pill (every week). It’s estimated that that drug could lead to $9 billion in annual revenues.

Plus, when it comes to GILD stock, it is definitely cheap. Right now, the forward P/E ratio is 8.58 and the dividend yield is 4.61%. As one of the retirement stocks, it’s pretty attractive. According to Jefferies analyst Michael Yee, GILD is a “low-expectations, cheap/inexpensive, turn-around story for 2021 with sentiment pretty low yet a new year on the horizon and business is doing fine.”

Kraft Heinz (KHC)

Kraft Heinz is one of the most durable retirement stocks on this list and should provide stable returns for a retirement account. Just some of its brands include Jell-o, Velveeta, Philadelphia and Oscar Mayer.

Believe it or not, the Covid-19 pandemic has boosted this company’s business. That’s because consumers have increased their packaged-goods spending due to more time spent at home.

But Kraft Heinz has been restructuring its operations as well. Part of this effort has included reduced costs and a simplification of its product line. There have also been divestitures, such as with its Planters, Cheez Balls and Corn Nuts brands.

Another key to KHC’s strategy has been investments in its e-commerce platform. Over the past year, Kraft-Heinz saw 100%-plus growth to $1.5 billion for its e-commerce segment (Page 14).

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So, KHC stock has done well during the past year. However, its valuation is still at attractive levels. Right now, the shares trade at 14.9 times forward earnings. The dividend yield is 4.2%.

IBM (IBM)

Over the past decade, IBM stock has gone from as high as $215 to today’s price of around $128. The company has been slow to adapt to new technologies like cloud computing. However, investors should not throw in the towel on this pick of the retirement stocks. The future is actually looking bright for IBM.

The fact is that the company has been investing heavily in next-generation technologies like artificial intelligence (AI) and quantum computing. There has also been a retooling of the cloud business. IBM’s strategy is to have a hybrid approach, which will likely be more amenable for large enterprise customers.

The company’s acquisition of Red Hat should be a nice driver too. With this, IBM has become one of the largest players in the fast-growing open source market.

Given the fall in its stock price, it should be no surprise that IBM stock is trading at low levels. Right now, the P/E is only 11.57 times. Plus, at 5.11%, this stock has one of the highest dividend yields in the tech industry.

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article except PFE.

Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling.  He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.

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An old rule for fund allocation to equities is to subtract your age from 100. As an example, a person who is 60 years old can possibly have 40% of his cash holdings allocated to equities. However, a lot depends on the risk-taking ability of an investor. I believe that investments in retirement stocks should focus largely on companies in a mature industry with stable cash flows.

In order to choose stocks for a retirement portfolio, I have used the following criteria.

The stock should have a beta of less than one. High-beta stocks might provide higher returns when markets are bullish. However, capital preservation is the key for retirement investments, and low-beta stocks protect the capital.

The company should have a multi-year history of dividends and the balance sheet fundamentals should be robust. A good retirement portfolio is one that provides investors with steady cash flows. In a low-interest-rate environment, it makes sense to buy stocks that have a healthy dividend yield.

I have also focused on high-quality stocks that have strong fundamentals, but have been under-performers in the last one year. Exposure to these stocks will give investors potential capital gains in addition to dividend income.

Overall, in my view, retirement investments should focus on capital preservation and returns that beat inflation.

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Let’s discuss seven stocks that have been screened and deserve a place in the retirement portfolio.

• Costco Wholesale (NASDAQ:COST)
• Lockheed Martin (NYSE:LMT)
• Johnson & Johnson (NYSE:JNJ)
• Walmart (NYSE:WMT)
• Procter & Gamble (NYSE:PG)
• AstraZeneca PLC (NASDAQ:AZN)
• PepsiCo (NASDAQ:PEP)

Retirement Stocks: Costco Wholesale (COST)

Costco is attractive at current levels and worth buying for retirement investments. In the last year, COST stock has moved higher by over 5%. However, an annual dividend of $2.80 and a low beta of 0.65, makes the stock perfect for a retirement portfolio.

From a business perspective, Costco has been delivering strong numbers. For the first quarter of 2021, the company reported sales growth of 16.9%. Further, for January 2021, sales growth was 17.9% on a year-on-year basis. With a strong financial performance, COST stock is bound to trend higher from current levels.

It’s also worth noting that the company’s e-commerce sales growth for Q1 2021 was 86.4%. With the company building strong online presence, it’s likely to remain competitive. The company already has online presence in eight countries.

From a cash flow perspective, Costco has 107 million card holders and currently earns $3.5 billion in membership fees. With a global renewal rate of 88%, the company is well positioned for strong cash flows.

Costco has a strong presence in U.S. and Canada. However, the company is entering new markets, which includes China and France. If growth gains traction in China, the company’s top-line growth and membership fee growth are likely to remain strong.

Overall, Costco’s business is relatively immune to economic fluctuations and the company has robust cash flows. Dividends are likely to continue increasing on an annual basis. These factors make COST stock among the top names to consider for retirement investments.

Lockheed Martin (LMT)

With an annual dividend payout of $10.40 and an attractive dividend yield of 3.1%, Lockheed Martin is an  attractive option for the retirement portfolio. LMT stock also has a low beta of 0.94. On top of these factors, the stock trades at a trailing price-to-earnings ratio of 13.8. With sustained financial growth, the stock is undervalued.

Lockheed Martin, being in the defense sector, is also immune to economic shocks. This point is underscored by the fact that the company’s order backlog has continued to increase on a year-on-year basis. The company closed FY2020 with a record backlog of $147 billion, which provides clear revenue visibility.

A near-term headwind for the company is the extension of the review by regulators on the proposed acquisition of Aerojet Rocketdyne (NYSE:AJRD). However, even in the worst-case scenario, I don’t see significant downside from current levels.

Coming to the financials, the company reported operating cash flow of $8.2 billion for FY2020. Strong OCF has allowed the company to return $3.9 billion to shareholders in the form of dividends and share repurchase. Given the order backlog, value creation is likely to continue.

It’s important to note that NATO allies are targeting 2% of GDP spending on defense. Most countries fall short of this target spending. This implies higher defense expenditure in the next few years, which is good news for Lockheed Martin.

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Overall, LMT stock is among the top stocks to consider for retirement investment. Besides the healthy dividend payout, I expect significant capital gains from current levels.

Johnson & Johnson (JNJ)

Johnson & Johnson is another quality name that deserves a place in the retirement portfolio. From a technical perspective, JNJ stock has strong support roughly around $150 levels.

On Feb. 27, the company received approval from the U.S. Food and Drug Administration for the emergency use authorization of the Janssen Covid-19. This is a potential near-term trigger for the stock trending higher.

Similar to the other names discussed, JNJ stock has a low beta and an attractive dividend yield of 2.5%. In a low interest rate environment, the yield is attractive. Importantly, dividends are sustainable considering the company’s business outlook.

In terms of the business outlook, Johnson & Johnson is well diversified. The company’s biggest revenue segment is pharmaceutical sales. For FY2020, the segment reported $45.57 billion in sales, which was higher by around 8% on a yoy basis. With strong presence in neurology, oncology and infectious diseases, segment sales are likely to remain strong.

The consumer health and medical devices segment growth was impacted in FY2020 due to the pandemic. However, these segments will continue to deliver strong cash flows in the coming years.

It’s worth noting that for the last year, the company invested $12.2 billion in research and development. These investments will manifest in the form of a strong pipeline of products across segments.

With these factors, JNJ stock is a good retirement investment. The company’s strong free cash flows point to sustained growth in dividends, which is a key criterion for a retirement portfolio.

Walmart (WMT)

The U.S. economy is primarily driven by consumption spending. A key objective of expansionary monetary policies and fiscal stimulus is to boost consumption spending in the economy. Walmart is one of the best plays in that sector.

WMT stock has gradually trended higher by 11% in the last year. However, stable dividends and a low beta of 0.48 are the factors that make WMT stock worth considering for your retirement stocks.

To put things into perspective, Walmart reported operating and free cash flow of $36.1 billion and $25.8 billion respectively for FY2021.

In terms of growth, I am bullish on Walmart’s global presence. On a constant currency basis, the company’s international sales increased by 5.2% in FY2021. This growth was driven by strong sales in Mexico, Canada and India (Flipkart).

India is home to over 1.3 billion people and the adoption of e-commerce is still at an early stage. The country can be among the top markets for Walmart in the next decade. In the U.S., Walmart is focused on building supply chain capacity, automation and improving omni-channel sales. The company’s e-commerce growth was 69% on a yoy basis.

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Overall, even with an increase in minimum wages in the United States, Walmart is well positioned to deliver healthy margins and strong cash flows. Dividends are likely to continue increasing, making the stock attractive for income investors.

Procter & Gamble (PG)

PG stock has been in an extended period of consolidation and has been almost sideways in the last year. With a low beta of 0.41 and a dividend yield of 2.55%, the stock is worth considering for a defensive portfolio. At a trailing P/E of 23.9, I also believe that PG stock can deliver health capital gains after underperforming in the last one year.

It’s important to note is that PG stock might have traded sideways. However, the company’s organic sales growth and earnings growth has been healthy. For Q2 2021, organic sales growth was 8% with all 10 global product categories witnessing growth. As a matter of fact, sales growth has been at or over 5% in the last six quarters. Further, for Q2 2021, core earnings per share growth was 15%.

In terms of dividends, the company reported operating cash flow of $5.4 billion for the most recent quarter. This positions the company well for value creation through dividends and share repurchase.

Due to the pandemic, Procter & Gamble did face channel and supply chain disruption headwinds. This impacted growth in Asia Pacific, Middle East and Africa. However, I believe that growing presence in emerging markets will ensure sustained growth for the company in the coming years.

Overall, PG is worth buying for your retirement stocks. The company has a strong business, healthy financials and attractive dividends.

AstraZeneca PLC (AZN)

Among companies in the pharmaceutical sector, I like AstraZeneca for a place in the retirement portfolio. AZN stock has been in a zone of consolidation in the last one year.

Based on analyst ratings, the stock has an average price target of $63.95. This would imply a 35.7% upside from current levels of $47.04. Besides being undervalued, AZN stock has a beta of 0.17 and a dividend yield of 2.93%. These are big reasons to consider exposure to the stock.

For FY2020, AstraZeneca reported strong top-line growth of 10%. New medicines were a key contributor to growth with $3.5 billion in incremental revenue contributions. With AstraZeneca having a strong late-stage pipeline, it’s likely that healthy top-line growth will sustain in the coming years.

AstraZeneca reported net debt of $12.1 billion as of FY2020. Besides stable dividends, one of the financial priorities of the company is to de-leverage. With strong operating cash flows, the company is positioned to report better credit metrics in the next few years.

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Overall, a strong investment in research and a deep pipeline of new products are positive triggers for the company. At current levels, investors stand to benefit in the form of capital gains and steady dividends.

PepsiCo (PEP)

With a long history of shareholder value creation, Pepsi stock is another name to include among retirement investments. Like all the other names discussed, PEP stock has a low beta of 0.61. In addition, a dividend yield of 3.1% makes the stock worth considering.

PEP stock has been an underperformer in the last year with negative returns of 5.84%. However, the average analyst estimates a price target of $151.95 for the stock. This implies an upside of around 17% from current levels.

It’s important to note that even as PEP stock remains depressed, the company’s top-line and earnings growth has been steady. Even for FY2021 PepsiCo is expecting mid-single-digit organic revenue growth.

In terms of specific businesses, I am bullish on growth from the beverage segment. Recently, the company launched Neon Zebra, which caters to the growing cocktail mixers category. PepsiCo believes that the cocktail category is worth more than $858 million. Therefore, product innovation is one growth trigger for the company.

As a matter of fact, PepsiCo now has 23 brands that generate more than $1 billion each in annual sales. With a wide product offering and global presence, the company is positioned for steady growth and value creation, and caps off my suggestions for the best retirement stocks.

On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. 

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored more than 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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Seasoned investors realize blue-chip stocks could help achieve financial independence in retirement. A blue-chip business is a well-established company that typically has a long and robust earnings history, tangible assets, stable dividends, and proactive management. Share prices of blue-chips also tend to recover quite quickly from market declines. All these characteristics make them strong choices for retirement portfolios. Today’s article, therefore, discusses seven blue-chip retirement stocks that may be perfect for those golden years.

Members of the Dow Jones Industrial Average (DJIA) are accepted as blue-chip stocks. Over the past year, the DJIA has returned over 14%. In addition, the annual average dividend yield of the index stands around 2%.

Many investors in their later years consider living off the cash flow generated by dividend payments in their portfolio holdings without even tapping into their capital. Therefore, these fiscally-stable blue chip retirement stocks could be appropriate for such passive-income seekers.

S&P Global (NYSE:SPGI) suggests, “Since 1926, dividends have contributed to approximately one-third of total return while capital appreciations have contributed two-thirds. Therefore, both sustainable dividend income and capital appreciation potential are important to total return expectations.”

Blue-chip stocks also help investors in portfolio diversification. The U.S. Securities and Exchange Commission (SEC) suggests, “By picking the right group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.”

With that information, here’re seven options you may want to check for investing in blue chip retirement stocks in 2021.

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• CVS Health (NYSE:CVS)
• Health Care Select Sector SPDR Fund (NYSEARCA:XLV)
• International Business Machines (NYSE:IBM)
• International Paper (NYSE:IP)
• Invesco Dow Jones Industrial Average Dividend ETF (NYSEARCA:DJD)
• iShares U.S. Consumer Goods ETF (NYSE:IYK)
• Procter & Gamble (NYSE:PG)

Retirement Stocks: CVS Health (CVS)

52-week range: $52.04  – $77.23
Dividend yield: 2.90 %

Rhode Island-based healthcare CVS Health needs little introduction. It has over 10,000 retail pharmacy locations in close proximity to 80% of the U.S. population. The company is also the largest pharmacy benefit manager stateside.

CVS Health reported Q4 and full year results on Feb. 16. Total revenue was $69.6 billion, a 4% YoY increase. GAAP net income decreased 44.1% to $975 million. This decline was mainly due to lower operating income because of the pandemic as well as a loss on early extinguishment of debt of $674 million during the quarter. Adjusted diluted earnings per share was $1.30, compared to $1.73 in the prior year quarter.

On the other hand, net income increased 8.5% for the year ended Dec. 31, 2020. CEO Karen Lynch stated:

We utilized the full depth and breadth of our capabilities and our presence in local communities across the country to play a leadership role in COVID-19 testing and vaccine administration. Our ability to deliver 2020 full year results above expectations is a testament to the strength of our strategy and the flexibility of our diversified health services model.

The group is increasingly playing a key role in vaccine distribution. As a result, foot traffic is likely to increase in those locations, helping boost revenues in the long-run. Passive-income seekers could consider buying shares of this retirement stock.

Health Care Select Sector SPDR Fund (XLV)

52-Week Range: $73.54 – $118.99
Dividend Yield: 1.5%
Expense Ratio: 0.12% per year

Over the past year, health became one of the most important parts of our lives. Therefore, our next choice in this list of retirement stocks is an exchange-traded fund (ETF). The Health Care Select Sector SPDR Fund focuses on biopharma and life sciences firms. Other business in the fund include providers of healthcare equipment and supplies. Since its inception in December 1998, funds under management have grown close to $25 billion.

XLV, which tracks the Health Care Select Sector Index, holds 63 stocks. Close to 50% of the fund’s assets are concentrated in the top ten stocks. They include Johnson & Johnson (NYSE:JNJ), UnitedHealth (NYSE:UNH), Abbott Laboratories (NYSE:ABT), AbbVie (NYSE:ABBV), and Merck (NYSE:MRK).

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Year-to-date (YTD), the fund is flat. But, it hit a record high on Jan. 26. Its current price supports a dividend yield of 1.5%. Given the current volatility in broader markets, several of the names in the fund could come under increased pressure. Potential declines would improve the margin of safety for buy-and-hold investors.

International Business Machines (IBM)

52-week range: $90.56 – $136.09
Dividend yield: 5.42%

Armonk, New York-headquartered tech giant International Business Machines offers software, information technology (IT) services and hardware. Over 90% of the Fortune 500 companies are its clients. IBM’s mainframes manage 90% of all credit card transactions globally. Therefore, the company is aiming to become a dominant fintech and blockchain player. The group is also responsible for 50% of all wireless connections in the world.

IBM reported 2020 fourth quarter and full year results on Jan. 21. Q4 net revenue was $20.4 billion, down 6% YoY. Yet, analysts were pleased to see that total cloud revenue came at $7.5 billion, up 10% YoY. The company has been focusing on increased cloud-based software solutions.

Non-GAAP net income and diluted EPS were $1.9 billion and $2.07, respectively, both down 56% YoY. IBM’s free cash flow was $6.1 billion during the quarter.

“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations while dealing with the broader uncertainty of the macro environment.” said Arvind Krishna, IBM chief executive officer. “The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”

The fact that IBM shares have not done well over the past year means the dividend yield now stands well above 5%. As the company reorganizes to become a leaner operation with cloud based recurring revenue streams, its shares are likely to shine again.

International Paper (IP)

52-Week Range: $26.38 – $53.39
Dividend Yield: 4.12%

Memphis, Tennessee-based paper and packaging group International Paper has operations worldwide. Its segments include Industrial Packaging, Global Cellulose Fibers, Printing Papers and Consumer Packaging.

On Feb. 4, the group announced full-year and fourth-quarter 2020 results. Net sales for the quarter were $5.24 billion, compared to $5.50 billion in Q4 2019. Quarterly net earnings and EPS came at $153 million 39 cents per diluted share. A year ago, the metrics had been $165 million or 42 cents per diluted share. Finally, free cash flow for the quarter stood at $695 million.

Analysts noted the strength in packaging products. However, paper sales declined. CEO Mark Sutton said, “In 2020, we returned $800 million to shareholders and reduced debt by $1.7 billion… As we enter 2021, we anticipate continued strong demand for corrugated packaging and pulp and are poised to grow earnings.”

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Potential investors would find better value around $47.50.

Invesco Dow Jones Industrial Average Dividend ETF (DJD)

52-Week Range: $25.21 – $41.57
Dividend Yield: 0.99%
Expense Ratio: 0.07%

Our next choice is another ETF, the Invesco Dow Jones Industrial Average Dividend ETF. The fund provides exposure to dividend-paying companies in the DJIA. It is based on the Dow Jones Industrial Average Yield Weighted (Index), which includes firms with consistent dividend payments over the previous 12 months. Both the index and the ETF are balanced semi-annually.

Since its inception in December 2015, assets under management have reached $91 million. It currently holds 28 stocks and close to 60% of the fund is allocated to the top ten names. Chevron (NYSE:CVX), Dow (NYSE:DOW), Walgreens Boots Alliance (NASDAQ:WBA), JPMorgan Chase (NYSE:JPM) lead the names in the roster. 

YTD, the ETF is up almost 7%. Given the increased volatility in broader markets, several of the names in the fund could come under pressure in the coming days. A potential decline toward $39 or lower would improve the margin of safety.

iShares U.S. Consumer Goods ETF (IYK)

52-Week Range: $92 – 182.13
Dividend Yield: 1.42%
Expense Ratio: 0.43%

The iShares U.S. Consumer Goods ETF gives access to consumer goods firms stateside. These businesses operate in sectors that span from food and beverage to automobile and household items. IYK started trading in June 2000, and net assets stand at $739 million.

IYK, which tracks the returns of the Dow Jones U.S. Consumer Goods Index, currently has 97 holdings. The top ten stocks comprise over 55% of total holdings. As far as industries are concerned, funds are distributed among Food, Beverage, Tobacco (35.25%), Auto & Components (23.41%), Household & Personal Products (17.78%) and Consumer Durables (15.91%), among others.

The leading name in the ETF is Tesla (NASDAQ:TSLA), which accounts for 16.94% of the fund’s total holdings. Next in line are Procter & Gamble, Coca-Cola (NYSE:KO), PepsiCo (NASDAQ:PEP), and Nike (NYSE:NKE).

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IYK is down 1.3% since the start of the year. Yet, it hit a record high in early February. As a result of the increase in price over the past year, the valuation metrics are frothy. Those investors who would like to have significant exposure to shares of Tesla as well as U.S. consumer giants could consider investing in the fund, especially in the case of a short-term decline toward $160.

Procter & Gamble (PG)

52-week range: $94.34 – $146.92
Dividend yield: 2.55%

Last up on this list of retirement stocks is Cincinnati, Ohio-based Procter & Gamble, one of the most important consumer goods companies worldwide. Its history goes back to 1837. Several of its well-known brands include, Ariel, Charmin, Crest, Downy, Febreze, Gillette, Head & Shoulders, Olay, Oral-B, Pampers, Pantene, Tide, and Vicks.

On Jan.20, the group announced FY21 Q2 results. Net sales of $19.7 billion showed an increase of 8% YoY. Net earnings were $3.8 billion, up by 4% YoY. Diluted net EPS was $1.47, also an increase of 4% YoY. Free cash flow as of Dec. 31, 2020 was $4.9 billion.

CEO David Taylor remarked, “We delivered another strong quarter of results across all key measures – top line, bottom line and cash. We remain focused on executing our strategies of superiority, productivity, constructive disruption and improving P&G’s organization and culture.”

Buy-and-hold investors might want to keep the stock on their radar for a potential decline toward the $115 level. Seasoned investors are likely to know that P&G has had 64 years of consecutive dividend increases, making the company a Dividend King.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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2020 was tough. If you felt the pinch, you might be thinking about pulling some money out of your retirement fund.

Years ago, one of my relatives borrowed money from his 401(k) to move to a new house. Even back then (I was in college), I thought, “That doesn’t sound like a great idea.” And it wasn’t… because he never paid back the loan. He owed a mountain of taxes on a “loan” that swiftly turned into a withdrawal.

I tell you this story because it taught me a valuable lesson. So for those thinking about borrowing from their 401(k)? Two things to note:

• Borrowing money from your retirement fund presents some risk; and
• When faced with a money shortage, you might not think you have any other options.

Let’s take a look at some of the potential pitfalls.

Risks of Borrowing Money from Your 401(k)

If you wanted to, you could call up your company’s HR office right now and ask to take a loan out of your retirement fund, which you must pay back within five years. But that decision comes with some serious strings.

Risk 1: Double taxation

One of the biggest arguments against taking a loan from your retirement plan? The amount you repay in interest ends up double taxed. When you make your loan repayments, including the interest, you use money that’s already been taxed. That’s on top of the taxes you pay when you withdraw from your retirement account. Double whammy.

Risk 2: You’ll have to pay it back more quickly if you leave your job

If you change jobs, quit or get fired, you’ll have to repay your balance sooner than that five year period. That being said, you would have until the due date of your federal income tax return to repay the amount you borrowed from your 401(k).

Risk 3: Your money will grow more slowly

Even though you’ll pay yourself back, you’re still removing money from your retirement account and thus preventing that money from growing. The less money you have in your plan, the less that amount can grow using compound interest. Five years is a long time to lose out on the minor miracle of compounding interest.

Risk 4: It might turn into a withdrawal

What happens if you don’t pay back the money you borrow? Your workplace retirement loan could turn into an early withdrawal. If you’re younger than the age of 59½, you’ll have to pay income tax on that amount, plus a hefty additional 10% penalty on the outstanding loan balance.

Risk 5: You might not have the opportunity to borrow from your plan

Some employers won’t allow their employees to take out a retirement loan at all. Check with your plan administrator or look at its website to see whether you can use this as an option. Don’t rely on a retirement loan as your only option in a financial bind, because it might not even be an avenue available to you.

If You Must Borrow From Your Retirement Fund, Take These Steps

If you have absolutely no other choice and absolutely must borrow from your retirement plan, take these steps.

Step 1: Figure out how much money you need

You want to take out only what you need, because again, you set yourself up for some risks, including the fact that you will never get the compounded interest back — ever. So if you only need $9,000, don’t take out $12,000 “just in case.”

Step 2: Visit your company’s HR department

Visit your human resources (HR) department and inquire about borrowing against your retirement plan. Ask about specific details. In some cases, you can only borrow from your own vested balance. Other companies will let you borrow from both the vested balance and the company match.

Step 3: Learn the repayment details

Again, you must pay this money back within five years. You can do that via automatic deductions. Find out how much interest you must pay on the loan. Your plan administrator usually calculates the interest rate by adding one or two percentage points to the current prime rate. The interest you pay gets added to your 401(k) account.

Step 4: Borrow and pay back your loan

The only thing you have left to do is pay off your loan once you actually decide to take the loan and fill out the paperwork. It’s worth noting that the CARES Act allowed plan sponsors to give you up to an additional year to pay off your 401(k) loans as long as you qualify.

Alternative Ways to Get Money

Want to consider your alternatives, rather than a 401(k) loan? Take a look at these two options instead.

Alternative 1: Tap into your savings

It’s why you have a savings account, right? It’s time to tap into that money instead of borrowing from your retirement account. In fact, if you have this option, take advantage of it.

Experts suggest keeping three to six months’ worth of necessary monthly expenses in your savings account. If you do borrow from your savings account, try to keep at least one month’s living expenses on hand (or $1,000), whichever is higher.

Alternative 2: Consider a home equity loan

You could also consider a home equity loan, or second mortgage, which allows you to borrow a lump sum using your home’s equity.

You can get a home equity loan through banks, credit unions or online lenders and choose from a variety of repayment periods, many longer than the five-year range for 401(k) loans. However, that repayment period depends on your credit score, home equity availability and financial situation.

You’ll get a sense of what you can borrow, your interest rate, monthly payment, the term of the loan and any fees involved. Once you agree to the loan terms, you get a lump sum and can pay back the loan over time in fixed monthly payments.

Think Carefully About Your Retirement Money

What became of my relative? Sadly, he passed away about 10 years later with nothing to pass on to his wife, kids or grandkids, and I always think of that well-intentioned 401(k) plan that he had. It always makes me sad to think about it, and I don’t want that to happen to others.

When you need money during these difficult financial times, you maybe tempted to borrow from your 401(k). However, remember that your ticket to a successful future sometimes lies in those retirement funds. Take this decision very seriously!

If you have to borrow money, look into several alternative options to compare fees and interest rates on a home equity loan or another type of loan. Compare those rates to how much you’ll pay borrowing from your 401(k).

Melissa Brock is a 12-year veteran of college admission, founder of College Money Tips and Money editor at Benzinga. She loves helping families navigate their finances and the college search process. Check out her essential timeline and checklist for the college search!

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Technologically savvy, independent, entrepreneurial, diverse, but connected, socially responsible, and financially focused … Welcome the first genuinely digital-native generation: Generation Z (Gen Z). Although different researchers may assign slightly different ranges, Gen Z is typically accepted as the cohort born between 1997 and 2012. Today, we introduce seven retirement stocks for Gen Z to buy and hold.

Gen Z is the first generation that does not know a world without the internet and, as such, differs dramatically from the previous two generations, Generation X (Gen X) and millennials (Gen Y). Recent metrics show Gen Z makes up close to a quarter of the U.S. population. Furthermore, their spending power is about $150 billion in the U.S.

These young people are getting ready to enter the world stage as they continue with their studies and prepare themselves for their working years. The way they conduct their personal and professional lives, shop and save will become a dominant factor for our economy. Research by McKinsey reveals, “Companies should be attuned to three implications for this generation: consumption as access rather than possession, consumption as an expression of individual identity, and consumption as a matter of ethical concern.”

Understandably, the pandemic has affected the spending patterns of Gen Z. Now, “Gen Z is going all-in on tech.” On the other hand, “When it comes to shopping in-store, comfort levels are down, and anxiety is up … 62% of Gen Z shoppers shared that it may take them a while before they feel comfortable shopping in a mall again.”

According to researcher Jason Dorsey, surveys by the Center for Generational Kinetics (CGK) show, “the impact of watching their parents struggle during the Great Recession shaped Gen Z to save money, think about and plan for retirement, seek companies that offer benefits as part of employment, create emergency accounts at a young age, and make budget-conscious decisions.”

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With that information, here are seven retirement stocks that Gen Z investors could consider investing in for the long term:

• Electronic Arts (NASDAQ:EA)
• Expedia (NASDAQ:EXPE)
• Hain Celestial (NASDAQ:HAIN)
• Invesco NASDAQ Next Gen 100 ETF (NASDAQ:QQQJ)
• NextEra Energy (NYSE:NEE)
• Schwab U.S. Large-Cap Growth ETF (NYSEARCA:SCHG)
• Vanguard Information Technology Index Fund ETF Shares (NYSEARCA:VGT)

Retirement Stocks: Electronic Arts (EA)

52-week range: $85.69 – $150.30
1-year price change: 29%
Dividend yield: 0.48%

My first pick for this list of retirement stocks is EA. Redwood City, California-based gaming group Electronic Arts is a leading name in digital interactive entertainment. Impressively, the company has a portfolio of well-known titles such as EA Sports FIFA, Battlefield, Apex Legends, The Sims, Madden NFL, Need for Speed and Titanfall.

On Feb.2, EA announced Q3 FY21 results. Net revenue was $1.67 billion, up from $1.59 last year. But net income of $211 million was down from $346 a year ago. Diluted earnings per share (EPS) also decreased from $1.18 to 72 cents. Furthermore, operating cash flow was $1.12 billion. Analysts noted the increased levels of player engagement and the growth in the mobile business.

CEO Andrew Wilson commented, “With our expansion plans for EA SPORTS, strong catalogue of owned IP, leading live services, and ability to span every platform, we are growing to reach an even larger audience.” COO and CFO Blake Jorgensen added, “Looking further ahead, even with the upside this year, we anticipate delivering growth in fiscal 2022, driven by the next Battlefield.”

The group’s FY21 ends on Mar. 31, 2021. For the fiscal year, management expects net revenue to come at $5.6 billion. Projected net income of $742 million is expected to translate into diluted EPS of $2.54.

EA stock’s current forward price-to earnings (P/E) and price-to-sales (P/S) ratios are 24.10 and 7.52, respectively. It has recently announced it will acquire Glu Mobile (NASDAQ:GLUU), a move that is likely to provide further tailwinds to its mobile focus. Electronic Arts could be a great pick when it comes to retirement stocks.

Expedia Group (EXPE)

52-week range: $40.76 – $166.57
1-year price change: 36.5%  

Seattle, Washington-based online travel platform Expedia was initially one of the most affected travel stocks in the early weeks of the pandemic. While the demand for air tickets, car rentals, cruises, hotel bookings and lodging collapsed, so did the EXPE share price. However, in February, as the markets focused on a potential rebound in travel services, the stock hit a record high.

Q4 financial results released on Feb. 11 showed revenue of $920 million, a decline of 67% year-over-year. Plus, adjusted net loss for the quarter was $376 million, translating into adjusted EPS of $2.64. 

CEO Peter Kern cited, “Q4 did not show any real sequential progress other than some signs of modest improvement around the holidays that carried into the early part of 2021. While the environment continues to be unpredictable, we remain keenly focused on reshaping and simplifying our business.”

EXPE stock’s P/S and price-to-book (P/B) ratios are 4.32 and 15.14, respectively. Given the continuing uncertainties due to Covid-19, Expedia might still come under pressure in the coming weeks. However, high hopes of the vaccine’s positive results also mean that further declines are likely to be short-lived.

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With its well-known brands, such as Hotels.com, Trivago, Orbitz, Travelocity, CheapTickets, CarRentals.com, Expedia Cruises and VacationRentals.com, Expedia is likely to reach new highs in the coming quarters, too.

Hain Celestial Group (HAIN)

52-week range: $18.12 – $45.42
1-year price change: 58%  

Lake Success, New York-based Hain is an organic and natural products company. Operations extend beyond North America to Europe, Asia and the Middle East. Its brands include Celestial Seasonings, Terra, Ella’s Kitchen, The Greek Gods and Yves Veggie Cuisine.

According to the second-quarter results released on Feb. 9, net sales were $528.4 million, an increase of 4% YoY. Furthermore, adjusted net income was $34.7 million, up 97% YoY. Adjusted EPS of 34 cents doubled from the same quarter the prior year. Operating free cash flow was $46.3 million, compared to $4.6 million in Q2 2020. Additionally, analysts were pleased to see improvements in margins and free cash flow.  

CEO Mark L. Schiller commented, “Although the macro operating environment remains challenging, our team continues to execute well against our transformational agenda. As a result, I am confident we will continue to see solid margin expansion and profit growth as we progress through the second half of fiscal year 2021.”

HAIN stock’s forward P/E and P/S ratios are 32.79 and 2.12, respectively. Given the broad product portfolio and transformation efforts for growth, Hain stock could be regarded as a solid long-term investment. Yet, with the recent increase in price, some investors are likely to ring the cash register soon.

A potential decline toward $40 or below would improve the margin of safety in the shares of the tea and organic food specialist, making this a great pick for investors looking at retirement stocks.

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

52-week range: $24.67 – $35.18
1-year price change (since Oct. 2020): 25%
Dividend yield: 0.34%
Expense ratio: 0.15%, or $15 annually on a $10,000 investment

Our next discussion centers around an exchange-traded fund (ETF). The Invesco NASDAQ Next Gen 100 ETF gives access to the 101st to the 200th largest non-financial firms listed on the Nasdaq stock exchange.

Most InvestorPlace readers are probably familiar with the NASDAQ 100 index, which is made up of the 100 largest U.S. and non-U.S.-based non-financial companies listed on the Nasdaq. The NASDAQ 100 is also referred to as the triple Qs.

QQQJ started trading in October 2020 and assets under management are about $1.1 billion. The fund follows the NASDAQ Next Generation 100 index, which focuses on firms that could possibly move up to the NASDAQ 100.

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Shares of information technology (IT) companies have the highest weighting (42.89%), followed by health care (19.02%), communication services (15.58%), consumer discretionary (13.85%), and others. The top 10 holdings comprise about 19% of net assets. The top three names in the fund are:

• Roku (NASDAQ:ROKU): the streaming entertainment content platform is up over 246% in the past year
• Crowdstrike (NASDAQ:CRWD): the cybersecurity technology group is up over 252% in the past year
• Trade Desk (NASDAQ:TTD): the digital-advertising platform is up over 158% in the past year

The fund deserves to be on investors’ lists of retirement stocks. A large number of the companies in the fund are likely to become household names in the coming quarters.

NextEra Energy (NEE)

52-week range: $43.70 – $87.69
1-year price change: 5.89%
Dividend yield: 2.06%

My next pick for retirement stocks for Gen Z is NextEra Energy. Juno Beach, Florida-based NEE is a clean energy company that owns Florida Power & Light Company, serving more than 5.6 million customer accounts. The group also operates NextEra Energy Resources, one of the largest generators of renewable energy companies worldwide. It is a leader in battery storage, too.

Fourth-quarter financial results were released on Jan. 26. Adjusted income was $785 million, an increase of 11% YoY. Adjusted EPS was 40 cents per share, up 11% YoY. Additionally, cash and equivalents were $96 million, compared to $64 million a year ago.

CEO Jim Robo cited, “Based on the strength and resiliency of our underlying businesses, I will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2021, 2022, and 2023, while at the same time maintaining our strong credit ratings.”

NEE stock’s forward P/E and P/S ratios are 29.85 and 8.22, respectively. Although the shares are not cheap by historical valuation levels, the optimistic outlook for green energy companies continues. Buy-and-hold investors could consider a decline toward $75 or even below as a better entry point. Most analysts concur NextEra has plenty of power to keep growing.

Schwab U.S. Large-Cap Growth ETF (SCHG)

52-week range: $67.25 – $137.20
1-year price change: 30.9%
Dividend yield: 0.52%
Expense ratio: 0.04%

Our next choice is another fund, namely the Schwab U.S. Large-Cap Growth ETF. SCHG, which started trading in November 2009, provides exposure to U.S.-based large capitalization (cap) growth stocks. The definition of large caps may differ slightly across brokerages. A firm with a market cap of more than $10 billion is usually considered a large-cap company. At present, over 75% of the companies in the ETF have markets caps above $70 billion.

SCHG, which has 232 holdings, tracks the returns of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. Assets under management stand close to $14 billion. As far as the sectors are concerned, IT has the highest weighting (45.38%), followed by consumer discretionary (16.65%), communication services (14.93%), healthcare (12.31%) and industrials (3.54%).

The top 10 holdings comprise over 50% of the fund. Heavyweights include Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA).

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Growth names have consistently outperformed value stocks in the past decade. Therefore, those investors who believe record-low interest rates and technological tailwinds will provide further momentum to such growth names could consider buying the dips in the ETF.

Vanguard Information Technology Index Fund ETF Shares (VGT)

52-week range: $179.45 – $382.73
1-year price change: 37.75%
Dividend yield: 0.83%
Expense ratio: 0.1%

The Vanguard Information Technology ETF gives access to businesses that mainly operate in IT. The fund started trading in January 2004, and net assets stand close to $47 billion. 

VGT, which has 345 holdings, tracks the MSCI US IMI Info Technology 25/50 index. Close to 60% of the funds are in the top ten stocks. Apple, Microsoft, Nvidia (NASDAQ:NVDA), Visa (NYSE:V) and Mastercard (NYSE:MA) top the names in the roster. These firms have been among technology and growth leaders in the past decade.

Looking at sector allocations, technology hardware, storage and peripheral leading with 23.2%, followed by systems software (20.1%), semiconductors (15.9%), application software (13.3%) and data processing and outsourced services (12.9%).

In a future shaped by Gen Z demands, the uptrend in shares of tech companies are likely to continue. Despite occasional profit-taking, the fund should continue to do well in the coming quarters, too.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. 

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There are two types of dividend stocks: those that increase their annual dividend payments year after year, often referred to as Dividend Aristocrats, and those that grow their annual dividends by double-digit percentages every year. 

In early January, Rob Carrick, one of Canada’s best personal finance columnists, wrote an article about dividend stocks that doubled their payouts over the past 10 years. 

With an assist from Tom Connolly of DividendGrowth.ca, they’ve put together a list of stocks that have delivered 10-year annualized dividend growth of 7.2%. 

Why 7.2%? 

That’s the amount of growth you’d need based on the Rule of 72 — 72 divided by 7.2% equals 10– the number of years growth required to double a company’s dividend payout. 

Now the names on the list, while excellent businesses, are mostly traded exclusively on the Toronto Stock Exchange. Thus, some of them are only available over-the-counter, through a broker that has access to the TSX, or not at all. 

Of the 15, eight trade on a U.S. exchange. I’d check them out. 

• Masco (NYSE:MAS)  
• Rollins (NYSE:ROL)
• Moelis & Company (NYSE:MC) 
• Tractor Supply (NASDAQ:TSCO)
• Victory Capital (NASDAQ:VCTR) 
• GlaxoSmithKline (NYSE:GSK) 
• T. Rowe Price (NASDAQ:TROW)  
• S&P Global (NYSE:SPGI) 
• Open Text (NASDAQ:OTEX)
• FirstService (NASDAQ:FSV)

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In the meantime, here are 10 dividend stocks that are likely to do the same.

Dividend Stocks to Buy: Masco (MAS)

Business has been good for the global leader in home improvement and building products whose brands include Behr Paint, Delta faucets, and Endless Pools. 

On Feb. 9, the Michigan-based company announced that it was increasing its annual dividend by 68% from 56 cents to 94 cents, starting with the Q2 2021 payment. Also, the company announced a new $2 billion share repurchase program effective immediately. 

“The anticipated dividend increase we’ve announced today, along with the new $2B share repurchase authorization, underscores our strong financial position and the Board’s confidence in our future,” stated Chief Executive Officer Keith Allman.

In recent years, Masco has ridden the home improvement boom to deliver a five-year annualized total return of 17.3% through Feb. 12. 

With a trailing 12-month (TTM) free cash flow (FCF) of $840 million, it has an FCF yield of 5.3% based on an enterprise value of $15.8 billion.  

Rollins (ROL)

I’ve always liked Rollins, one of the world’s largest providers of pest control services. 

In May 2016, I included ROL in a group of 10 top stocks that ought to be in every retirement portfolio. It’s up 224% since then, and that doesn’t even include the dividends. 

“Over the long haul, it hasn’t disappointed delivering 18 consecutive years of earnings growth and 14 consecutive years of dividend increases averaging 12%,” I wrote on May 18, 2016. 

In fiscal 2020, Rollins increased sales and earnings by 7.2% and 13.3%, respectively. Accounting for the 3-for-2 split on Dec. 10, 2020, Rollins’ board announced on Jan. 26 that it would increase its quarterly dividend by 50% over Q4 2020 to 8 cents starting with its February 2021 payment. 

The company paid out $161 million in dividends in 2020, up from $154 million in 2019. The company repurchases very little of its stock. Between 2017 and 2019, it repurchased just $28 million of its shares, opting to use most of its free cash for dividends and acquisitions. 

Rollins has a trailing 12-month free cash flow (FCF) of $380 million. That works out to an FCF yield of 2% based on an enterprise value of $18.8 billion.  

It’s not cheap at current prices, but it will deliver an above-average total return [dividend income plus capital appreciation] over time. 

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Definitely buy this one on the dips. 

Moelis & Company (MC)

Moelis & Company is an independent investment bank based in New York City that went public in April 2014 at $25 a share. If you bought some of its initial public offering (IPO) and still hold it today, you’re sitting on a 119% return. 

There is no question the investment bank has had its ups and downs. In June 2018, it flirted with $70 before falling gradually to its 52-week low of $22.11 during the March 2020 correction. 

On Feb. 10, 2021, the company reported record Q4 2020 revenues of $422 million, up 89% from a year earlier. On the bottom line, its adjusted net income was $146 million, up considerably from $26 million in Q4 2019. 

In 2020, the company paid out dividends and executed share repurchases totaling almost $275 million. It included a $2 a share special dividend paid out in December while also increasing the regular quarterly dividend by 44% from the previous quarter and 8% from pre-Covid-19 levels.  

Tractor Supply (TSCO)

Tractor Supply is one of my all-time favorite companies, retail or otherwise. Its business model servicing the rural lifestyle makes abundant sense. 

In 2001, Tractor Supply made a transformative acquisition, acquiring bankrupt Michigan-based Quality Stores, a competitor with 85 stores at the time. It had 323 stores. Today, it has almost 2,000. 

It hasn’t been as lucky with another acquisition it made. In 2016, it acquired Petsense, a retailer of pet supplies, for $116 million. Petsense had 136 stores at the time. In Q4 2020, the company had non-cash pre-tax impairment charges of $74.1 million related to its Petsense operations. 

As a result of the charge, Tractor Supply’s operating income in the fourth quarter was $184.5 million, 3.1% lower than a year earlier. On the plus side, fourth-quarter sales were 31.3% higher over Q4 2019. 

The board announced on Jan. 28 that it would increase its quarterly dividend by 30% to 52 cents a share.    

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Tractor Supply is an outstanding retail stock to own for the long haul.   

Victory Capital (VCTR)

I thought Victory Capital was the only firm on my list of 10 dividend stocks that I’m unfamiliar with. Then it dawned on me that it’s the company behind VictoryShares and ETFs such as the VictoryShares Nasdaq Next 50 ETF (NASDAQ:QQQN).

However, if the San Antonio-based asset management firm keeps delivering quarterly results as it did in Q4 2020, I’ll have to get a lot more acquainted with it in a real hurry. 

The company finished fiscal 2020 with $136.4 billion in assets under management (AUM), 33% higher than a year earlier. A part of the increase was due to its 2019 acquisition of USAA Asset Management. 

On the bottom line, Victory generated record adjusted net income of $285.5 million in 2020, 48% higher than a year earlier. 

As part of the Feb. 10 press release of its fourth-quarter earnings, Victory Capital’s board announced a 29% increase in its quarterly dividend to 9 cents a share. It is the company’s third increase in a year. 

GlaxoSmithKline (GSK)

Anyone who suffers from back or joint pain is likely familiar with Voltaren, one of GlaxoSmithKline’s many products made by its consumer healthcare products division, merged with Pfizer’s (NYSE:PFE) consumer healthcare business in August 2019. It plans to separate the joint-venture into its own separate company. 

In addition to Voltaren, it makes Polident, Otrivin, Advil, Tums, and Centrum, and many others. Once GSK separates its consumer healthcare products business, it will focus on pharmaceuticals and vaccines. 

On Feb. 3, GSK reported its full-year results. They included a 3% sales increase year-over-year of 34.1 billion euros ($41.3 billion) and an FCF of 5.4 billion euros ($6.6 billion), 7% higher than in 2019. 

As for the dividend, it’s a bit of a mixed bag. 

Although the company increased its quarterly payment by 15% from $0.1746 a share to $0.2008 starting with the December 2020 payment, it also said that it wouldn’t increase the total dividend payments in 2021 from what it paid out in 2020.

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I’ve put it on the list of dividend stocks because it should provide investors with a much better entry point to buy its stock. It’s a definite value play at this point.

T. Rowe Price (TROW)

One of the four financial services companies on my list of dividend stocks, the Baltimore-based company announced on Feb. 10 that it was raising its quarterly dividend by 20% to $1.08 per share, the 35th consecutive year it has done so. That makes it a Dividend Aristocrat. The $4.32 annual payout yields a reasonable 2.7%.

On Jan. 28, T. Rowe Price reported Q4 2020 revenues of $1.73 billion, 18% higher than a year earlier, while adjusted earnings per share were 42% up over a year earlier. 

It was a good year for the investment manager in terms of asset gathering. In 2020, it had net client inflows of $5.6 billion, finishing the year with $1.47 trillion in assets under management. Its average assets under management in 2020 increased by 12.5%. 

The company finished 2020 debt-free with $6.2 billion in cash and investments in T.Rowe Price products. That’s up from $5.6 billion a year earlier. 

As long-term investments go, income investors ought to like T. Rowe Price. 

S&P Global (SPGI)

This isn’t the first time I’ve picked S&P Global as a stock to buy because of its increasing dividend. In April 2020, I picked SPGI stock along with nine other S&P 500 dividend stocks. Since then, it’s up 26%, a respectable, if not spectacular, return over 10 months.

On Jan. 27, it announced that it was increasing its quarterly dividend by 15% to 77 cents from 67 cents. S&P Global has paid a dividend each year since 1937 and increased its annual dividend for 48 consecutive years. 

In 2020, SPGI returned $1.8 billion to shareholders, including $645 million for dividends and $1.16 billion in share repurchases, no mean feat during a pandemic. 

“Increasing the dividend demonstrates our confidence and optimism in the continued strength of our cash flow generation and financial position,” said Douglas L. Peterson, CEO of S&P Global. “Returning cash to shareholders remains a cornerstone of our shareholder value proposition.”

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It has a very attractive FCF yield of 4.2% based on TTM FCF of $3.49 billion and an $82.34 billion enterprise value.  

Open Text (OTEX)

One of two Canadian companies that I’ve chosen for this article, Open Text is a cloud-based software company whose products and solutions help manage and utilize their information. 

The last year has not been kind to shareholders. Open Text stock’s generated a 52-week total return of just 2.5%, well below its software application peers, who gained 55.8% over the past year. 

However, its latest earnings report delivered hope. Excluding currency, the company reported recurring revenue of $674 million in Q2 2021, 19.5% higher than a year earlier. At the same time, its free cash flow was 46.5% higher to $275 million. Its free cash flow on a TTM basis is $1.07 billion for an FCF yield of 6.9% based on an enterprise value of $15.5 billion.    

That FCF yield’s approaching value territory. 

On Feb. 4, Open Text announced its March 2021 dividend would be $0.2008 a share, 15% higher than a year earlier. 

FirstService (FSV)

FirstService is the second of my Canadian picks of dividend stocks. The provider of residential property management and property services has been on my favorites list for some time. In December, I put FSV on my list of Canadian stocks to own that make money from America. 

On Feb. 4, FirstService announced it was increasing its quarterly dividend by 10% from $0.15 to $0.165. The annual payment of 66 cents yields a meager 0.4%. However, you won’t be sorry for owning its stock. It’s got a five-year annualized total return of 32.8%, almost three times the return of the U.S. markets as a whole.

The dividend increase is FirstService’s fifth consecutive year upping it by 10% or more. 

Highlights of fiscal 2020 include a 15% increase in revenues to $2.77 billion, while its adjusted earnings per share were up 15% year-over-year to $3.46. 

“We capped off the year with a very strong fourth quarter, largely driven by organic growth,” said CEO Scott Patterson. “We are proud of our performance throughout 2020, demonstrating strength and stability in the face of the pandemic, and we look forward to capitalizing on our growth opportunities as the environment improves.”

This could be the best fly-under-the-radar dividend stock available.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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From a purely financial perspective, the novel coronavirus has been a double-edged sword. On one end, financial advisors have bemoaned that millennials and younger workers eschew stocks and participating in retirement funds for living in the moment. Then, the Covid-19 pandemic sent everyone working remotely. Suddenly, wannabe Gordon Gekkos were sprouting everywhere.

At least Americans across the demographic spectrum now understand how important retirement investing is, right? Well, not quite. Like it or not, it’s the flashy, headline-grabbing stocks that have enjoyed the most engagement. And this dynamic has sparked the “meme stock” phenomenon as traders on social media apparently coordinate to push up undervalued and typically out-of-favor equities.

However, as the red ink dries on some of these meme trades, the fundamental reality of retirement funds arises: slow and steady usually wins the race.

Of course, this aphorism implies that you’ve contributed consistently and frequently to your retirement funds portfolio since early in your career. If you have, some of the funds described below should steer you into the right direction so that by the time you’re ready to retire, you’ve got a healthy nest egg to work with.

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Still, life doesn’t always occur on a perfectly linear trajectory. Many of you have already felt the sting of a disruptive event, such as an unexpected medical emergency. Sometimes the universe just kicks you in the butt and you’re forced to dust yourself off. Understanding that everyone’s situation is different, I’ve included several retirement funds from which to consider.

• Vanguard Target Retirement 2035 (MUTF:VTTHX)
• Fidelity Freedom 2035 (MUTF:FFTHX)
• American Funds 2035 Target Date (MUTF:AAFTX)
• Vanguard Target Retirement 2040 Fund (MUTF:VFORX)
• Vanguard Target Retirement 2050 Fund (MUTF:VFIFX)
• T. Rowe Price New Horizons Fund (MUTF:PRNHX)
• “Defi” Platforms

Also, your eyes don’t deceive you: for my last idea about retirement investing, I included a discussion about blockchain-based platforms. With technology constantly accelerating, I would be remiss not to mention it as the blockchain could play a significant role in the years ahead. So, strap yourself in for possibly the most diverse discussion on retirement funds ever.

Retirement Funds: Vanguard Target Retirement 2035 (VTTHX)

One of the best features of retirement funds is that it’s largely a hands-off process. And Vanguard Target Retirement 2035 Fund is one such retirement investing vehicle. Featuring a “target date” of 2035, Vanguard advises that the VTTHX is earmarked for those who are planning to retire between 2033 and 2037. If you’re an older Generation X member or a younger baby boomer, the VTTHX may be right for you.

What makes the Vanguard Target Retirement 2035 particularly attractive is its 0.14% acquired fund fees and expenses, otherwise known simply as the expense ratio. According to Vanguard’s website, the VTTHX features an expense ratio that is 70% lower than other retirement funds. Also, the minimum investment is $1,000, a reasonable entry point for most prospective acquirers.

However, do keep in mind that the VTTHX has a risk potential of four out of five. This means that it’s noticeably more aggressive than other retirement investing options.

Fidelity Freedom 2035 (FFTHX)

If you’re in your early 50s and you’re on plan to retiring in 2035, you’ve done well. According to a Forbes article, nine out of 10 Gen-Xers are falling short on their retirement investing goals. Here, the FFTHX fund is most appropriate for the 10-percenters who are on track for enjoying their golden years.

One of the catalysts driving the FFTHX relative to other retirement funds is its overall quality. Also, it’s important to note that while the majority of this fund is allocated toward domestic blue-chip equities (at 43.51%), a substantial allocation of the portfolio is dedicated toward international equities at nearly 38%.

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In years past, this may have caused the FFTHX fund to underperform relative to the S&P 500 Index. However, moving forward, its international exposure could see this fund outperform as many developing markets feature far higher growth opportunities.

American Funds 2035 Target Date (AAFTX)

Again, if you’re a younger Gen-Xer and you’re seeking retirement at 2035, you’re ahead of the game in terms of your demographic category. However, if you want to achieve financial freedom on the backs of American establishments as opposed to foreign ones, the American Funds 2035 Target Date is possibly the right platform for you.

Featuring a nearly 51% weighting toward U.S. stocks and a 25.3% weighting toward foreign equities, the AAFTX puts the America in “America First.” Additionally, this is one of the more stock-heavy retirement funds, with a 76.2% allocation toward equities and 18% toward bonds, with the rest distributed in other financial vehicles.

Within the equity allocation, the majority holdings are directed toward the technology sector at almost 19%. Considering that it was technology that substantially mitigated the disruption from the novel coronavirus, the AAFTX is appropriate for astute, forward-thinking investors. Just note the expense ratio, which is on the higher end at 0.35%.

Vanguard Target Retirement 2040 Fund (VFORX)

Traditionally, the retirement age has been held as 65 years. However, the harsh realities of the economy, particularly the expanding wealth gap, makes this target unrealistic for millions of Americans. So if you’re in your early 50s or are in your late 40s approaching this half-century milestone, you may want to consider the Vanguard Target Retirement 2040 Fund.

Featuring a heavy mix toward equities (82% stocks, 17% bonds and 0.9% short-term reserves), this appeals to investors who still have many years to ride with their retirement funds. Therefore, if we do have a catastrophic loss on Wall Street this decade, you probably have at least a decade to recover. Frankly, buying shares of quality companies during a downturn is one of the best things you can do.

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Additionally, the VFORX gives a little time cushion for younger Gen-Xers that need a bit more time to grow their wealth before comfortably entering retirement. Also, like the other Vanguard funds, the VFORX features a low expense ratio and a very reasonable minimum investment ($1,000).

Vanguard Target Retirement 2050 Fund (VFIFX)

I anticipate that the Vanguard Target Retirement 2050 Fund is going to be one of the most critical retirement funds in recent memory. As the name implies, the VFIFX is aimed for those who are seeking to retire around the year 2050, or a range between 2048 and 2052. That of course fits right into the timeline for younger GenX-ers/older millennials who are approaching their 50s and may need extra time to bolster their savings.

Of course, this demographic is really where the paradigm shift in financial preparation started to take a turn – and not necessarily for the better. Forget all this talk about the novel coronavirus pandemic fueling Robinhood trading and the recent surge in short-squeeze extraction attempts. This is all newfound speculation based on a one-off event.

In reality, financial advisors for years warned during the pre-pandemic years that younger folks — as well as the youngish — need to get their act together. Instead, we saw some cultural transitions that occurred for people born in the late 1960s to early 1970s regarding rebellion against the corporate system.

Well, hopefully that’s out of the bloodstream because retirement is something to plan for when you hit your 50s if you haven’t done it already.

T. Rowe Price New Horizons (PRNHX)

When you’re younger, you have time on your side. This is huge for retirement investing strategies as you can minimize your risk and grow your wealth steadily through conservative financial vehicles. On the flipside, starting out late does not mean you’re out of the game. Indeed, the best lesson for life is to never give up.

That said, you’ve got to be realistic. If you’re in your 50s and haven’t allocated much into your retirement funds, you have little choice but to be aggressive. For those in this category, the T. Rowe Price New Horizons Fund is one of your best options. Featuring a mix of small emerging growth firms, the PRNHX is poised to outperform the lumbering blue-chip stalwarts of Wall Street.

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Of course, you must be aware that with investing in small firms, the upside is potentially much higher but so are the risks. You can understand the character of the PRNHX through its holdings, which has a majority exposure to information technology at 33.4%. Also, watch the higher expense ratio at 0.76%.

DeFi Platforms

Although hardly what you would call an example among retirement funds, the world is changing dramatically as we speak. Thanks to connectivity platforms, the fintech industry has exploded in popularity and adoption, delivering access and convenience to a new generation of end-users. In that context, I think it’s naïve to assume that retirement investing won’t also face serious disruption.

Over the last few months, I’ve been exploring the idea of the blockchain ecosystem that extends beyond market speculation and payment processing. Out of this burgeoning field comes an innovation that could turn retirement funds upside down: decentralized finance or DeFi for short.

While early cryptocurrencies proved that they could offer a viable alternative to payment transactions, the underlying blockchain technology can expand much further by eliminating human intermediaries for various financial functions. A critical function, of course, is the ability to accrue passive income.

Admittedly, the idea sounds risky as heck. Essentially, you buy from an approved list of cryptocurrency tokens and earn interest off them from participating virtual currency platforms like Coinbase.

Why would you do this? The yield is incredible, with some platforms offering 4% to 6% yield for major crypto coins while the riskiest tokens facilitate a yield of 12% or more. For those who are truly behind in their retirement investing goals and need to take serious risks, the blockchain might be your ticket.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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The post 7 Excellent Retirement Funds for Your Portfolio if You’re 50-Plus appeared first on InvestorPlace.

If you’re in your 50s, now is a good time to review your investments to be sure you have the best retirement funds for your goals. This assumes you plan to retire in a decade or so, or you’re hoping to be financially independent within that 10-year time frame.

While there’s no one-size-fits-all retirement plan, the 10-year mark is a point where it’s wise to make an assessment of the market risk in your investment portfolio and to consider a few adjustments.

When you’re planning (or hoping) to retire within 10 years, it’s wise to keep risk at a moderate level, even if you have a high tolerance for risk. This is because you’re getting within a timeframe where the odds of a severe bear market may occur and you don’t want to put your hard-earned retirement savings at risk.

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With that backdrop in mind, and in no particular order, we put together a list of diversified retirement funds that can be used either as a one-fund solution or as core holding to build around:

• Fidelity Balanced Fund (MUTF:FBALX)
• Vanguard Balanced Index Fund Admiral Shares (MUTF:VBIAX)
• T. Rowe Price Spectrum Conservative Allocation Fund (MUTF:PRSIX)
• Vanguard Wellesley Income Investor Shares (MUTF:VWINX)
• Bruce Fund (MUTF:BRUFX)
• Vanguard Target Retirement 2030 Fund Investor Shares (MUTF:VTHRX)
• T. Rowe Price Retirement 2030 Fund (MUTF:TRRCX)

Retirement Funds: Fidelity Balanced Fund (FBALX)

• Expenses: 0.52%
• Category: Allocation — 50-7o% Allocation
• 10-year return: 10.82%

If you’re looking for a cheap, well-managed moderate allocation mutual fund, Fidelity Balanced Fund is among the best on the market.

FBALX may not be the ideal fund for every investor in their 50s but it can work well for those who have a moderately high tolerance for risk.

The FBALX portfolio asset allocation is roughly 70% stocks, 25% bonds and 5% cash. With this allocation, shareholders can expect some price volatility but not quite the same degree of market risk as a portfolio consisting of 100% stocks.

The equity portion of the portfolio is predominately large-cap stocks, most of which are technology stocks like Apple (NASDAQ:AAPL) Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL). The fixed income portion is mostly investment grade bonds, mortgage securities, and US Treasury bonds.

Vanguard Balanced Index Fund Admiral Shares (VBIAX)

• Expenses: 0.07%
• Category: Allocation — 50-7o% Allocation
• 10-year return: 9.98%

One of the best retirement funds for index investing fans in their 50s is Vanguard Balanced Index.

With index funds, you get minimal expenses and a passively managed approach that can net you higher returns in the long run, compared to most actively managed funds. The performance history of VBIAX supports this timeless investing philosophy.

The 9.98% 10-year annualized return for VBIAX beats 91% of all moderate allocation funds. Although the next decade may not bring such high returns, shareholders can rest assured VBIAX will continue to track the performance of its underlying indexes.

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About 60% of the VBIAX portfolio tracks the CRSP US Total Market Index for the stock allocation and 40% of the fund tracks the Bloomberg Barclays U.S. Aggregate Float Adjusted Index for the fixed income piece of the pie.

T. Rowe Price Spectrum Conservative Allocation (PRSIX)

• Expenses: 0.61%
• Category: Allocation — 30-50% Equity
• 10-year return: 7.10%

For those 50+ investors looking for conservative allocation retirement funds, T. Rowe Price Spectrum Conservative Allocation is one of the best actively managed funds to buy.

Not every investor wants (or needs) to take average to above-average market risk with their retirement funds, especially with stocks now trading near all-time highs. For these investors saving for retirement, a conservative allocation might make sense.

The PRSIX asset allocation is roughly 40% stocks, 40% bonds and 20% cash. The largest stock sector allocation is to technology stocks like Amazon (NASDAQ:AMZN), GOOGL, and MSFT. The heaviest weight in the bond allocation goes to high-credit quality bonds, such as Treasuries.

Vanguard Wellesley Income (VWINX)

• Expenses: 0.23%
• Category: Allocation — 30-50% Equity
• 10-year return: 7.76%

One of the best conservative allocation funds to buy for retirement is Vanguard Wellesley Income.

For investors in their 50s, it’s time to tamp down on risk and preserve your retirement assets. But you also want to give those hard-earned assets a chance to grow and outpace inflation. You may even want a fund you can hold all the way into your retirement years and hold forever. VWINX is just that kind of fund.

With an asset allocation of 40% stocks and 60% bonds, it’s hard to imagine how a conservative fund can achieve a 10-year annualized return of 7.76%.

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Yes, the past decade has been kind to stock investors but if you want evidence of this fund’s long-term potential, look no further than the 9.69% annualized return since the inception date of July 1, 1970. Not a bad 50-year return at all for a conservative fund.

Bruce Fund (BRUFX)

• Expenses: 0.67%
• Category: Allocation — 50-70% Equity
• 10-year return: 9.51%

There’s much more to a fund than a name and Bruce Fund is an outstanding case in point.

With a name like Bruce, who needs a ticker symbol? OK. All investment nerd jokes aside, BRUFX is a serious fund that can fit right into a retirement portfolio for the 50+ crowd saving for retirement. Bruce works well as a core holding or as a moderately allocated one-fund solution.

For a bit of background, Bruce gets its simple name from the fund management team, Robert B. Bruce and R. Jeffrey Bruce, with the longest tenure at 37.5 years. The annualized return since the inception nearly four decades ago is an impressive 9.70%.

The fund is small compared to big players like Vanguard and Fidelity, with about $570 million in assets under management. But smaller can sometimes be better, especially when the managers have more ability to nimbly move in and out of positions.

As for the portfolio, BRUFX has an asset allocation of about 75% stocks, 15% bonds and 10% cash. This allocation can work well for investors wanting to be a bit heavier on the stock side for someone getting close to retirement.

Vanguard Target Retirement 2030 (VTHRX)

• Expenses: 0.14%
• Category: Target-Date 2030
• 10-year return: 9.04%

Target-date retirement funds can make the ultimate set-it-and-forget it retirement funds. For those investors that are in their 50s now, Vanguard Target Retirement 2030 could be the right fit for this type of fund.

The beauty of target-date funds is that the fund management will gradually shift the portfolio assets from stocks to bonds, as the target date approaches. For retirement savers in their 50s, the year 2030 could be a good retirement target to make.

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The VTHRX portfolio consists of four Vanguard index funds, which combine to make an asset allocation of about two-thirds stocks and one-third bonds. This is a solid moderate allocation. By the time the target date of 2030 gets here, the allocation will have shifted to an allocation that would be more conservative.

T. Rowe Price Retirement 2030 (TRRCX)

• Expenses: 0.64%
• Category: Target-Date 2030
• 10-year return: 9.76%

For retirement savers in their 50s who want to take above-average risk in their target-date fund, T. Rowe Price Retirement 2030 is an appropriate choice.

While a typical target-date 2030 fund might have an allocation of about two-thirds stocks and one-third bonds, TRRCX is a notch higher in market risk with an allocation of about 75% stocks, 20% bonds and 5% cash.

Since 2030 is still almost a decade away, the extra market risk can make sense for investors who don’t mind more price volatility in exchange for the potential of receiving higher returns.

On the date of publication, Kent Thune did not personally hold a position in any of the aforementioned securities. However, he holds FBALX, VBIAX, and VWINX in some client accounts. Under no circumstances does this information represent a recommendation to buy or sell securities.

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Planning for your sunset years is never an easy task. In fact, the chances are that it’s the last thing on your mind. That’s why we picked the retirement stocks to provide a healthy yield and have a positive five-year dividend growth rate.

Millennials are notorious for not saving enough and saddling themselves with a high amount of debt. To combat that, you should have a portfolio of high-quality companies that provides a stable income stream as you get along in life.

Regular dividends are significant when you are planning for your retirement. Unlike swing trading, a speculative trading strategy in financial markets where a tradable asset is held for one or more days to profit from price changes or ‘swings,’ dividend investing is buying stocks through which you can receive a regular income.

• The 7 Best Dividend Stocks To Buy On The Market Today

Plus, if a company is doing well and paying regular dividends, price appreciation will follow.

So without further ado, here are five great retirement stocks for your portfolio:

• Shell Midstream Partners (NYSE:SHLX)
• Farmers National Banc Corp. (NASDAQ:FMNB)
• Realty Income (NYSE:O)
• Coca-Cola (NYSE:KO)
• Digital Realty Trust (NYSE:DLR)

Retirement Stocks to Buy: Shell Midstream Partners (SHLX)

We start this list with a controversial pick, considering oil prices are depressed. Shell Midstream Partners is a fee-based, growth-oriented midstream master limited partnership formed by Royal Dutch Shell (NYSE:RDS.A, NYSE:RDS.B) to own, operate, develop and purchase pipelines and other midstream assets.

Is this the right time to invest in a company with exposure to the petroleum industry? Markets will take a few years to recover, and interest in alternative energy is growing with each passing day. However, SHLX stock is an income play rather than a growth-oriented one.

The company has grown dividends for five consecutive years. It has a five-year average growth rate of 22.2%. The dividend yield is also a juicy 16.6%. And don’t worry about the company’s ability to maintain its dividend. It has plenty of cash on its books. More importantly, its operating metrics are great. Gross margin and operating margins are an impressive 82.8% and 36.5%, respectively.

The best thing about this stock is that it’s an absolute steal at current rates. SHLX stock has underperformed the stock market over the last year, losing 46.8% versus a 17% gain in the S&P 500. Investors are clearly spooked about the future of the sector. Consequently, the share price is trading at a steep discount to its 52‑week high.

But that’s great news since you can swoop in and pick up this great company at a bargain.

Farmers National Banc Corp. (FMNB)

From a controversial pick to a rather conservative one, Farmers National Banc is a multi-bank holding company offering mortgage loans, personal checking, and a wide range of business products. Despite the pressures that the banking sector is under due to low-interest rates, it has had a stellar 2020.

Over the last six quarters, it beat Wall Street expectations five times. That’s not an easy feat. In the third quarter of 2020, the bank reported growth in loan activity, increased deposits, and a respectable net interest margin. Net income of $10.9 million was 19% higher than a year ago, despite a $2.1 million increase in loan losses provision.

Even in such a tough business environment, the company celebrated 151 consecutive quarters of profitability. At the start of the pandemic, Farmers National helped its commercial and agricultural customers by providing relief on their loans in the form of payment deferrals. However, the fact that deferrals are now down is a testament to its diversified holdings.

Now comes my favorite part, the dividend. FMNB has maintained a very healthy payout ratio of 30.1% despite the virus wreaking several business lines. The dividend yield is an excellent 3.1%, and distributions have grown for five years consecutively. Despite all this, FMNB stock remains at 85% of its 52‑week high, making it one of the more attractive retirement stocks.

Realty Income (O)

Realty Income is a real estate investment trust that invests in freestanding, single-tenant commercial properties subject to a triple net lease (NNN). Under an NNN lease agreement, the tenant or lessee must pay all the property expenses, including real estate taxes, building insurance, and maintenance.

Realty Income owns more than 6,500 properties leased to about 600 tenants across 51 industries. Due to its well-diversified portfolio, Realty Income’s occupancy level has never been below 96% since 1996. We will have to wait for the fourth quarter and full-year results to have a fuller assessment. But until Q3, Realty had received over 93% of rent due, enough to maintain its very healthy monthly dividend.

It’s important to note that REITs must pay at least 90% of taxable income to unitholders. That helps them maintain their tax-exempt status. High payout reduces the risk of management for investors. Before 2020, the company had boosted its monthly payout for 10 consecutive years. Even during the pandemic, the REIT did not cut its dividend. And its yield of 4.7% is top-notch.

Much like the rest of the REIT sector, O stock is down substantially, 21.% over the last year. However, its five-year return is 9%, which is respectable considering how badly prices fell last year.

Remember, you are not investing in this one purely for the price appreciation. This one has a solid history of delivering reliable, stable income for your portfolio. That’s the unique selling point for me.

Coca-Cola (KO)

At a market cap of $208.47 billion, Coca-Cola is one of the world’s largest multinationals. It has 500 beverage brands sold in 200 countries, though 70% of Coke’s unit sales are still from sodas. It’s a truly global company in every sense of the word. The bulk of revenues are based outside of the U.S.

In the last six quarters, it has stitched together four consecutive positive earnings surprises. The company recently reported earnings per share of 55 cents, adjusted, versus the analyst estimates of 46 cents per share. Revenues came in at $8.65 billion versus a consensus estimate of $8.36 billion.

That’s pretty impressive, considering purchases at movie theaters, restaurants, and offices remain restricted due to the pandemic.

However, at-home demand is making up for the lack of in-person sales. CEO James Quincey has said that the company is outpacing Pepsi (NASDAQ:PEP) in away-from-home business.

No surprises, given its success, that Coca-Cola has managed to increase its dividend each year since 1962. KO stock comes with a dividend yield of 3.4% and a five-year dividend growth rate of 4.4%.

I find it amazing that KO stock hasn’t bounced back strongly from March lows with such a consistent track record. I guess markets remain more enamored with electric vehicle stocks and SPAC plays at the moment. However, if you are picking retirement stocks, then the key is stability. And you can’t get more reliable than KO stock.

Digital Realty Trust (DLR)

Our last entry on this list is another REIT. Digital Realty owns and operates over 275 data centers worldwide, with more than 30 million rentable square feet across five continents.

Unlike the other picks on this list, DLR stock has outperformed its sector by 22.4% in the past year. Why that is so is pretty obvious. While the broader real estate sector has underperformed the market, this subsegment is growing fast. According to a report, the global data center construction market size is anticipated to reach $121.56 billion by 2027, expanding at a compound annual growth rate of 8.5% from 2020 to 2027.

During the first nine months of 2020, its total revenue came to $2.8 billion, an increase of 17% year-on-year. The acquisition of Interxion dented its bottom line greatly. However, guidance for 2020 is still positive. DRL is now expecting FFO per share between $6.10 and $6.15, up from $6 to $6.10 previously.

The dividend yield is a solid 3.3%, and distributions have increased 10 consecutive years. Payouts have a five-year average growth rate of 5.7%, and coverage is solid at 55.9%. Cash has grown at a CAGR of 12% over the last five years. There is little chance that the distribution will be in trouble any time soon.

The last thing we should talk about is valuation. That is one area where DLR can look unattractive. Shares are trading at 60x price-earnings versus the industry, which trades at 27.1x. Most analysts and investors agree that the virus is a boon for the data center industry. Hence, the markets are reflecting that sentiment.

However, remember that DLR stock is an income play, like most other retirement stocks on this list.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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Picking retirement stocks is never an easy task. Stocks historically generated long-term gains that are bigger than those of any other asset class. However, picking retirement stocks is easier said than done. You always have a new sector upending the markets. This past year we saw that with electric vehicle stocks. Along with risky SPAC plays, they went hyperbolic. And the momentum doesn’t seem to stop.

However, retirees must figure out how to produce enough income without a job. They shouldn’t operate with the same mentality as swing traders, a trading style that attempts to capture short- to medium-term gains. Since 1926, large stocks delivered an average of 10% return per year. And at no point have they lost ground over any period of 20 years or longer during that time. But the key theme here is that you have to go long to maximize your gains. Something that retirees can do, so long as the income stream is stable.

It also goes without saying that the best retirement stocks have excellent yields. A good track record of dividend payments is a strong sign of security and is very attractive to income-oriented customers. Most of the retirement stocks we discuss in this list are real estate investment trusts, or REITs. REITs own or finance income-producing real estate across a range of property sectors. The reason for their selection is REITs must distribute at least 90% of their taxable income to shareholders annually via dividends.

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Therefore, without further ado, let’s look at four of the best retirement stocks to start planning for your future:

• Healthcare Trust of America (NYSE:HTA)
• Extra Space Storage (NYSE:EXR)
• American Tower (NYSE:AMT)
• AT&T (NYSE:T)

Retirement Stocks: Healthcare Trust of America (HTA)

Healthcare Trust of America is a safe way to play the medical sector. Investors are looking to fill up their portfolio with biotechs and pharmaceuticals in the hopes of striking gold. Whether or not any one of these picks manages to create a vaccine is irrelevant. Unless you diversify your portfolio with a host of names, you could get burned pretty badly. That’s where HTA stock comes in. It’s a REIT that invests in medical office buildings. Medical professionals will continue to use these buildings regardless of whether their work revolves around developing vaccines or not.

Let’s face it. Like most advanced developed nations, America is aging. The baby boomer generation has the disposable income to spend on quality medical facilities, which will keep demand up for the 25 million square feet of office space that HTA has at its disposal. Granted, there was a decrease in funds from operations per share in the second quarter of 2020. But things are pretty much back to pre-pandemic levels as of Q3. HTA hiked its dividend, reported normalized FFO of $0.43 per diluted share – a record for HTA – and revenue, NOI, adjusted EBITDA growth across the board.

From a dividend perspective, you can’t get any more rock-solid than this one. Due to the steady net operating income growth, the company has consistently increased its dividend, leading to a very healthy yield at the moment of 4.8%. Considering that it’s a REIT, expect money coming into your account on a very regular basis if you buy HTA stock. Just the kind of investment you need when you have your feet up and enjoying traveling the world or remodeling your home.

Extra Space Storage (EXR)

Our next entry is one of the largest self-storage REITs in the U.S. and is a member of the S&P 500. It has a fairly diversified portfolio. With a dividend yield of 3.2%, it is an excellent pick for long-term growth and stable returns.

Despite the novel coronavirus pandemic, EXR managed to increase core FFO/share by 5.6% year-over-year to $1.31 in Q3’20. The business model is recession-resistant, so I am not surprised by the performance. Same-store occupancy is an excellent 95.9%, 210 basis points higher than the year-ago figure. From a financial health perspective, everything looks OK. The self-storage REIT has a solid balance sheet, with a debt-to-EBITDA of 6.07 times. That is par for the course if we are talking REITs. Its interest coverage ratio is a solid 3.7 times, and sales growth is a solid 11.3% for the last five years.

Because of the factors discussed, the payout is not in danger. By 2025, the self-storage market’s valuation is expected to grow to $115.62 billion from $87.65 billion in 2019. A compound annual growth rate (CAGR) of 134.79% over the forecast period of 2020-2025.

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Ultimately, EXR stock should garner your attention because of its solid balance sheet, strong occupancy and FFO/share growth, and juicy dividend yield. Shares are not the most affordable at the moment, trading at 31 times forward price-to-earnings. However, these are retirement stocks we are talking about. At this price, you are buying into an industry that will only grow, guaranteeing sustained income for several years to come.

Retirement Stocks: American Tower (AMT)

For the final REIT on our list, we have another solid performer. Only this time, it’s in the broadcast communications space. American Tower is one of the largest providers of wireless communications services. The growing demand for 5G wireless streaming capability is pushing revenue higher for the communications REIT. Even before the pandemic, the world was marching to 5G network technology. But the current crisis has only exacerbated the need for faster uptake.

That provides a secular trend that AMT can exploit in the United States and foreign countries. Operations are spread across the U.S., Germany, Ghana, Nigeria, Chile, Colombia, Costa Rica, Mexico, South Africa, Uganda, Brazil and Peru. So you get a lot of geographic diversification when you buy EXR stock, always a good thing when you don’t want to hedge your bets. The company recently reported AFFO earnings of $2.29, beating analyst expectations by 22 cents and growing 14.5% year-over-year. Total revenue was up 3% year-over-year and beat Wall Street analysts’ estimates by $40 million.

AMT boosted its dividend 34 quarters in a row. The multitenant communications REIT has grown its dividend for the last nine consecutive years and is increasing its dividend by an average of 20.02% each year. American Tower pays 62.61% of its earnings as a dividend, but the yield of 2.3% is not in danger. The solid earnings and revenue growth allow the company to keep investing in the 5G expansion while maintaining healthy distributions.

AT&T (T)

We finally have a non-REIT here. InvestorPlace readers know that I love T stock for a variety of reasons. The telecommunications giant has a solid business model and is all set to have a blockbuster 2021 due to HBO Max. There were certainly issues that the platform experienced at its launch. But these are resolved. Late last year, AT&T reached an agreement to bring the platform to Roku (NASDAQ:ROKU), finally bringing its content to one of the largest streaming services in the world.

WarnerMedia announced that its entire movie slate for 2021 will release simultaneously in theaters and on HBO Max. The movies will stream on HBO Max for one month before leaving the platform for a period of time. According to AT&T CEO John Stankey, HBO Max, which closed the third quarter at 8.6 million active subscribers in the U.S., scored another 4 million to reach 12.6 million as of early December.

Meanwhile, reports are also emerging that the company is in discussions with a group of banks to raise $14 billion to buy more 5G airwaves. The move is essential because control of 5G airwaves will decide which company will emerge as the leader in U.S. telecommunications.

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Now let’s talk about my favorite aspect of the company: its dividend yield of 7.2%. This compares very favorably with the industry yield of 3.5%. Only Vodafone (NASDAQ:VOD) comes close with a 6.2% yield among its peer group. AT&T increased its dividend distribution for 10 consecutive years. If you are looking for one of the best retirement stocks for your portfolio, look no further.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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Selecting mutual funds for a 401(k) can be a daunting experience. There are a large number to choose from, and it can be difficult to determine which are the best. Because of this, it is common for people to put together portfolios that lag. And yes, this can make it difficult to achieve your retirement goals.

But the good news is that you do not have to be a financial guru to be successful. The critical factor is to focus on a few core principles. For example, one is to diversify across different types of investments and markets. Next, it is advisable to avoid making quick decisions, such as by selling your mutual funds when the markets dive!

It is also a good idea to look at risker investments, such as those in international markets or growth stocks. They usually perform well over the long-term.

So, in light of all this, what are the mutual funds to consider? What types make sense for the typical 401(k) investor?

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Well, here’s a look at seven well-known mutual funds that are included in many plans:

• Vanguard 500 Index Fund (MUTF:VFINX)
• Fidelity Low-Priced Stock Fund (MUTF:FLPSX)
• Dodge & Cox Balanced Fund (MUTF:DODBX)
• T. Rowe Price Blue Chip Growth Fund (MUTF:TRBCX)
• Fidelity Investment Grade Bond Fund (MUTF:FBNDX)
• Vanguard International Growth Fund (MUTF:VWIGX)
• T. Rowe Price Dividend Growth Fund (MUTF:PRDGX)

Now, let’s dive in and take a closer look at each one.

Great Mutual Funds: Vanguard 500 Index Fund (VFINX)

A great option for any 401(K) is to have a mutual fund that tracks the S&P 500. The index, which was launched in the late 1950s, tracks the largest publicly traded companies in the U.S. and includes about 80% of the total market capitalization of equities markets.

That said, the premier fund to track this is the Vanguard 500 Index Fund, which has $557 billion in assets under management. This fund was launched in the mid-1970s and was actually the first index offering.

Overall, a key benefit for VFINX is the low costs. Note that the expense ratio is only 0.14%. This means that more of the returns go back to investors and this can make a huge difference in terms of long-term returns.

Fidelity Low-Priced Stock Fund (FLPSX)

When it comes to mutual funds, the focus is often on those that are based on indexes. And there are good reasons for this. First of all, the costs are usually lower. And it is also rare for a portfolio manager to consistently beat the markets.

Yet, this does not mean you should shun actively managed funds. Keep in mind that these can allow for more flexibility and higher returns; That is, so long as there is a good team in place.

This is certainly the case with the Fidelity Low-Priced Stock Fund. The portfolio manager, Joel Tillinghast, is a legend in the investment world. He joined Fidelity in 1986 as an equity analyst and then would take the helm of FLPSX a few years later. His investment approach has been to do deep research and look for value opportunities.

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What about the track record? It is one of the best. In fact, since inception of FLPSX, the average return has been 12.71%.

Great Mutual Funds: Dodge & Cox Balanced Fund (DODBX)

With mutual funds in a 401(k), its advisable to have an allocation across both bonds and stocks. This helps to even out the inevitable volatility in the portfolio.

However, it can be difficult to come up with the right split. So, what do you do? Well, you can invest in a balanced fund. This is where about 60% of the portfolio is in stocks and the rest is in bonds. It’s a strategy that has proven to be quite effective.

That said, there are definitely many balanced funds available. But there is one that is among the standouts: the Dodge & Cox Balanced Fund. Its been around since 1931, when the U.S. plunged into the Great Depression. Since then, the portfolio mangers have taken a conservative approach to investing.

The result is that the returns for DODBX have been fairly consistent. For the past decade, the average gains has come to 9.96%.

T. Rowe Price Blue Chip Growth Fund (TRBCX)

This year has seen a major bull move for growth stocks, especially those focused on cutting-edged technologies like cloud computing, mobile and AI (Artificial Intelligence). But these types of investments can also see big drops. This was the case, for example, when the dot-com boom imploded.

However, a mutual fund can help reduce the risks. Yet the long-term results can still be quite robust.

Just look at the T. Rowe Price Blue Chip Growth Fund. For the past decade, the average return was an impressive 17.94%.

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The portfolio manager, Larry Puglia, has been managing TRBCX since 1993. His focus is to do extensive research on large and medium-sized companies that have above-average growth paths. As for some of the current top holdings, they include Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).

Great Mutual Funds: Fidelity Investment Grade Bond Fund (FBNDX)

Having a bond mutual fund in your 401(k) can help provide diversification and stability. But there is another advantage to bond mutual funds: taxes. Your 401(k) is a shelter for the income generated. This can certainly add up over time.

Therefore, what is a good bond fund to consider? Look at the Fidelity Investment Grade Bond Fund. A minimum of 80% of the assets are allocated to investment-grade bonds and debt securities, which have medium to high quality. The rest of the portfolio is for risker investments.

Overall, the FBNDX fund has been around since the early 1970s and has been able to maintain consistent returns. Over the pas 10 years, the average gain was about 4.2%.

Vanguard International Growth (VWIGX)

It’s always smart to have some international exposure with your 401(k). Let’s face it, there are many countries that are growing quickly and have exciting companies. Thus, investing in foreign companies can also diversify not only geographically but with different currencies.

However, the expenses for mutual funds in this category can be fairly high. After all, there is usually a need to setup operations in different countries.

This is why it’s a good idea to look for an index fund like the Vanguard International Growth fund. The expense ratio on VWIGX is 0.43%, which compares to 1.10% for the average for the category.

The fund is based on the All Country World Index, which excludes U.S. stocks. This covers large and medium sized companies in 23 developed and 26 emerging markets.

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There are currently 127 stocks in the portfolio and some of the top holdings include Alibaba (NYSE:BABA), Tesla (NASDAQ:TSLA), and Tencent Holdings (OTCMKTS:TCEHY).

Great Mutual Funds: Fidelity Equity Dividend Income Fund (PRDGX)

A good strategy for a 401(k) is to invest in high-quality companies that have a history of growing their dividend payouts. This provides a cushion when markets get bearish. But dividends are also an indication of strength, as it shows that a company is consistently profitable.

One of the top mutual funds in this category is the Fidelity Equity Dividend Income Fund, which has $17.2 billion in assets under management. Granted, the current yield may seem minimal: 1.21%. But keep in mind that this is still much better than the interest rates on high-quality bonds.

Moreover, when evaluating a dividend fund, it’s a good idea to look at the total return; That is, the combination of the yield and capitalization. Based on this metric, the PRDGX fund has had a good long-term track record. In fact, for the past ten years, the average annual return was 13.75%

The portfolio manager is Tom Huber, who has been at the helm for more than 20 years. The focus is to invest in large companies that are likely to continue to increase their dividends. Some of the top holdings include Visa (NYSE:V), JPMorgan (NYSE:JPM) and UnitedHealth (NYSE:UNH).

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.

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It’s easy to panic if life got in the way of saving for retirement. But even if you’re age 50, with little saved for retirement, it’s not too late to adjust your money and investing habits and save for retirement.

With abundant resources, calculators and online tools at your disposal, you can assess where you are financially and what you need to do to build up a retirement stash for later. Take a deep breath, sit down, and map out your retirement plan, today.

1. Understand Your Current Financial Situation

If you don’t know where you are financially right now, it’s difficult to plan for your retirement.

Maybe you have some debt, and your income isn’t great. There are ways to proceed which will help shore up a retirement plan.

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Use a tool like Mint.com, an Excel sheet, a Google doc, or even a pencil and paper to assess your current financial situation.

Tally up your net worth first. This includes what you own and encompasses all of your financial assets like equity in a home, savings accounts, investment accounts (including a 401k) or any other financial account.

Next, list your debts and liabilities. Include your credit card balances, mortgage balance and any other financial obligations.

Subtract liabilities from assets, and that is your net worth. that gives us our starting point. The goal in retirement planning is to then growth your net worth.

2. Estimate Current Retirement Income and Expenses

List your expected income from Social Security. You can create an account at SSA.gov and use the My Social Security Tool to estimate your Social Security benefit. Then add to that any other expected income sources, such as a pension and annuity payments.

Here’s the tricky part. Figure out how much you expect to spend in retirement. A good rule of thumb is that retirees can expect to spend 80% of their pre-retirement expenses in retirement.

Compare expected income and expenses, and if there’s a gap, that’s the amount of money you’ll need to come up with in retirement. There are many retirement calculators online, to help with this process.

Now you have an idea of how much money you’ll need annually in retirement.

3. Eliminate All Debt But Mortgage Payments

If you’re paying 15% interest on credit card payments and earning 7% on an investment account you have a net loss on your money of 8%.

If you have a lot of debt, you’ll need to make lifestyle changes — drive a more affordable car, or cut down your housing and living expenses. Focus on the largest expenses and figure out how to reduce them.

If you’re helping to support adult children, now is the time to cut the cord. It’s important to prioritize your own retirement and allow your children to make their own way in the world.

4. Increase Your Income

It’s a reality that today, that it’s tough to live on one income. Many successful people work more than one job and create multiple streams of income. Consider getting a side job, working online or checking out the gig economy for extra income ideas.

With apps like Uber (NASDAQ:UBER), Lyft (NASDAQ:LYFT), TaskRabbit, Fivver (NYSE:FVRR) and UpWork, it’s easy to access side hustles for extra income.

After understanding your financial situation, eliminating debt and boosting income, it’s time to focus on investing to build wealth.

5. Maximize Retirement Account Investing

If you have a 401k, 403b or other retirement account, you’re eligible to contribute $19,500 per year in 2020 with an additional $6,500 if you’re over age 50. This is an ideal account to use for retirement saving, as you won’t pay tax on the amount in the account and your employer may match your contribution.

If you’re already adding money to this account, increase your contribution. Contributing the maximum is ideal. If you can’t reach the max contribution amount, aim to transfer at least 15% of your income to the 401k or retirement account.

You can also open a Roth or Traditional IRA account for added savings. Check out the IRS income requirements. Contributing both to IRA and workplace retirement accounts will compound your investing and grow your savings faster.

At age 50, if you can contribute $15,000, per year to a retirement account for the next 20 years and earn a 6.5% average return, you’ll have $620,000 at age 70.

6. Add to Retirement Savings with a Health Savings Account (HSA)

If you have a high-deductible healthcare plan, you’re allowed to contribute $3,550 per year to a tax advantaged HSA. If you’re over age 55, you can contribute an additional $1,000 annually.

Like the 401k and IRA accounts, there are no taxes levied as the funds grow within this account. You can invest the money within the account for retirement and it will not be taxed upon withdrawal if the proceeds are used to pay for healthcare.

7. Delay Social Security Benefits Until age 70

If you are healthy and expect to live a long life, delaying Social Security benefits until age 70 can substantially increase your lifetime income. Once you reach your full retirement age, which is 67 if you were born in 1970, you’re eligible to receive full Social Security benefits. If you claim before age 67, your benefit payment will be reduced. But if you wait to claim your benefit until age 70, you can increase your payment by approximately 24%. Waiting until age 69 yields a 16% benefit increase over the amount you receive at full retirement age.

Consider working until age 70 if at all possible.

8. Buy an Annuity to Boost Retirement Income

Annuities come in a variety of flavors, with many types of fees. The benefit of a retirement annuity, especially if you are healthy, is that you can smooth out your retirement income.

Using the saving and investing example above, if you saved and invested $15,000 annually from age 50 to age 70, you would have a $620,000 retirement fund. You could buy a $250,000 annuity that would pay roughly $20,000 per year.

Add that to an approximate $30,000 Social Security annual benefit at age 70, and you’ll receive $50,000 annual income in retirement.

When buying an annuity, consider fees and benefits and choose carefully.

9. Get Low-Fee Investing Help from a Robo-Advisor

Robo-advisors are low-fee investment advisors that offer sound management for investors of all types. The benefit of opening a retirement or taxable brokerage account with a robo-advisor is that you can leave emotion out of the investment decision. You won’t be tempted to buy and sell at inopportune moments and ultimately hurt your returns.

You’ll also receive professionally crafted investment portfolios in line with your risk level.

There are many robo-advisors, some with low fees and low investment minimums as well as many other features. There are even fee-free robo-advisors with access to live financial planners like SoFi Invest.

Building a retirement stash starting at age 50 is possible with a plan. Assess if the behavioral changes required to grow your future wealth are worth making habit changes today.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she did not hold a position in any of the aforementioned securities. 

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With the S&P 500 down 13.4% year to date, including dividends, through April 22, it’s a good time to revisit the sage financial advice that you should never put too much of your employer’s company stock in your retirement plan. Diversification matters.

In June 2018, professors Robert Pozen and Ming Liu wrote an article for Fortune with the headline, “Having too much employer stock in your 401(k) is dangerous. Just look at GE.”

The authors discussed how federal pension laws restrict the amount of company stock in a defined benefit plan to 10% of the plan’s total assets. However, that same rule doesn’t apply to defined contribution plans. Posen and Liu wrote at the time:

“38 percent of large companies with 5,000 or more employees offer company stock as an investment option for their defined contribution plan, according to the Plan Sponsor Council of America’s (PSCA) 60th Annual Survey of Profit Sharing and 401(k) Plans. However, according to this same survey, 36 percent of 401(k) retirement plans offering company stock do not limit the amount of plan assets in this investment option.”

A classic example is Stage Stages (NYSE:SSI), an operator of department stores in small and mid-sized towns. It has a Nonqualified Deferred Compensation Plan that the company established in 2002 to attract key employees to the company. 

At the end of 2018, Stage Store stock accounted for 2.4% of the plan’s assets. SSI stock fell to 74 cents a share as of December 31, 2018. In 2019, executives bought 731,205 additional shares. Those shares represented 51% of the plan’s assets as of Dec. 31, 2019.

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As I write this, the 1.1 million shares are worth $411,051, $2.5 million less than what the executives paid for the stock.  Diversification matters, and these seven stocks might not be doing company employees any favors:

• Exxon Mobil (NYSE:XOM)
• Darden Restaurants (NYSE:DRI)
• Procter & Gamble (NYSE:PG)
• Hormel Foods (NYSE:HRL)
• Walmart (NYSE:WMT)
• Marsh & McLennan (NYSE:MMC)
• General Electric (NYSE:GE)

I’m highlighting these stocks given their high prevalence in employee retirement plans and potential for losses in the near- to mid-term.

Too Much Company Stock: Exxon Mobil (XOM)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 43.4%

I haven’t been a fan of Exxon Mobil for some time. I believe that while we still need oil and gas for the foreseeable future, fossil fuels inevitably will become irrelevant in a world full of clean energy.

That’s why in mid-March, I said “Investors Shouldn’t Touch Exxon Mobil With a 10-Foot Pole.” Some took offense to my argument and told me so in emails. I’m a big boy; I can take it. 

The sad part is, I’m sure the vast majority, if not nearly all, of Exxon Mobil employees are wonderful, hard-working people. I don’t wish them any ill will. Yet it appears the company and its board are doing them a major disservice by allowing such a ridiculously high weighting of XOM stock.

I’d love to be able to figure out the cost basis for the 111.9 million Exxon shares that were held by employees in the company’s savings plan at the end of 2019. Of course, the company is quick to point out that cost information is not required because they are participant-directed investments. Lucky for them.

However, what I can do is look back to the end of 2016, when Exxon’s stock was trading above $90 and near a five-year high. 

On Dec. 31, 2016, the Exxon Mobil savings plan held 129.3 million shares of the company that were valued at $11.7 billion or $90.26 a share. XOM stock accounted for 54.4% of the total assets. On Dec. 31, 2018, it held 111.9 million shares worth $7.6 billion or $68.19 a share.   

Today, as I write this, those shares are down another 35%, with not much hope of getting back to $90 anytime soon. 

As defined contribution plans overweighted to employers go, Exxon Mobil’s is one of the worst offenders.

Darden Restaurants (DRI)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 34.3%  

Restaurant chains are getting hit by the novel coronavirus despite the fact many of them are still able to provide take-out, drive-thru, and delivery for their stay-at-home customers.

In February, before Covid-19 took hold, I recommended Darden along with nine other dividend stocks that had gotten off to a quick start in 2020.

Furthermore, in mid-April, I discussed how Darden was doing right by its employees. No, they aren’t perfect, but in an industry known for frugality when it comes to employee benefits, it’s better than most.

So, the fact that it has allowed the percentage of Darden company stock in the defined contribution plan to remain at such an elevated level is troubling.

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Further, included in the liabilities of the plan are ESOP loans valued at $736,000. Here’s what the company says in its 11-K form: 

“The Plan purchased Company stock held in the Darden ESOP Fund (Note 7) using the proceeds of the ESOP loans. There is currently one ESOP loan outstanding payable to the Company to fund such purchases. This ESOP loan is secured by a pledge of the purchased Company stock. As ESOP loan repayments are made, the ESOP Trustee releases the leveraged shares.”

The word “leverage” is not a good thing when the plan is extremely overweight in Darden stock. The company can do better for its employees.

Procter & Gamble (PG)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 32.5%

One of the most interesting aspects of the Procter & Gamble Savings Plan, other than the fact it has 10.6 million shares of PG stock that was valued at $1.16 billion as of June 30, 2018, is that in addition to various mutual funds, it also had $1.67 million worth of J.M. Smucker (NYSE:SJM) stock.

Why Smucker’s? The company bought Folgers coffee from P&G in June 2008 for $3 billion in Smucker’s stock. Since June 4, 2008, Smucker’s stock has appreciated 125%, while Procter & Gamble’s stock is up 82% in the same period. The employees who kept their stock were wise to do so. 

Now, don’t get me wrong, based on the market value of the PG shares held as of June 30, 2019, and a cost basis of $618.9 million, the plan holders were ahead of the game at t

he end of fiscal 2019. However, at the market lows in mid-March, the company’s stock was trading below where it was in June 2019. 

What would be telling is to go back over a few years to figure out how long some of these employees have been holding the stock. My guess is the annual return isn’t nearly as good as the mutual funds in the plan. 

Having 33% of the retirement plan in P&G stock is a bad idea.

Hormel Foods (HRL)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 19.5%

This particular defined contribution plan is the Hormel Foods Corporation Tax Deferred Investment Plan A. As of Oct. 27, 2019, Hormel’s fiscal year-end, the plan had $903.5 million in total assets. Of that, 1,402,075 shares, or $138.1 million, were held in company stock. 

In the previous fiscal year, the planholders held 1,533,604 shares in Hormel worth $153.4 million. This Hormel stock accounted for 17.8% of the plan’s $859.8 million in total assets. 

If this plan had a 10% cap, the plan holders would have to sell 35% of their company stock. On Oct. 27, 2019, Hormel shares were worth $98.50. As of April 22, 2020, they were worth $48.42 a share, which represents a 51% loss in just six months. 

It’s important to remember that this is a defined contribution plan and is meant to allow employees to put a certain amount of their pre-tax compensation into it where it can earn interest and capital gains on a tax-deferred basis until the funds are withdrawn from the plan.

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In this particular case, Hormel matches 100% of an employee’s first 3% of their eligible compensation and 50% of the next 2%. But after that, employees are on their own.

Walmart (WMT)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 12%

First, I just want to say that I most recently wrote about Walmart stock in February and considered it a stock to buy.

That said, I don’t see why a company of Walmart’s size needs to have 12% of its company stock in the $27.6 billion 401(k) plan. The Walton family already controls the company. There’s no need to be overweight in Walmart stock.

Now, I will say in the company’s defense, that it is the choice of the employee whether he or she owns company stock. Further, it doesn’t appear that the company provides any incentive to own its stock within the retirement plan, such as a discount to the current share price. 

However, as the professors pointed out in the introduction, when only 14% of companies with more than 5,000 employees offer company stock as one of the investment options, does it really make sense for Walmart to be part of a group that’s getting smaller by the day.

Marsh & McLennan (MMC)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 9.7%  

There are two ways one can look at Marsh & McLennan’s 401(k) and Investment Plan: The first is that as a company that provides strategic advice to other companies about their retirement plans ought to be a little more conservative about their own employees’ retirement planning. The second is that they ought to know how far you can push the limit without upsetting the apple cart. 

When it comes to financial advisors, I’m not sure there are many who would be comfortable with their clients holding more than 10% in one stock, even if that stock was a tested and trusted name like Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). 

Like many retirement plans, the 11-K’s lag the fiscal year-end by about six months. Marsh & McLennan’s 2019 form ought to be out in mid-June. Later this year, I might revisit some of these plans. 

Anyway, as of Dec. 31, 2018, the Marsh & McLennan stock held in its 401(k) Savings & Investment Plan was $415.4 million, or 9.7% of the $4.3 billion in total investments. The market value of the stock at the end of 2018 was $79.75 a share, 194.6% higher than the plan’s average cost of $27.07 a share. 

You’re probably wondering why I’m picking on Marsh & McLennan when there are many much bigger violators, such as Procter & Gamble?

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Well, when a company like Medtronic (NYSE:MDT) only has 8% of its plan’s assets invested in company stock, and isn’t literally in the businesss of retirement consulting, perhaps it’s time for Marsh & McLennan to reduce its employees’ exposure to its stock.

General Electric (GE)

Company Stock as a Percentage of Plan Assets (latest fiscal year): 8.7%

Although I’m focusing on firms whose company stock represents a higher percentage of an overall retirement plan, I’ve included GE to illustrate what can happen to planholders when they hold too much of one thing; in this case, GE stock. 

GE files its 11-K’s in June, so we’re working off its 2018 numbers. GE’s fiscal year ends Dec. 31. At the end of 2018, there were 262.9 million shares of GE stock held by planholders worth $1.99 billion. That’s $7.57 a share.

A year earlier, GE planholders held 280.8 million shares worth $4.9 billion, or $17.45 a share.

In 2017, planholders sold approximately 17.9 million shares at prices between $7.57 and $17.45 a share. Go back to 2016 and you’ll see that GE stock was worth $10.6 billion at the end of the year and accounted for 36.4% of the retirement plan. 

GE planholders saw a big chunk of their retirement plan go up in smoke because the company didn’t have a maximum weighting for GE stock. To make matters worse, because the stock was held in a tax-advantaged account if they sold at a loss (that depends on an individual’s cost basis), the capital loss wasn’t applicable. 

Beware the under-diversified defined contribution plan. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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[Editor’s note: This story was originally published in 2019, but was updated on March 23, 2020.]

When it comes to the tax-return season, the biggest question is: where’s my refund? The amount is often fairly sizable and many people rely on it (in 2019 the average refund was $2,869).

Assuming you use an electronic filing, you may have to wait anywhere from two to three weeks to receive your tax refund. Yet there could be delays, such as if the return is incomplete, has errors, or has been impacted by identity theft or fraud.

So what if you file a paper return? Well, in this case, it could take six to eight weeks to get your tax refund.

Now the IRS actually makes it easy to track the status of your refund. The agency has something called “Where’s My Refund?” There is even a mobile app for Apple’s (NASDAQ:AAPL) iOS, Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) Android and Amazon.com’s (NASDAQ:AMZN) Kindle. To see the status of your tax refund, you’ll need to provide your Social Security number, filing status and the exact amount on your tax return.

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If the app indicates “refund sent,” you may still need to wait up to a week to get the payment deposited. This is because of the processing of your bank. Or, if you requested a paper check, you may have to wait another couple weeks.

Further, due to the uncertainty because of the coronavirus from China, Tax Day has been delayed from April to July 15. However, your state taxes may still be due at the normal time. Make sure to double check the deadline for your state before putting off filing.

Some Options With Your Tax Refund

There is a way to get your refund quicker — that is, to get a so-called refund advance, which often has zero interest. And yes, the major tax prep operators have their own programs like H&R Block (NYSE:HRB), Intuit’s (NASDAQ:INTC) TurboTax, Jackson Hewitt and Liberty Tax.

But there are some hitches. For example, you are required to purchase the tax services or preparation software of the company. Next, there are often fees for a debit card that your advance will be deposited in. There may even be finance charges if the amount exceeds a certain level. What’s more, if the refund winds up being less then the loan, you could be on the hook for the difference.

In other words, it’s a good idea to read the fine print. Although, for the most part, a refund advance can be a good option.

Tom Taulli is an Enrolled Agent and also operates PathwayTax.com, which is a tax advisory and preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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Retirement savers received a big let down from the IRS recently. While the tax agency did raise the annual contribution limits on 401ks by $500, it left the amount of cash you can stuff into an IRA — currently $6,000 — the same. This is now the second straight year at those contribution caps. That means anyone contributing to an IRA needs to make the most out of each contribution.

Luckily, there are several exchange traded funds (ETFs) that can do just that.

The best ETFs for IRAs and Roth IRAs are those that feature plenty of long-term growth and opportunity. The tax-deferred or tax-free nature of IRAs allow for decades of compounding potential. The best ETFs track market segments and themes that deliver on those lines. Just contribute, click “buy” and walk away for 20 to 30 years. It’s here that investors can make the most out of the flat-lining contribution caps for IRAs and grow their capital over the long haul.

But with more than 1,750 different exchange traded funds now on the market, how do you know which could be the best ETFs to stuff in your IRA? Fortunately for you, InvestorPlace has done some of the leg work.

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With that, here are five of the best ETFs for your IRA.

The Best ETFs for Your IRA: iShares Exponential Technologies ETF (XT)

XT tracks an index of the firms operating in the latest in innovation. We’re talking cloud computing, 3D printing, Internet of Things (IoT), bioinformatics, etc. It’s all in there. The beauty is that the ETF doesn’t just focus on traditional tech stocks. In fact, only about a third of its portfolio is in tech companies. The rest spans everything from financials to industrial names. Top holdings include Seattle Genetics (NASDAQ:SGEN) and NVIDIA (NASDAQ:NVDA).

This broad mandate and focus on high-innovation is a wonderful long-term theme. Some of these ideas will take a while before becoming mainstream and are still in their infancy. So, the ETF is designed to be a long-term growth engine of a portfolio. Why pay taxes on the long-term gains along the way? XT in an IRA just makes sense.

And it’s done pretty well on that front already. Since its inception in 2015, XT has managed to produce an average yearly 11% return.

With low expenses of just 0.47%, or $47 per $10,000 invested, XT is one of the best ETFs to hold in an IRA.

Vanguard Small-Cap Value ETF (VBR)

VBR tracks the performance of the CRSP US Small Cap Value Index. This benchmark owns the cheapest small-cap stocks in the U.S. The ETF currently owns nearly 860 different stocks. That’s just under half of the entire small-cap universe. This concentration allows for investors to tap into the full potential of the small-cap value out-performance phenomenon.

And outperform it has. Over the last decade, VBR has managed to produce a staggering 11.57% annual return. Meanwhile, the ETF also throws off some impressive yield- currently at 2.25%. These sorts of high, long-term returns just beg to be placed inside a tax-deferred/free vehicle. And given the recent shift back to value stocks, VBR’s long-term success is almost assured. Even better is as a Vanguard ETF, VBR is dirt cheap to own at just 0.07%.

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All in all, small-cap value has been one of the best places to find growth and VBR could be one of the best ETFs tracking that theme.

Invesco WilderHill Clean Energy ETF (PBW)

One of the oldest and elder statesmen funds in the sector is the Invesco WilderHill Clean Energy ETF (NYSEArca:PBW).

The U.S.-focused ETF tracks a basket of stocks that are “engaged in the business of advancement of cleaner energy and conservation.” That’s actually a pretty mandate and includes the obvious solar panel producers like FSLR. However, PBW includes other stocks that operate in the clean energy realm such as construction firm MYR Group (NASDAQ: MYRG), who specializes in erecting wind turbines and transmission lines, as well as Itron (NASDAQ:ITRI), who makes smart-meters. This makes PBW a very broad play on the renewable energy theme and its overall growth.

As for realizing that growth, returns for PBW have been spotty. But that just underscores the long-term nature and risk of renewable energy. With adoption growing, long-term investors may finally realize the potential. With that PBW could be one of the best ETFs to buy in your IRA and forget about for a while.

iShares MSCI Frontier 100 ETF (FM)

The truth is, we kind of can do that via iShares MSCI Frontier 100 ETF (NYSEArca:FM).

FM focuses on so-called frontier markets. These are “emerging” emerging markets and are nations just in their beginnings of economic expansion and growth. We’re talking about countries like Kenya, Vietnam, and Romania. These nations feature plenty of risk, but also plenty of reward as they start to transform. The beauty of using FM and why its one of the best ETFs is that it allows Regular Joes access to these stocks. It’s pretty much impossible for you or I to buy stocks on the Kuwait Stock Exchange. But with FM, it’s one-ticker access.

And the ETF does belong in your IRA as this is not an overnight theme. It’s going to take some real time for many of these nations to move up the economic ladder. That means buying shares and ignoring them for a bit in order for the theme to take off.

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Perhaps the only drag is the FM is expensive at 0.81%. However, considering what it owns, the cost is justified.

Schwab U.S. REIT ETF (SCHH)

The Schwab U.S. REIT ETF (NYSEArca:SCHH) could be a wonderful way to get your exposure. SCHH tracks the bread-and-butter Dow Jones U.S. Select REIT Index. With the ETFs 98 different holdings, investors get access to apartment owners, office buildings, shopping centers and even warehouses. Better still is that the index focuses on the top real estate owners in their respective categories. This provides plenty of stability, size and cash flows.

SCHH has had plenty of returns as well. Since its inception in 2011, the ETF has managed to produce a great 10.31% annual total return. This just underscores REITs ability to produce gains over the long haul. By placing them in your IRA, investors can get maximum compounding potential with the tax headaches.

And with low expenses of just 0.07%, SCHH could be the best ETF to do just that.

At the time of writing, Aaron Levitt held a long position in XT.

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It’s all about the U.S. economy when it comes to the markets right now. Global growth is slowing. Major economies in Europe, Asia and more are all slowing, headed into recession, are in recession or worse. Most major stock indexes in U.S. dollar terms continue to trail the S&P 500 Index in price and total returns.

And in the bond markets, the U.S. is the destination of choice for investment, with over $14 trillion of bonds in Europe and Asia with negative yields. The U.S. continues to offer more attractive bond yields for Treasuries, corporates, municipals and other bonds. Add in the low-to-lower U.S. inflation as measured by the core Personal Consumption Expenditure Index (PCE) sitting at a mere 1.77%, and U.S. bonds look even more attractive.

Troubling Economic Data

But the U.S. economy is not all milk and honey. Trade negotiations are showing glimmers of easing with various nations including China, Japan, Canada and Mexico, but uncertainty persists. This is evident by the whipsawing of U.S. stock markets last week and, so far, this week. One day traders are in a mania of optimism over China talks. The next they plunge into depression over prospects of talks collapsing. This is no way to provide certainty for individual investors.

And last week, we had discussions over indicators of business sentiment for manufacturing and non-manufacturing in the Purchasing Managers Indexes (PMIs). And they are another manic/depressive input for the stock market with the glass half-empty battling the glass half-full traders and prognosticators.

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Two PMIs for manufacturing were released. Both show drops over the past 12 months. You have been hearing about this as bad news for the economy until you get the inside scoop.

Markit PMI Manufacturing (White) ISM (Gold) Indexes Source Markit, ISM & Bloomberg

The ISM number is 47.80 which is below 50 and suggests a slowing in manufacturing activities and expectations. But the Markit number is 51.10. That’s above 50 and actually higher than the previous month, showing improving optimism. The divergence is explained by Markit to me that the ISM has a greater focus on larger and more globally focused manufacturers which are being more impacted by global slowdowns or recessions.

This matches up with the realities that the U.S. remains in growth mode while the world slumps, as I’ve been discussing in my Profitable Investing.

Looking Deeper Into the Numbers for SAfe Stocks

But taking a step further back, manufacturing is a very small sector of the US economy and is dwarfed by services and non-manufacturing. And we got a snapshot on these sectors PMIs from Markit Services and ISM non-manufacturing indexes which were released today.

Markit Services (White) & ISM Non-Manufacturing (Gold) PMI Indexes Source Markit, ISM & Bloomberg

Both PMIs remain in positive territory (above 50) but are lower than they were in 2017-2018.

But another view directly on consumers also came in late last week in the Bloomberg Consumer Comfy Index.

Bloomberg Consumer Comfy Index Source Bloomberg

This shows an upturn to 62 for the latest weekly survey results which includes lots of disconcerting news on the US economy including the General Motors (NYSE:GM) strike. This means that for now, the biggest component of the U.S. economy — consumer spending — should remain a positive for a while longer.

Of course, we also had Jobs Friday last week. The employment data showed both arguments for further growth and slipping progress. But my take was that the jobs number was good, including the two-month revision. Participation was also good, along with the underemployment rate. And wages are still climbing — but with perhaps less inflationary pressures. Again, pretty good.

All of this shows both some things to be concerned about and some to take comfort in for stock investors. And many U.S.-focused industries and companies are faring better in their businesses and in the stock market than globally focused peers. This is why I have continued to focus my recommendations on the U.S. sectors for now.

But then we come to the credit markets. The U.S. credit markets have been squeezed, causing some near-term challenges. This is in the very short-term funding market in the repurchase agreements (Repo) market. This came with regulation-strangled major banks not participating as they did many years ago along with a slew of U.S. Treasury bond sales taking cash out of the credit markets

This is being finally addressed by the Fed as it resumes a form of Quantitative Easing (QE) by providing Repo transactions daily amounting to $75 billion and discussions of resumed bond buying. And in turn, U.S. bonds are gaining in price. But a lot more is now riding on the next Federal Reserve Bank Open Market Committee (FOMC) meetings on Oct. 29-30.

REITs & Utilities, Along with a Gold Lining

Real estate investment trusts (REITs) and utilities continue to deliver gains which have been holding up even on troubled general stock market days. This has been the trend during past downturns, including the big and sustained one for the fourth quarter of 2018. And dividend income remains attractive with REITs adding the tax benefit of the 20% tax deduction from dividend income as part of the Tax Cuts & Jobs Act of 2017 (TCJA).

The indexed play is the Vanguard Real Estate ETF (NYSEARCA:VNQ) while for an individual REIT — look at my multi-decade proven performer in WP Carey (NYSE:WPC).

There are two utility investments to focus on. The indexed equity play is with the Vanguard Utilities ETF (NYSEARCA:VPU). This ETF has returned 23% year to date and provides a yield of 2.8%.

The second is an individual utility, NextEra Energy (NYSE:NEE). This utility has regular power operations in Florida and has unregulated wind and solar operations throughout North America. The stock has delivered a return of 32.07% year to date and yields 2.22%.

And gold, something that I first began to recommend earlier this year, is now the go-to market for downturns. It can also help with capitalizing on lower U.S. interest rates. But rather than bullion or the SPDR Gold Trust ETF (NYSEARCA:GLD), go with the royalty company, Franco-Nevada (NYSE:FNV) which continues to vastly outperform spot gold and the GLD.

Bonds, Buy ‘Em

While there was a glitch in the liquidity in the credit markets discussed above, U.S. bonds remain great performers year to date. In the Profitable Investing model portfolios, I have a collection of funds, individual preferred stocks, individual mini-corporate bonds and well-performing closed-end municipal bond funds.

In particular, look at the BlackRock Credit Allocation Income Trust (NYSE:BTZ). This closed-end fund has a great collection of bonds which has the fund’s stock price trading at a big discount to the net asset value (NAV) of the bond portfolio by 9.41%. That’s a big bargain right now. And it yields 7.4%, making for a further great buy.

Now I’ve presented my recommendations for risk-off stocks and alternatives for volatile or down markets, perhaps you might like to see more of my market research and recommendations for further safer growth and bigger reliable income. For more – look at my Profitable Investing. Click here to learn more:

In addition, I have recently had a book published titled Income for Life. For more information on it, click here:

It is nearly 400 pages of income producing investment strategies for all weather economic conditions as well as additional income producing ideas that anyone can use successfully.

Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps — and into safe, top-performing income investments. Neil’s new income program is a cash-generating machine…one that can help you collect $208 every day the market’s open. Neil does not have any holdings in the securities mentioned above.

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The financial crisis of 2008 was a baptism by fire for new investors. From 2009 through present day, momentum investing was on the minds of Wall Street’s veteran and amateur investors alike. Yet, while the Dow Jones Industrial Average soared 200%-plus from the lows of the crisis, cracks in the logic of momentum investing began to appear.

Boiled down, momentum investing (cutely dubbed “momo” investing) is the practice of going long factors that have outperformed the market over the previous 3 to 12 months and shorting factors that underperformed. Easy, right? But on Nov. 21, 2018, Money Maven’s Sean Hyman drills into the logic behind momo stocks — claiming momentum stocks are dangerous.

Hyman illustrates his point by citing Nvidia (NASDAQ:NVDA). At the time, NVDA had given back roughly 50% of its gains, falling from $292.76 to $149.08.

“My advice,” begins Sean, “would be to stay away from NVDA and other momentum stocks because they’re all ripe for a massive fall.” Since that article’s publication, NVDA has risen 20.6%. But over the past three years, Nvidia’s stock climbed 169.2%, outperforming the iShares PHLX Semiconductor ETF’s (NASDAQ:SOXX) 96.9% rise. Rewind five years, and the gap is even more pronounced — 798.9% vs. 144.8%, respectively.

When you look at it from that perspective, a 50% loss isn’t so significant, is it?

Now, I’m not advocating investors ignore fundamentals and focus solely on a factor’s past performance — I’m just stating the facts about momentum investing. In “Fact, Fiction and Momentum Investing,” authors Clifford S. Asness, Andrea Frazzini, Ronen Israel and Tobias J. Moskowitz identify several “myths” about momentum investing that have been propagated for years.

The Top Three Myths About Momentum Investing

Returns are Volatile and Inconsistent: One of the biggest criticisms against “momo” investing is that returns are too inconsistent. Or, more specifically, gains happen in short bursts and periods of losses are extended. If we randomly opened the stock chart of Aurora (NYSE:ACB) to Feb. 19, 2019 through March 20, 2019, we’d see a burst of roughly 41% … but over the next six months, ACB stock gives back all of those gains. However, historical data disproves the notion that momentum investing is somehow sporadic. From SSRN:

“Momentum’s presence and robustness are remarkably stable (and by this we don’t mean that it doesn’t have long stretches of poor performance, as does any factor, or short stretches of extreme performance; we mean the overall evidence across very long periods of time and in many places).”

To this point, Professor Kenneth French provides data that can be replicated by any investor.

Despite exhibiting higher-than-average volatility, French’s results show that momentum investing provides an overall stable set of returns. Importantly, the conclusion drawn from this research is not to invest in momentum stocks alone, but to use momo in conjunction with value investing.

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Interestingly enough, research released earlier this year from finance professors Sina Ehsani of Northern Illinois University and Juhani Linnainmaa of the University of Sourthern California optimized the momentum investing approach. What they uncovered, essentially, is that you can invest in momentum by betting on the best-performing factors of the previous year, as opposed to betting on individual stock performance.

The Wall Street Journal illustrates how this would work in a real-life portfolio, suggesting that investors break their portfolios down by market capitalization and compare performance. Since large caps beat small caps (the DJIA vs the Russell 2000), this momentum approach would bet on large-cap stocks. Next, investors rebalance their portfolio by comparing exchange-traded fund performance (this enables them to hone in on the next factor to prioritize) against the broader market. Then, invest in the factors that beat the market over the past year.

Momentum Is for Small-Cap Stocks Only: As a financial journalist and editor, I’ve seen headlines of this sort almost on the daily. “Invest in this Small Cap for 5,000%+ Returns!” or “Go Small for BIG Gains.” And while it’s not necessarily false, it’s misleading at best and malicious at worst. The myth that small-cap stocks are a momentum investor’s best bet was created in the early aughts after a paper researched returns of small stocks, finding they often outpaced their large peers. The paper never stated, however, that large caps are incapable of providing similar momentum.

Quite the opposite.

Large-cap stocks, according to the researchers, are equally capable as small caps of momentum performance. The paper points to research from Kenneth French, cited above, that tests the returns of a small-cap portfolio long winners and short losers against a similarly composed large-cap portfolio. The results show that between 1913 and 2013, the small portfolio averaged 9.8%, while the large group averaged 6.8% — not a big difference once you factor in increased risk and volatility for small stocks.

Interestingly, the value proposition for large stocks dropped significantly. As the researchers put it, “… to argue that momentum is all about small stocks is completely inconsistent with the facts, and far more of an argument to lay at the feet of pure value investing. To promote this myth about momentum while simultaneously advocating value investing is bordering on absurd.”

Trading Costs Nullify Momentum Gains: According to this myth, the premium to finance a momentum strategy (of potentially shorting small stocks) outweighs the gains. The analysis details real-world data compiled by Frazzini, Israel and Moskowitz to model transaction costs of trillions of dollars in trades over a period of 15 years. These data span 19 developed markets, concluding that “per dollar trading costs for momentum are quite low, and thus, despite the higher turnover, momentum easily survives transaction costs.”

The myth, the paper states, comes from fallacious studies that use aggregated data to measure costs for the average investor across all trades, rather than measuring institutional costs. The costs for an individual are ten times higher than those of institutional investors.

“Since the premium for momentum is much higher than it is for size, and the costs to trading momentum are slightly lower than those for size (momentum is higher turnover but small caps are more expensive to trade than other stocks), you don’t have to do much math to realize that momentum can easily survive trading costs.”

You can read the full report dispelling myths about momentum investing here.

However, investing for momentum is only one part of a well-rounded portfolio. After all, there are plenty of little-known companies that are “keystones” to fundamental technologies that will change our lives.

One little development, a slight perspective tweak, could become a driving force at the intersection of technology and humanities. Much in the way the iPhone has permanently sewn digital interaction into daily life. Diving deeper, the iPhone’s revolutionary execution was only made possible by a keystone technology — 3G. The next technological evolution will be made possible by a natural succession of next-generation keystone applications. To learn more, read legendary tech investor Matt McCall’s treatise on the technology that will facilitate the next big breakthrough of our generation.

John Kilhefner is the managing editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.

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Starting a new job is stressful. You sign up for health insurance, attend orientation and then are left with benefit packages to decipher and a new responsibilities to master. Investing can be scary — and with all the fine print and investment choices — signing up for a 401k account at work might fall by the wayside.

Whether you’re a younger employee, or have been around the block once or twice, it’s easy to put off signing up for your company 401k plan.

But, if you could take a few steps now to learn about and enroll in your 401k plan, you might be hundreds of thousands of dollars richer — or even a millionaire — by participating in this tax-advantaged retirement plan.

The 401k Basics

A 401k is named for the section of the tax code that governs the accounts. It is an investment account sponsored by your employer, allowing you to transfer, pre-tax, a portion of your salary to invest in your future. Many employers also “match” a portion of employees’ contributions. Matching employer contributions is “free money” on top of your salary and benefits.

So, if free money isn’t enough to get you started investing in your 401k, here’s another motivator.

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For 2019, the IRS allows individuals to contribute up to $19,000 — up from $18,500 in 2018. Based on this cap, you should deposit at least enough to obtain the “match” from your employer, which is typically 5%-6% of your salary.

Since you contribute money before paying taxes, you’re essentially reducing your taxable income. Further, the 401k investments grow tax-free while in the account.

Here’s an example. Assume that Rebecca, a 30 year old, earns $100,000 annually and starts investing immediately in her 401k account. If she invests $10,000 per year into her account (without increasing the contribution amount), and her employer match is 5%, her employer would contribute $5,000 annually.

In 20 years, when Rebecca is 50, the account will be worth approximately $605,000. In 30 years, at age 60, her account will have grown to $1.3 million, assuming a 7% annualized rate of return.

The Perils of Waiting to Invest

Now let’s compare Rebecca with Raymond. He was distracted and apprehensive about investing in his 401k. Assume that he waited until age 40 to begin contributing. Raymond contributed the same $10,000 annually and his employer also contributed $5,000 each year. In 20 years, at age 60, Raymond has $605,000 in his account. That’s no small feat, but it pales in comparison with 60-year-old Rebecca’s $1.3 million.

Whether you feel scared, overwhelmed or distracted, you can lose hundreds of thousands of dollars by waiting to contribute to your 401k.

Tips to Start Investing in Your 401k Now

If you’re overwhelmed with choosing investments, most retirement accounts offer a target-date fund. These funds divide your money among diversified stocks and bonds and become more conservative as your retirement date approaches. By choosing to invest in a target-date fund, you can avoid having to pick individual investments.

If you already have a 401k, congratulations. To make sure you’re maximizing your 401k returns, get your retirement account analyzed — for free — with this handy platform, Blooom.

Finally, begin investing now, even if you feel worried that you might leave your job soon. Then, when you do leave your job, you can roll your 401k over to an IRA. Your money will then continue to grow until retirement.

It’s difficult to find a wealth-building tool as powerful as a 401k account, so don’t let fear deter you from a golden opportunity.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.

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[Editor’s note: This story was updated on Aug. 8, 2019, to update Stash’s pricing to its new model.]

The fintech industry continues to grow by leaps and bounds and with that growth have come lots of new investing apps for investors, young and old, to use in their pursuit of investment returns. 

In 2018, fintech companies in the U.S. got $12.4 billion in funding, 43% higher than a year earlier. Many of those fintech companies are using the funding to develop apps to make investing and personal finance more accessible and more rewarding. 

According to CB Insights, there are something like 39 fintechs worth $1 billion or more. Together, those 39 companies are worth an estimated $147.4 billion.  

Consumers like to use apps to manage their finances. Data from 2016 suggests the average person uses between 1-3 apps to get the job done. As fintechs continue to create new apps to handle different aspects of our financial lives, I’m sure more young investors will gravitate to them.

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With that in mind, here are 10 investment apps for young investors to consider, as they put their hard-earned money to work.   

Acorns

The problem for most young investors is that they don’t have a lot of money to invest because of student loans, steep rents, low wages etc. While understandable, the Acorns app allows you to invest your spare change to get the process started. 

Another exciting service Acorns has developed is Found Money, which uses brand loyalty to build your investment account. So, every time you buy something at one of the Found Money partners, that company credits your Acorns account with the applicable savings. 

The one thing to be aware of is the fees. Until you get a larger account balance, the monthly fees vary between $1-$3. That is going to seem high.

For example, it charges $2 a month for an IRA account. If you have $1,000 in that account, the annual fee is 2.4%. If you have $10,000, that fee drops to 0.24%. 

E-Trade

If you’re going to buy stocks, ETFs, or even mutual funds, you’re going to need a discount brokerage account to buy the investments. 

E-Trade isn’t the cheapest discount broker. It charges $6.95 a trade, but gets a 4.5 rating out of 5 from NerdWallet, primarily because of its excellent mobile app, excellent customer support and large investment selection. 

The discount broker has two mobile apps that are both available on iOS and Android.

The E-Trade mobile investing app provides options such as stock screening that help you find the right stocks to buy. It can even be accessed on Apple Watch. The second mobile app is OptionsHouse, the company’s options specialist, that lets you make options trades on the go.  

It doesn’t hurt that E-Trade’s parent is E-Trade Financial (NASDAQ:ETFC), a company with an $11.4 billion market cap.

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The only downside: you’ll pay more per trade if you aren’t an active trader.

Mint

If you can’t save any money, you won’t be able to invest. That’s where Mint.com comes into play. 

Mint is a free personal finance app from Intuit (NASDAQ:INTU) that helps users track their spending, create a budget, and generally gets you smarter about money. It even lets you know when bills are due and what you can afford to pay. 

Over 15 million people use Mint in the U.S. and Canada to keep their finances straight. Intuit uses this free app to inform you about its other products such as Turbo Tax, which cost money to use and are also very helpful for saving money. 

It’s an excellent loss leader. It will put you on stronger financial footing if you use it on an ongoing basis. 

 Motif Investing

Young investors interested in investing apps might want to take a look at Motif Investing, the California tech startup that uses data science and automation to create thematic portfolios that its 350,000 customers can buy with a click of a button. 

CEO Hardeep Walia found a way to use data science to find the best investment themes and companies benefiting from those themes. 

If you want to bet on the next great biotech stock, Motif has a portfolio called Feeling Better About Biotech, a basket of up to 30 biotech stocks and ETFs that gives you an appropriate exposure to the industry. 

For as little as $300 in your trading account, you can own this portfolio of stocks. Motif also has an Impact account. For as little as $1,000 in your account, you can get a fully automated portfolio that aligns with your financial goals and values. 

The Impact account charges 0.25% annually while the trading account varies from free if you use a next market open trade to as high as $19.95 a trade depending on the type of portfolio you’re building.

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 If you’re interested in owning one or two stocks, Motif is probably not for you. 

Robinhood

Of the apps listed in this article, Robinhood is the investing app most likely followed and used by millennials. Robinhood officially launched in December 2014. It provides commission-free investing in stocks, options, and cryptocurrencies. 

Since its founding Robinhood has grown to a customer base of over four million active users, many of them young investors; its average user is 32. Estimates suggest that Robinhood, which counts Snoop Dog as an investor, could be valued at as much as $10 billion.    

Robinhood came under scrutiny in 2018 when it tried to launch a checking account for its customers that would pay 3%, didn’t charge any fees and was covered by the Securities Investor Protection Corporation. The program never got off. It is currently working with regulators to create a cash management plan that will get off the ground.

In the meantime, the commission-free service for trading continues to gain popularity with investors.

SoFi

Its official name at its founding in 2011 was Social Finance Inc. It made student loans. Eight years later, it still makes student loans but has expanded into other areas of financial services, including personal loans, mortgages, bank accounts, and investing products and services. 

On July 8, SoFi launched Stock Bits, a new service that allows investors to buy fractional shares of popular stocks. If you want to own a dollar’s worth of 50 stocks, you now can. It’s specifically designed for those who are new to investing. 

“People are told to ‘buy what they like,’ but when what they like costs over $100 or $1,000 per share, first-time investors are priced out,” said Anthony Noto, CEO at SoFi. “Investing is a financial requirement for achieving financial independence, and it is our focus to remove the barriers to getting started by providing features like Stock Bits for SoFi Invest.”

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SoFi had a challenging year in 2018. Laying off more than 7% of its staff due to weakness in its mortgage products, I believe Stock Bits could be an innovation that lifts the San Francisco financial services company to new heights.

Stash

The Stash Investment App was launched in October 2015. It’s premise was simple: provide Americans with the tools, guidance and confidence to grow their savings. Almost four years later, Stash has more than 3.5 million people saving and investing using its investing app. 

For as little as $5, you can own fractional shares in companies you support and believe in. However, we’re not done. It also allows you to invest in portfolios of stocks through ETFs for as little as $5. That means you can own some of the most popular ETFs for a fraction of what you’d pay to hold them on your own.

The Money Under 30 website recently reviewed the Stash investing app, suggesting it is well made and well designed. Competing with Acorns for the attention of young investors, Stash has three monthly subscriptions available charging $1, $3 or $9 per month depending on the plan you choose. 

Stash has moved to a subscription model, dropping the 0.25% annual management fee. However, you will pay the management fees of the ETFs in your account, in addition to the monthly subscription fee. There are no minimum balances for all three plans.

Wealthsimple

Wealthsimple is a Toronto-based robo-advisor that provides ready-made investment portfolios to people in Canada, the U.S., and the UK. Founded in 2014, it now controls 70% of the digital advisory space in Canada and is slowly making inroads in the U.S. where it launched in early 2017. 

At the end of March, Wealthsimple had CAD$4.3 billion in assets under management and more than 100,000 clients in the three countries where it operates.

In March, the company launched Wealthsimple Trade, which provides commission-free investing in Canada for stocks and ETFs. It’s the first company in Canada to do what Robinhood’s doing in the U.S.  

It’s managed to snag 25,000 users in the first four months of operation; the average age of its users is 31. Like Robinhood, a lot of its users are buying cannabis stocks. The banks are also popular, as are some of the big tech companies like Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA). 

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Delivering an attractive and easy to use mobile app, expect Wealthsimple to make waves in the U.S. market in the next couple of years. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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Consistent contributions to well-managed retirement accounts can lead to a financially secure future. Yet, as with all types of investments, a 401k requires management and oversight. From selecting assets to rebalancing your 401k, either you or a professional needs to ensure that the account includes the correct investments in the appropriate proportions for you.

Source: Shutterstock

Discover the secrets to 401k management and find out whether you should hire a pro or DIY.

Best Strategies for 401k Management

With a new job comes a paycheck and benefits package which typically includes a 401k retirement account. Just click the “sign up” link from your company portal and you’ll be directed to a platform that guides your investment choices for your retirement account.

More often than not, there is a morass of choices and information. You need to figure out your investment options, the fees and how much to contribute. Take heart — help is available to navigate the treacherous 401k management waters.

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Read on to learn about the various options for account set up and management for your 401k.

Where to Get Retirement Account Help?

The 401k plan administrator can help with basic account and investment questions. Schwab, Vanguard and Fidelity offer 401k management services and have well-oiled customer service departments. So do many other providers. Betterment for Business, a top robo-advisor, partners with firms to offer their digital investment platform to employees. It also offers personalized advice.

If you want more in-depth planning guidance with your 401k and financial future, you might want to hire a financial planner for a review. Just make sure to check out their credentials with brokercheck at finra.org. Many fee-only financial planners offer this service for an hourly fee.

If you have a 401k and want a check-up to see if you’re on the right track, Blooom will analyze your 401k account for free and make recommendations. For a low fee, Blooom is a one-of-a-kind digital investment manager focused solely on 401k management, 403B, and TSP management.

After a free login and account sync, Blooom provides feedback on your asset allocation mix, fees, diversification. Then Blooom shows how their management could improve your account, by suggesting lower fee funds from among the plan choices and adjusting your asset allocation. If you sign up to use Blooom’s 401k management you’ll pay a small monthly fee of roughly $10 per month, although there are discounts available for multiple accounts and annual payments.

How to DIY Your Retirement Account Management?

Like any other financial decision, whether to get help managing your 401k or doing it yourself depends on several factors. For those, experienced investors or those comfortable with handholding from the plan representative, you can probably manage your 401k on your own.

Here’s what you need to do to stay on top of your retirement account management.

1. Understand the plan fees and expenses. Ferreting out this information can be challenging. Fees and expenses go directly to the plan administrator or the investment fund management company.

Your account statement and plan documents should list fees and expenses. The investment funds list the management fees. This is the amount that goes directly to the mutual or exchange-traded fund company. Realize that higher fee plans and funds will leave less of your money to invest in the financial markets.

Your human resources representative can explain this information as well.

2. After getting a handle on fees, several times per year, review returns. To find out how your returns compare to the market, compare them with relevant unmanaged benchmark indexes. For example, a large cap stock fund return could be compared with the performance of the unmanaged S&P 500 index like the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).

When you signed up, you selected an asset allocation that was suitable for your age and risk tolerance. Every year or so, make sure that your account still matches your preferred asset allocation or mix of stock and bond funds. For example, if you want a 70% stock and 30% bond allocation, and by year end, stocks make up 80% of your investments and bonds 20%, you’ll need to rebalance.

Rebalancing involves buying and selling funds until the asset allocation percentages are in line with your preferences. Or, you can direct new contributions to the underperforming asset class.

401k Management Wrap up

If you’re comfortable managing the investments, rebalancing and reviewing fees, then you can get by on your own or with guidance from the plan administrator. If you prefer to have your 401k managed by a professional, consider hiring Blooom or your own financial advisor to ensure that you’re making the best retirement account decisions, for you.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.

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Today, and for every day for the next 10 years, 10,000 baby boomers will turn 65, fueling huge demand for retirement income. While Social Security is a start, many retirees have investment assets to liquidate and spend in retirement. Yet, how much to withdraw in retirement remains a problem. The 4% rule popularized in the 1980’s isn’t a sure thing.

That’s where retirement income funds might help. These investments emerged around the same time as target date investment funds did.

The premise is simple: invest in a professionally managed retirement income fund, and build income to either save for retirement or to spend after you’ve left the workforce. The fund provider might send you a monthly check or just conservatively manage your assets for income and growth.

Retirement income funds are typically actively managed mutual funds that lean toward a conservative asset allocation. The funds charge a management expense ratio, typically less than 1%. These investments can be useful for retirees seeking professional money management for less than the cost of a traditional financial advisor.

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Retirement Income Fund Details

Retirement income funds are not all alike. Income replacement funds, which are similar to reverse target-date funds gradually return your money, plus any income and capital gains until the funds are liquidated in a predetermined year.

Then there are managed payout funds, that strive to give retirees equal monthly payouts, for a predictable cash flow. The Vanguard Managed Payout Fund Investor Shares (NASDAQ:VPGDX) attempts to disperse 4% annually. Currently, Vanguard estimates that a $100,000 investment would generate $313 monthly, or 3.76%. The fund charges a 0.32% management fee.

Other retirement income funds include the Fidelity Freedom Income Fund (NASDAQ:FFFAX), JPMorgan SmartRetirement Income Fund Class I (NASDAQ:JSRSX), BlackRock LifePath Index Retirement Fund Investor A Shares (NASDAQ:LIRAX), T. Rowe Price Retirement Balanced Fund Class R (NASDAQ:RRTIX) and a swath of Schwab retirement income funds including the Schwab Monthly Income Fund – Enhanced Payout (NASDAQ:SWKRX).

Unlike an annuity, retirement income funds don’t guarantee a specific payout. Each fund will choose its own asset mix and investment methodology. Returns and payout amounts also vary.

Advantages of Retirement Income Funds

These funds are professionally managed and rebalanced, saving the investor from investment management during retirement.

For the managed payout retirement income funds, the investment firm distributes cash for living expenses. This saves you the anxiety of figuring out how much to withdraw and from which accounts to take. There are even IRA retirement income funds to help with retired minimum withdrawal computations such as Fidelity’s Simplicity RMD funds.

Disadvantages of Retirement Income Funds

The management expense ratio is a consideration. While less than the fees of a typical financial planner, retirement income funds usually charge more than a low-fee index fund.

The asset allocation may not be right for you. If you’re a conservative investor, some retirement income funds might be weighted too heavily towards stock investments, and vice versa.

Retirement income funds don’t replace the financial advice you might need in your later years to help with tax, financial and estate planning. That’s where a human financial advisor can be helpful.

At the outset, you’ll still need to research the funds to find the one that works for you.

If retirement income funds aren’t for you then you might consider investing on your own and setting up a withdrawal plan.

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Another alternative to retirement income funds might be a low fee robo-advisor with a conservative income portfolio option. Betterment, M1 Finance and Wealthfront robo-advisors can handle the investment rebalancing and portfolio management, while you decide upon a withdrawal strategy. For the cost conscious, M1 Finance doesn’t charge any management or transaction fees. While both Betterment and Wealthfront levy a low 0.25% management fee with no additional transaction or trading fees.

Ultimately, retirement income funds are one solution to the question of how to disburse funds during retirement. When exploring retirement income funds take into consideration your own temperament, abilities, and investment preferences.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.

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CVS Health (NYSE:CVS) stock is down 22.3% year-to-date, closing at $53.19 on Monday. To put this in perspective, this is around the same price CVS stock was trading at in early 2013.

The broader health care sector hasn’t done very well in 2019 either. The Health Care Select Sector SPDR Fund (NYSEARCA:XLV), which counts CVS stock as one of its largest components, is the worst performer among nine sector ETFs year-to-date.

CVS is the largest pharmacy in the United States. Last November, CVS completed its acquisition of Aetna, America’s third-largest health insurer.

Click to EnlargeThe $70 billion deal still faces some challenges in court, but if it goes through, it would create a vertically integrated health care giant. CVS would be a pharmacy, a pharmacy benefit manager (CVS Caremark), a health insurer, and a primary care provider (through its MinuteClinics).

This could potentially shake up America’s health care system.

CVS beat analyst forecasts when it reported first-quarter earnings on May 1, sending CVS stock up higher to the mid-50s, although it has lost ground since then.

Is it time to buy CVS stock?

Bulls would say “yes” emphatically. Although the health care sector is not doing so well this year, it is projected to grow faster in the years ahead. Also, CVS is a low-beta stock — 1.09 at yesterday’s close — and it trades at low valuations, and the stock might benefit from the merger with Aetna. It also pays a nice 3.82% dividend.

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Bears, on the other hand, would not buy CVS stock. They would cite political risks from both sides of the aisle, the opioid crisis, and competition from Amazon (NASDAQ:AMZN) entering the health care sector, both with its PillPack acquisition and its Haven disruptor venture. They also would warn investors about the company’s high debt levels.

Let’s take a look at both sides of the story. 

CVS Stock Pros

Growing Sector: The health care sector is growing faster than the rest of the economy, and this could benefit CVS stock.

According to projections from the Center for Medicare and Medicaid Services, U.S. spending on health care will grow at a 5.5% annual rate from 2018 to 2027. By 2027, the U.S. will be spending $6 trillion a year on health care, up from $3.65 trillion in 2018.

Part of this is due to factors such as America’s growing aged population (along with most of the developed world).

Growth in the health care sector could be a tailwind for CVS stock.

Low Beta: As a relatively low-beta stock, CVS is unlikely to be hit hard by cyclical economic downturns.

People will always need medicine and household essentials sold at CVS. During a downturn, you might put off buying a new car or going to a casino; you aren’t going to buy less toothpaste and toilet paper.

If you think this bull market has gone on long enough and a downturn is around the corner, it might make sense to look at stocks like CVS.

Valuation: “Across the board, CVS stock is trading at dirt-cheap, decade-low valuation levels,” InvestorPlace contributor Luke Lango concluded in April.

Lango looked at several valuation metrics. Many of his observations are still true.

“The trailing sales multiple is around 0.3. That’s a decade low, well below the five-year average sales multiple (0.6), and below the index average multiple (2.1). The price-to-cash-flow multiple is just above 6, which is also a decade low and well below the five year average and index average cash flow multiples. Same is true for price-to-book and forward price-to-earnings.”

CVS Stock Cons

U.S. Politics: Washington’s wrangling could also pose a problem for health care companies like CVS. This has already hit CVS stock.

The Democrats are moving toward greater intervention in the economy, with an emphasis on the health care sector, which accounted for 17.9% of U.S. GDP in 2016. Several Democrats running for president in 2020 have endorsed “Medicare for All”, which could eliminate private health insurance.

CVS just bought a health insurance company, Aetna, for $70 billion. 

President Trump also wants lower drug prices, and some of his proposals could negatively impact pharmacy benefit managers like CVS.

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Amazon: Amazon has already disrupted multiple industries, and health care could be next.

Last year, Amazon formed health care company Haven with JPMorgan Chase (NYSE:JPM) and Berkshire Hathaway (NYSE:BRK.B). This joint venture will be free from profit-making incentives and constraints; its goal is to improve health care while lowering costs. There’s also the aforementioned PillPack, an online pharmacy startup.

Opioid Liability: CVS stock could also suffer if the company is hit with more opioid lawsuits.

I mentioned the opioid crisis last year in an article on Johnson and Johnson stock. Thousands of people in the U.S. have died as a result of overdosing on opioids such as hydrocodone and fentanyl.

While the federal government is working to combat this opioid crisis, CVS faces opioid lawsuits from the Cherokee nation, City of New York, and the state of Florida. If more jurisdictions file lawsuits against CVS, the stock will be negatively impacted.

The Verdict on CVS Stock

In my view, the cons outweigh the pros and I would stay away from CVS stock for now.

Yes, CVS stock is cheap, but sometimes stocks are cheap for a reason. Cheap stocks can sometimes be value traps, and InvestorPlace contributor Ian Bezek thinks CVS is a value trap right now.

I’m inclined to agree. I think the Amazon threat is real.

Some may argue that Amazon’s success as a pharmacy is not guaranteed. Indeed, Amazon invested in Drugstore.com in 1999 only to see the site sold to Walgreens Boots Alliance (NASDAQ:WBA), which shut it down in 2016.

However, Amazon was a much smaller company back then. Today it is an $800-billion behemoth.

The technology research firm CB Insights recently detailed Amazon’s ambitions in the health care sector.

Can CVS out-innovate Amazon? I’m not so sure.

I would hold off on buying CVS stock.

As of writing, Lucas Hahn did not hold a position in any of the aforementioned securities. 

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It’s a question that has nagged at investors for as long as both asset categories have existed … are stocks the way to go, or bonds? If both, how much of either belong in a portfolio?

The answer to the “stocks vs bonds” debate is, of course, one that depends on a myriad of factors unique to each and every investors. On a pound-for-pound, dollar-for-dollar basis though, stocks are the superior option for most investors, most of the time. They’re not as safe or stable as bonds when you’re talking about one specific equity. For a smart, long-term investor who knows how to build a diversified portfolio though, stocks just make more sense. Bulletproof? No, they’re not. They can certainly take their lumps and keep on tickin’ though.

With that as the backdrop, here are five specific reasons stocks win the battle of stocks vs bonds. In no particular order…

Income Growth

Yes, bonds offer hyper-reliable income flow. While bond issuers can and sometimes do default on their payouts, that’s a rarity. Meanwhile, it’s not terribly uncommon for a company to reduce or altogether cancel their dividend, even if on a temporary basis.

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There’s a flipside to that risk/reward coin though. With a bond, the semi-annual payment is fixed for the duration of that debt. With a dividend-paying stock, the payout usually grows in time. Walmart (NYSE:WMT), for instance, has upped its dividend for 45 straight years now, while NextEra Energy (NYSE:NEE) has done the same for 24 consecutive years.

Different Cycle

For veteran investors who’ve owned both stocks and bonds through at least a couple of different economic cycles, they’ll know that bonds often do well in some environments that bode poorly for stocks, while bonds tend to do poorly while stocks are thriving. Namely, rising rates — as we’ve seen of late — have pressured the bond market lower, but the corresponding inflation has coincided with solid growth from equities, since economic growth itself is generally what fuels inflation.

It might take a bit of timing intuition to make good on the nuance, but savvy investors know that sooner or later, every asset will face a headwind and enjoy a tailwind, but will do so at different times.

Stocks Usually Beat Inflation

It has been a mostly ignored secret of late, but not only have bonds lost value of late as interest rates have risen, most interest payments from bonds haven’t kept up with inflation.

This year’s average annualized inflation rate stands at 2.8%, though effectively speaking, the cost of goods seems to have grown a bit more than that. Meanwhile, the average yield on 30-year Treasuries is barely a bit higher, at 2.97%… and that’s a long commitment. Less-committal 5-year paper is only paying 2.75%, which means in the end, holders of that debt are only breaking even relative to inflation.

Yes, inflation-protected instruments like the iShares Barclays TIPS Bond Fund (NYSEARCA:TIP) can help fight the adverse impact of inflation on debt-based interest payments. Its upward adjustment is always backwards-looking though, and never quite seems to keep up with the full pace of price increases.

More Price Transparency

To be fair, technology has come a long way, bringing bond trading via the web on par with the amount of information that stock traders have enjoyed for years now. Yet, in that the bond market just isn’t as brisk or as big as the equity market is, bond prices (or bond liquidity, for that matter) aren’t always perfectly clear.

It’s still a far cry from days gone by, when it took a phone call and several minutes, as a brokerage firm had to literally contact someone at a trading desk to make a purchase or sale. Nevertheless, the bond market remains a bit slow, and frustrating, to navigate.

Better Long-Term Bottom Line

Last but not least — and perhaps a culmination of all four of the other advantages of stocks compared to bonds — they just to better in the long run.

Ask ten different experts what the average annual performance for stocks is, and you’ll likely get ten different answers. Almost all of the answers, though, will be somewhere between 8% and 11%. Not so with bonds. Their average annual return is more like 5% to 6%.

Granted, it takes time and patience to secure those kinds of results … time not all investors are readily willing and able to give. For the truly long-term-minded investor, though, that can ride out the rough patches, stocks simply do better.

The Last Word on Stocks vs. Bonds

None of this is to suggest all investors should always and only own stocks. It’s also not to say bonds are to be avoided at all costs. A balanced approach has been and continues to be the smart-money move in all cases.

Do keep in mind, however, for some investors there’s a tendency to seek out a little too much certainty and current reliability. Considering how long people are living now after they retire from their job — 30 years in some cases — the bigger risk these days is outliving your money due to not thinking enough about long-term growth that only stocks can offer.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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[Editor’s note: “10 Baby Boomer Stocks to Buy” was previously published in January 2018. It has since been updated to include the most relevant information available.] 

We don’t hear as much about baby boomer stocks to buy these days since the conversation has turned to millennials, the new topic du jour. However, with bond yields moving higher and more experts suggesting the secular bull market in bonds is over, it’s time baby boomers nearing retirement reconsider how much they de-risk their portfolios.

“Measured against interest rates, stocks actually are on the cheap side compared to historic valuations,” Warren Buffett said in a recent interview. “But the risk always is that interest rates go up, and that brings stocks down.”

Yes, you’ve got to keep an eye on not putting too much into stocks, but for my money, they’re still a better investment for baby boomers than heavily investing in bonds, especially if bond yields move considerably higher.

Regardless of millennials taking the spotlight away from the baby boomers, it’s still important to factor in the aging population in some of your stock picks.

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Here then are ten red-hot baby boomer stocks to get you to, and through, retirement.

Baby Boomer Stocks to Buy: Royal Caribbean Cruises (RCL)

Most people with significant savings tend to travel a lot more in the first ten years of retirement than the next ten years. The oldest baby boomers are now 72 years of age meaning they probably have a few years of travel still left before they put away the suitcases away.

One company that will benefit from the changing demographics is Royal Caribbean Cruises Ltd (NYSE:RCL). Cruises have always been of interest to retirees but now have also become a favorite travel activity of millennials, which means that business could continue to get better and better for the Miami-based company.

“ASTA [American Society of Travel Agents] polled 1,522 people in the U.S. aged 25 to 70 on their travel habits and preferences for The 2017 ASTA How America Travels National Study conducted by PSB,” wrote Skift Magazine in a May 2017 article. “This is the real shocker from the report: more millennials ‘strongly like’ cruising than boomers or Gen Xers. More than four in five millennials who have cruised had a good time, which is truly surprising.”

Boomers might be growing bored of cruising but millennials appear willing to pick up the slack. RCL stock is up 31% annually over the past five years and already up 27% this year. I’d expect that this momentum will carry on for a few more years.

Vail Resorts (MTN)

For every baby boomer who might be into cruising, there’s another one who still keeps fit by skiing down a mountain. I can remember my aunt and uncle skiing well into their late 60’s and early 70’s in Quebec until their bodies could no longer take the stress.

Many of today’s boomers are in excellent shape, making it possible to ski into their 80’s and possibly beyond. Also, many have chosen to work past 65, not necessarily because they have to, but because it beats thinking about what to do every day to pass the time.

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“When Social Security was introduced, the average life expectancy was only 61 years, so most people who made it to retirement were only retired for a very short time.” wrote Scott Hanson in Kiplinger. “Today, a healthy 65-year-old man has a 25% chance of living to be 89 (90, for a woman). If you retire at 65, you might have a 24-year (or more) retirement.”

Therefore, a company like Vail Resorts, Inc. (NYSE:MTN), one of the world’s largest operator of ski resorts, is going to get a lot of business from baby boomer retirees in the future that it wouldn’t have gotten ten or even five years ago.

The chairlift that is MTN stock has got a long way to go before investors need to get off.

Ameriprise Financial (AMP)

I long have recommended investors buy Ameriprise Financial, Inc. (NYSE:AMP) stock because it was being valued as an insurance company even though over half its operating income was from asset management activities.

Since then, AMP stock is up 316%, more than two-and-a-half times the S&P 500.

That recommendation didn’t even consider the financial planning needs of the large group of baby boomers that would be turning 65 over the next 20 years.

Ameriprise currently has $131.8 billion assets under management at the end of 2018 in an industry that’s expected to grow assets 5% annually on a global basis to $90 trillion by the end of 2020 with a significant chunk of that in the U.S. and Europe where AMP has a major presence.

Ameriprise’s asset management business generates more than $80 billion in annual gross sales. Over the last six years, the company’s managed to grow its earnings per share by 15% compounded annually, 500 basis points higher than its asset manager peers and 600 basis points higher than its financial planning peers.

Younger boomers like myself are especially in need of the services Ameriprise provides. Why not buy its stock and get back some of the fees you’ll pay for financial planning?

Howard Hughes (HHC)

Bill Ackman was the largest shareholder in Howard Hughes Corp (NYSE:HHC) until he sold 2.5 million shares in late December and early January. Now holding 5.1% of the real estate investment trust that got its start way back in 1950 when Howard Hughes acquired the lands that would become the Summerlin master-planned community (MPC), Ackman’s likely headed for the exit.

But that doesn’t mean you shouldn’t buy and hold. HHC has an excellent group of assets that provide it with a three-pronged plan for growth.

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First, we have the MPCs, something that will be very popular with baby boomers looking to slow down a little. HHCs five MPCs have 11,000 acres of saleable residential and commercial land at prices between $200,000 and $1 million an acre which puts the MPCs uninflated value at $4.6 billion.

Secondly, it has 50 million square feet of future developments that are paid for, in part, by the sale of land at its MPCs.

Finally, it owns 7.6 million square feet of retail and office space, multifamily apartment buildings with 2,600 units and approximately 1,000 hotel rooms. These are all operating assets that provide cash flow to the business to spur future development.

It’s a trifecta of growth that’s hard to beat.

Lululemon (LULU)

As I said in the piece about Vail Resorts, baby boomers are getting a lot healthier than people the same age from 20 years ago, so it’s only natural that they are doing all kinds of things to keep fit, including yoga.

Lululemon Athletica Inc. (NASDAQ:LULU) continue to capture a big chunk of the yoga apparel market, but anyone who follows the stock knows that it’s become more than just a place for yoga enthusiasts to buy their workout gear. It’s become a top choice for athletes of both sexes because it manufactures clothing that is both innovative and comfortable while providing a higher price point for investors.

Perhaps the biggest compliment that LULU could get as the premier athleisure company in the world is Nike (NYSE:NKE) opened 5,000 women-focused “pants studios.” Some experts see Nike as a category killer; I view it as a giant company reacting to the competition. Nike’s a great business but it’s not going to kick LULU off its perch by assigning space to pants studios.

If you believe in exercise, LULU is the stock for baby boomers to own, not Nike.

Aphria (APHQF)

There’s no way I’d leave off at least one stock from one of the most promising industries and opportunities to come around in many a decade.

Aphria Inc (OTCMKTS:APHQF) has a $1.75 billion market cap and happens to be one of the industry’s lowest-cost producers and that’s going to be critical for provincial governments looking to reduce the amount of pot sold on the black market.

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I’m not necessarily even thinking about the recreational use by baby boomers, but rather all the medicinal uses for pain issues that will continue to drive marijuana sales higher. I fully expect the top-line revenue from marijuana and marijuana-related products such as gummy bears to be considerable.

Canopy Growth Corp (OTCMKTS:TWMJF) might be the biggest, but in my books, Aphria is the best of the Canadian cannabis stocks.

Booking Holdings (BKNG)

Baby boomers are going to do some traveling, whether it’s before they retire or after they’ve called it quits at work. The question becomes which travel stocks to bet on.

I’ve already highlighted cruises and skiing. Airlines typically are the ones that would get boomers to their final destination if they’re not driving, but hotels, casinos and various other industries also come to mind.

However, I’m going to go with the Booking Holdings (NASDAQ:BKNG), the company that wants “to help people experience the world.”

Many consumers remember Booking specifically for its “Name Your Own Price” proposition where you’d say you want to pay $150 for a hotel in Chicago and it would give you an option whose name would remain a secret until after you had accepted and paid for your room. I myself once used it to get a cheap fare to Destin, Florida from Toronto — not an easy undertaking.

BKNG stock’s revenues have grown every year for the past decade with free cash flow up by 41% compounded annually to $4.3 billion. My bet is on boomers continuing to make travel arrangements through Booking. All the other things are just the details.

Vanguard Health Care ETF (VHT)

We can’t forget traditional healthcare companies when we’re talking about the baby boomers but given how many stocks there are in the sector — including 155 which are over $2 billion in market cap according to Finviz.com — I think the prudent thing to do to cover the healthcare sector is to buy an exchange-traded fund..

Cheap is better in this instance because I’m just suggesting that you give yourself a little blanket coverage; I’m not suggesting you go with something tactical.

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Therefore, with that in mind, I’d go with the Vanguard Health Care ETF (NYSEARCA:VHT), a portfolio of 372 healthcare stocks, all U.S.-listed large companies with a median market cap of $76 billion. The ETF itself has $7.2 billion in total assets, making it one of the largest 100 ETFs in the country, and its expenses are 0.1%, or $10 per $10,000 invested.

Madison Square Garden (MSG)

Baby boomers like to be entertained. Who doesn’t for that matter?

How they will spend their time over the next couple of decades includes attending live concerts and sporting events of their favorite performers or teams.

There are several publicly traded options to get your fix but the biggest pure-play entertainment company other than Walt Disney Co (NYSE:DIS), which don’t own any sports-related properties except ESPN, is Madison Square Garden Co (NYSE:MSG).

MSG owns Madison Square Garden itself; the New York Knicks and New York Rangers; Radio City Music Hall; and several other theaters as well as a few other entertainment properties. MSG was split-off from MSG Networks Inc (NYSE:MSGN), the company’s regional sports network, so that it could focus on its valuable sports and entertainment properties.

Majority owner James Dolan has got a bit of a bad reputation that didn’t get any better by having Charles Oakley thrown out of Madison Square Garden, but the assets themselves will continue to appreciate.

Brookfield Asset Management (BAM)

You would think I’d include a bank in a group of ten baby boomer stocks, but I’m more interested in providing ideas that will make you money than pumping Jamie Dimon’s tires.

Initially, I thought about Blackstone Group LP (NYSE:BX), one of the world’s leading alternative asset managers, but decided to go for a slightly smaller version in Brookfield Asset Management Inc. (NYSE:BAM).

CEO Bruce Flatt has expertly guided the company since 2002, building it into one of Canada’s biggest companies with approximately $250 billion in assets under management in many parts of the world.

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In 2017, Canada’s national newspaper named Flatt its CEO of the year. Frankly, he could be one of the world’s best. Over the past 15 years, BAM’s stock’s averaged an annual total return of 17.4%, almost double the S&P 500.

I prefer BAM over BX, but both stocks will make you money over the next 15 years.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

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For those investors in retirement, it all comes down to income. How can you convert your lifetime of savings into a steady stream of paychecks? There are plenty of ways to do that. But one of the best continues to be dividend stocks. After all, dividend stocks generally offer higher yields than bonds and give you the ability to see your income rise through increasing dividend payouts as well as grow, thanks to capital appreciation. Bonds, CDs, and other traditional fixed-income products can’t do that.

The only problem is, not all dividend stocks are worthy for retirees.

Those in retirement can’t afford to see their payouts get cut or see their capital go up in flames. There’s simply not enough time to recoup losses or balance out volatility. To this end, it takes a certain variety of dividend stocks to get you through your golden years. A focus on quality is key.

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Which dividend stocks make the grade for retirement? Here are five dividends stocks that are perfect for retirement portfolios.

Snap-on (SNA)

Dividend Yield: 2.43%

Selling screwdrivers, wrenches and other hand tools may not seem that exciting, but this niche has helped make Snap-On Incorporated (NYSE:SNA) one of the best dividend stocks around.

SNA manufactures a variety of tools, equipment, and repair information systems for various industrial markets. Many professional mechanics and assembly workers swear by Snap-On’s better-made products. And with a simple socket wrench set costing north of $300, SNA isn’t exactly going after DIY and weekend warriors here. You need high-performance when you’re fixing a bullet train or repairing a wind turbine.

This focus on the industrial market has widely insulated SNA from the whims of the consumer segment. Because of this, SNA has paid dividends without interruptions or reductions since 1939. Its last increase was a strong 15.85% jump.

Part of that jump comes from the reduction in corporate taxes. The other continues to be Snap-On’s moves into higher-margin tech products. Modern machinery is chock-full of computers and sensors. SNA is quickly becoming the standard provider for computer-based diagnostics equipment. This has provided a supercharger to its earnings in recent years. EPS surged 12.6% year-over-year in 2018.

All in all, Snap-On’s continued leadership position in its niche market continues to pay benefits. That makes it one of the best dividend stocks for retirees.

Becton Dickinson and Co (BDX)

Dividend Yield: 1.25%

Admittingly, the headline yield on Becton Dickinson and Co (NYSE:BDX) isn’t much to write home about. BDX’s current yield of 1.25% is about what you can earn from a savings account these days. However, the story at the medical device maker is one of payout growth. This why retirees should include BDX in their portfolio of dividend stocks.

BDX is one of the world’s largest producers of needles, syringes, and other sharps-related devices. This catalog of products spans everything from “basics” like insulin needles and catheters to more advanced regional anesthesia and drug delivery products. The beauty is that the bulk of these items are designed to be single use. That means your doctor and hospital has to come back every month to get more of them. Becton’s integration of rival Bard has only expanded on this catalog as well.

This, plus moves into life science products and more high-tech drug delivery medical devices, has continued to make BDX a cash flow machine. The firm has used that cash flow to reward shareholders by paying down the debt used to buy Bard as well as increase its dividend and conduct buybacks. Over the last decade, Becton has managed to double its dividend based on its strong cash flows. Given its strengths, there’s a good chance that BDX will keep that streak going.

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For retirees, BDX stock offers a chance to grow their income over the long haul.

Home Depot Inc. (HD)

Dividend Yield: 2.66%

It’s no secret that retail has been a blood bath. Online shopping has continued to hit many traditional brick and mortar retailers hard. Empty storefronts and dead shopping malls are quickly becoming the norm. But just don’t tell that to Home Depot (NYSE:HD). The home improvement retailer is killing it and has proved that its a top dividend stock. Retirees should take notice.

Much of HD’s recent success comes from its moves into omnichannel retailing. Consumers these days want to buy products when and how they want them. And as they want them in-store, online, via mobile apps, etc., Home Depot seems to have cracked the code. Spending on technology and beefing-up its operations has worked and customers keep hitting up HD for their home improvement needs. Sales grew nearly 11% last quarter to reach a whopping $26.5 billion based on its omnichannel moves.

HD has clearly gotten the message about the changing face of retail.

Keeping that going into the future and helping pad its dividend is that HD has also figured out how to attract millennial and younger customers. Thanks to new classes, videos, and DIY help, Home Depot has continued to attract the customers of tomorrow. That’s a demographic that many other retailers are struggling to court.

With its strong growth, HD recently was able to increase its dividend by 32% and conduct more than $15 billion in buybacks.

Microsoft Corporation (MSFT)

Dividend Yield: 1.25%

Microsoft (NASDAQ:MSFT) is proving that old school tech can still be a fertile ground for finding dividend stocks — especially those for retirees. The key has been CEO’s Satya Nadella’s vision to transform Mr. Softy into a software-as-a-service (SaaS) company and reap plenty of recurring/subscription revenues.

Today, the cloud rules the roost at MSFT. Microsoft’s Azure and Dynamics 365 platforms are quickly becoming the standards for many enterprise customers. Growing by double-digits, MSFT has been able to reap plenty of earnings/cash flows from its new cloud model. Better still, is that MSFT has been able to turn that cloud model toward regular Joes as well. Office 365, as well as its Xbox gaming/entertainment units, are also seeing plenty of growth. Total revenues for MSFT jumped by 12% last quarter on the strength of its cloud operations.

All of this continues to translate into plenty of profits and growing cash balance.

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And MSFT continues to share those profits with investors. Since 2010, the tech firm has managed to grow its payout by over 253%. That’s very impressive. And given its huge cash balance, strong cash flows and high margins, there’s a good chance that Microsoft will keep that streak going. For retirees, that makes MSFT one of the best dividend stocks to own for the long haul.

Realty Income (O)

Dividend Yield: 3.80%

When your corporate tag line is the “Monthly Dividend Company,” there’s a lot of pressure to keep to live up to that promise. Luckily for Realty Income (NYSE:O) it has been able to keep that promise for more than 584 consecutive months.

That steadfastness of payouts comes from Realty Income’s business model. O is one of the largest owners of freestanding real estate in the country — with more than 5.700 different properties under its wing. Freestanding real state includes everything from convenience stores and restaurants to movie theaters, and automotive parts/services centers. It’s the standard fare that dots our suburban landscape. With nearly 500 different tenants and its huge swath of property, O provides unmatched diversification.

As if O couldn’t get any better, the vast bulk of these properties are so-called triple-net leased. This means the tenants are responsible for taxes, maintenance and other costs related to the property. This allows Realty Income to keep more of its rent checks.

Well, not keep. O has been rewarding shareholders for decades. Its latest increase represents its 101^st monthly jump to its payout. This follows an increase back in January. A monthly check that keeps growing? If that’s not the perfect stock for a retiree, then I don’t know what is.

With a 3.8% yield, conservative balance sheet and monthly payouts, Realty Income could be a perfect dividend stock for a retirement portfolio.

Disclosure: At the time of writing, Aaron Levitt did not hold a position in any of the stocks mentioned.  

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Exchange-traded funds (ETFs) and index funds have long been grabbing market share from actively managed mutual funds for several reasons. First, various studies continue confirming that across various market capitalization segments and fixed income arenas, active managers often do not beat their benchmarks.

Second, and arguably more prevalent than the first point, is low costs. While there are plenty of ETFs and index funds out there are that are not particularly cheap, many of these products are really cheap and are getting cheaper. For long-term investors, fees really do matter and there is no denying that.

“Imagine you have $100,000 invested. If the account earned 6% a year for the next 25 years and had no costs or fees, you’d end up with about $430,000,” according to Vanguard, one of the dominant issuers of index funds. “If, on the other hand, you paid 2% a year in costs, after 25 years you’d only have about $260,000.”

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For cost-conscious, buy-and-hold investors, here are some of the best index funds to consider.

Best Index Funds: Fidelity ZERO Total Market Index Fund (FZROX)

Expense Ratio: 0%

Last year, Fidelity shook the index fund space by introducing the first no-cost index funds. The Fidelity ZERO Total Market Index Fund (MUTF:FZROX) is one of the first two zero-fee index funds introduced by Fidelity.

There may have been some naysayers who thought no-fee funds were a marketing gimmick. They should think again because FZROX is more proof that investors love cheap — or in this case, free — index funds. FZROX debuted early last August and today has $2.74 billion in assets under management. Fidelity clients can also transact in this index fund free of commissions.

FZROX is a standard, domestic total market equity fund that is considered a large-cap blend index fund. Investors should expect returns that are comparable to those of the S&P 500 or Russell 1000 Index.

Fidelity ZERO International Index Fund (FZILX)

Expense Ratio: 0%

The Fidelity ZERO International Index Fund (MUTF:FZILX) is the other no-fee index fund introduced by Fidelity last August. As is the case with FZROZ, FZILX is gaining a following by virtue of its zero expense ratio. The internationally focused FZILX now has slightly more than $888 million in assets under management.

This Fidelity index fund holds both developed and emerging markets equities, but that split is 70.45% to 22.23% in favor of developed markets fare. Only stocks with market values of greater than $10 billion are included in this index fund.

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At the geographic level, Europe is FZILX’s largest regional weight at over 38% while Japan is the index fund’s largest individual country weight at almost 17%.

Vanguard Value Index Fund — Admiral Shares (VVIAX)

Expense Ratio: 0.05%

The Vanguard Value Index Fund — Admiral Shares (MUTF:VVIAX) requires a minimum investment of $3,000, but when it comes to its fee, this index fund is one of the cheapest value funds.

“This low-cost index fund follows a buy-and-hold approach, and invests in substantially all of the stocks contained within its broad benchmark,” according to Vanguard.

The financial services and healthcare sectors combine for over 39% of VVIAX’s weight. Large exposure to financials is a common trait among traditional value funds, so investors should not be troubled by VVIAX’s weight to that sector. The fund’s top 10 holdings, eight of which are members of the Dow Jones Industrial Average, combine for 25.2% of its weight.

JPMorgan BetaBuilders U.S. Equity ETF (BBUS)

Expense Ratio: 0.02%

Until the zero-fee ETFs come to market or barring other fee reductions, the newly minted JPMorgan BetaBuilders U.S. Equity ETF (CBOE:BBUS) is the least expensive ETF in the U.S. This index fund, which debuted in March, offers investors efficient exposure to 85% of the U.S. equity market and holds more than 600 stocks.

Like some of the other index funds mentioned here, BBUS is a total market U.S. equity solution, so investors should expect returns comparable to those of broader domestic equity benchmarks because the fund’s sector exposures are similar to those found in widely indexes.

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BBUS is not yet a month old and already has $28.40 million in assets under management, proving that investors like their ETFs and index funds with low fees.

Vanguard Mid-Cap Index Fund — Admiral Shares (VIMAX)

Expense Ratio: 0.05%

Index funds with exposure to smaller stocks often feature higher fees than their large-cap counterparts, but there are plenty of cheap mid- and small-cap funds. That includes mid-caps and the Vanguard Mid-Cap Index Fund — Admiral Shares (MUTF:VIMAX), which is cheaper than 95% of competing funds, according to Vanguard data.

One of the primary reasons buy-and-hold investors should consider a mid-cap index fund like VIMAX is that mid caps historically outperform large caps by wide margins. Mid caps can also top small caps and do so with less volatility.

VIMAX holds 363 stocks and if there is a knock on this Vanguard index funds, it is mid-cap purity. The median market value of $14.8 billion on the fund’s holdings indicates VIMAX drifts into large-cap territory.

Fidelity ZERO Extended Market Index Fund (FZIPX)

Expense Ratio: 0%

As noted earlier, Fidelity started with two no-fee index funds and quickly grew that group to four. The Fidelity ZERO Extended Market Index Fund (MUTF:FZIPX) is one of the second pair in that quartet.

This index fund is one to consider for investors who have large positions in total market or large-cap funds, including some of the index funds mentioned here because FZIPX fills in the some of the mid- and small-cap gaps left by traditional large-cap products. To that point, FZIPX is considered a mid-cap blend fund.

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FZIPX is diverse, as its top 10 holdings combine for just 3.15% of the fund’s weight and the index fund has double-digit allocations to five sectors — financials, industrials, technology, consumer discretionary and healthcare. This index fund debuted last September and has nearly $300 million in assets under management.

Fidelity ZERO Large Cap Index Fund (FNILX)

Expense Ratio: 0%

The Fidelity ZERO Large Cap Index Fund (MUTF:FNILX) is the final member of Fidelity’s no-fee index fund quartet to be highlighted here. This is a traditional large-cap index fund featuring exposure to big domestic companies with market values of more than $10 billion. FNILX is considered a large-cap blend index fund because it includes both growth and value stocks.

Being a domestic large-cap index fund, FNILX’s sector weights are comparable to those of the S&P 500. As such, investors should expect returns and volatility that are in line with those of the benchmark U.S. equity gauge.

Like the other Fidelity index funds mentioned here, FNILX is available to the firm’s clients on a commission-free basis. And like the other Fidelity index funds highlighted here, FNILX has been an immediate success. The fund debuted last September and already has $526.38 million in assets under management.

Schwab Small Cap Index Fund (SWSSX)

Expense Ratio: 0.04%

The Schwab Small Cap Index Fund (MUTF:SWSSX) is one of the more venerable names among low-cost small-cap index funds. SWSSX holds over 2,000 stocks.

“Small-blend funds favor firms at the smaller end of the market-capitalization range, and are flexible in the types of small caps they buy. Some aim to own an array of value and growth stocks while others employ a discipline that leads to holdings with valuations and growth rates close to the small-cap averages,” according to Schwab.

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The $4.1 billion SWSSX allocates over a third of its weight to financial services and healthcare stocks. Throw in a 15.30% weight to tech stocks and SWSSX has the feel of a growth index fund, but it has portfolio turnover of 17%, so it can drift back to being a value or blend fund. SWSSX earns four-star Morningstar ratings.

Schwab International Index Fund (SWISX)

Expense Ratio: 0.06%

The Schwab International Index Fund (MUTF:SWISX) is another low-cost index fund for investors seeking to add some diversification to U.S.-heavy portfolios.

“Foreign large-blend funds invest in a variety of big international stocks. Most of these funds divide their assets among a dozen or more developed markets, including Japan, Britain, France and Germany. They tend to invest the rest in emerging markets such as Hong Kong, Brazil, Mexico and Thailand,” according to Schwab.

While some foreign blend funds feature emerging markets exposure, all of SWISX’s top 10 geographic weights are developed markets and those 10 countries combine for 88.6% of the index fund’s geographic exposure. European stocks represent 61.40% of SWISX’s weight, twice the weight the index fund assigns to Asian economies.

Vanguard Short-Term Corporate Bond Index Fund — Admiral Shares (VSCSX)

Expense Ratio: 0.07%

Investors looking for income without the burden of significant interest rate risk can turn short-term corporate bond index funds, of which the Vanguard Short-Term Corporate Bond Index Fund — Admiral Shares (MUTF:VSCSX) is one of the best options for cost-conscious, buy-and-hold investors.

VCSH’s 2,223 holdings have maturities ranging from one to five years, giving this index fund an average maturity of 2.9 years and an effective duration of 2.5 years. Over 85% of VSCSX’s holdings are rated A or Baa.

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VCSH yields 2.66%, which is better than the yield on Treasuries of comparable maturity and the dividend yield on the S&P 500, making it one of the best funds to buy.

As of this writing, Todd Shriber did not own any of the aforementioned securities.

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Despite all the fears over slowing global growth, inverting yield curves and a potential U.S. recession, the S&P 500 made an incredible comeback in the first quarter of 2019. The index’s 13% first-quarter gain was its best quarter since 2009’s second quarter.

It can be difficult to track down value in a market that’s so hot. However, the financial sector has consistently lagged the overall market and is actually down nearly 9% since the start of 2018, despite reporting 7.6% earnings growth last quarter.

The financial sector now has the lowest forward price-earnings (P/E) multiple in the market.

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Here are 15 financial sector stocks to buy in the second quarter, according to Bank of America.

Financial Stocks to Buy: Affiliated Managers Group (AMG)

Affiliated Managers Group (NYSE:AMG) is like an exchange-traded fund of asset managers. Affiliated Managers is itself an asset manager that invests in other asset managers. The company holds stakes in traditional asset managers, including Yacktman, Third Avenue and Tweedy Browne.

It also holds stakes in alternative managers, such as AQR, BlueMountain and Pantheon. Asset managers have been hit hard by a fee pricing war in recent quarters. Analyst Michael Carrier says Affiliated Manager’s fourth quarter was weak, but its outlook and valuation are both attractive.

He says outflows troughed in the fourth quarter. Given the company’s strong organic cash flow growth and 6.7 forward earnings multiple, Carrier says AMG stock should outperform its peers. Bank of America has a “buy” rating and $124 price target for AMG stock.

BB&T (BBT)

BB&T (NYSE:BBT) is a regional U.S. bank, but it’s far from a mom-and-pop business. BB&T is the sixth-largest U.S. bank by number of branches, and it will soon be much larger. Analyst Erika Najarian says BB&T has consistently improved its efficiency. In addition, she is projecting 2.6% revenue growth in 2019.

Those growth projections include 3% loan growth and 2% balance sheet growth, both improvements from 2018. In February, BB&T completed a merger of equals with SunTrust (NYSE:STI) worth $28.2 billion. Najarian says Wall Street analysts don’t fully appreciate the pro-forma earnings power of the combined company.

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Najarian is projecting $4.92 in 2020 earnings, about 4% above consensus. The companies expect the merger deal to close in the fourth quarter. In the meantime, BBT stock trades at a single-digit forward earnings multiple of just 9.5. Bank of America has a “buy” rating and $58 price target for BBT stock. The firm also has the stock on its US1 list of top American stocks to buy.

Citigroup (C)

The only one of the “big four” U.S. multinational banks with a “buy” rating and at least 15% upside to Bank of America’s price target is Citigroup (NYSE:C). Citigroup stock currently trades at a forward earnings multiple of just 7.1 and roughly a 20% discount to book value.

Given Citi’s solid execution of late, Najarian says the stock has a clear path to eliminating its valuation discount relative to peers. She says management can’t control how the market perceives risk in a slowing global economy.

However, if Citigroup improves its efficiency ratio in 2019, Najarian says investors will be forced to take notice of the stock’s value. In addition to the “buy” rating, Bank of America has a $76 target for C stock.

Citizens Financial Group

Citizens Financial Group (NYSE:CFG) is a U.S. regional bank with more than 1,200 branches across 11 different states. Najarian says CFG stock offers the single best value of any U.S. regional bank stock. At a forward earnings multiple of just 7.6, Najarian says only Citigroup is a better value than CFG in the financial sector.

In addition to the compelling value, Bank of America’s 7% revenue growth estimate is best among all regional banks by a wide margin. Najarian says the market is discounting credit concerns too steeply.

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But even if CFG stock continues to trade at a discount to peers, she says CFG stock has significant upside from current levels. Bank of America has a “buy” rating and $41 price target for CFG stock.

Comerica (CMA)

Comerica (NYSE:CMA) is another U.S. regional bank stock that Bank of America likes in 2019. Comerica’s operations are primarily targeted in the Texas, California and Missouri markets. After meeting with company management in March, Najarian says investors don’t need to be concerned about a pause in Federal Reserve interest rate hikes.

Comerica’s business is more sensitive to interest rates than any other regional bank Bank of America covers. Fortunately, Najarian says new client growth, attractive valuation and an impressive credit profile should help support the stock. She says balance sheet flexibility provides an opportunity to increase buybacks, drive net interest margins and grow earnings per share. Bank of America has a “buy” rating and $93 price target for CMA stock.

Hartford Financial Services (HIG)

Hartford Financial Services (NYSE:HIG) is an insurance and financial services leader with diversified property and casualty insurance products. In the most recent quarter, Hartford reported a solid earnings beat and announced a $1 billion buyback program.

Analyst Jay Cohen says investors can expect a solid return on equity of 13% over the next two years. He says HIG stock will likely continue to trade at a discount to peers given its large exposure to the risky workers’ comp business. In addition, he says there are additional risks involved in executing Hartford’s $2.1 billion acquisition of specialty insurer Navigators.

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Despite the risks, Cohen says Hartford’s 28% total return potential and its 9.1 forward earnings multiple makes the stock a safe bet for long-term investors. Bank of America has a “buy” rating and $59 price target for HIG stock.

KeyCorp (KEY)

KeyCorp (NYSE:KEY) is a U.S. regional bank with 1,300 branches spread out over 13 different states. Najarian says investors need to see KeyBanc execute its current financial plan without additional interruptions or deviations, such at its January acquisition of online lender Laurel Road.

Those types of acquisitions create noise in the company’s financials. They also make it difficult for investors to get comfortable with the company’s true trajectory. With a forward earnings multiple of 7.7, Najarian says KEY is one of the cheapest stocks she covers.

She says the company’s combination of growth potential, cost-cutting opportunities, and capital return capacity is exactly what investors are looking for. Bank of America has a “buy” rating and $19 price target for KEY stock.

Lincoln National (LNC)

In 2018, life insurer Lincoln National (NYSE:LNC) reported its best annuity sales of the past five years. Cohen says the solid number is an indication that the annuity business has finally stabilized.

Looking ahead, he says Lincoln’s impressive execution and consistent capital return should help drive the stock higher. The stock currently trades at a forward earnings multiple of just 5.6. That steep discount to the rest of the market may be due to investor concerns over LNC’s high leverage to interest rates. The Federal Reserve recently put its rate hikes on pause for at least the remainder of 2019.

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However, de-risking measures taken in the fourth quarter could result in expansion of its miniscule 5.6 forward earnings multiple over time. Lincoln national has been diversifying its earnings and shifting its revenue sources to improve its revenue quality. Bank of America has a “buy” rating and $74 price target for LNC stock.

MetLife (MET)

When it comes to life insurance stocks, Cohen says it’s time for investors to get MetLife (NYSE:MET). MET reported a disappointing earnings miss in the fourth quarter.

But Cohen says a deeper dive into the company’s numbers reveals a business well-positioned for long-term growth. MetLife took advantage of share price weakness in the fourth quarter by repurchasing $1.2 billion of shares, about 50% more than Bank of America had anticipated. Cohen says accounting and control issues that plagued the company in 2017 are now in the past. In addition, the spin-off of Brighthouse and the appointment of a new CEO mark a new era for the company.

Cohen says the new MetLife should eventually be awarded a higher multiple than its current forward PE of just 6.9. Bank of America has a “buy” rating and $53 price target for MET stock.

Morgan Stanley (MS)

Brokers and asset managers have been under pressure due to a pricing war that has taken a major bite out of fee income. However, Carrier says Morgan Stanley (NYSE:MS) and BlackRock (NYSE:BLK) stood out as two of the best-positioned companies following earnings season.

Carrier says Morgan Stanley is priced roughly in line with book value, an extremely low valuation given the company’s fundamental performance. Bank of America is projecting 12% ROE in 2019.

Carrier’s 2019 and 2020 EPS estimates are also 5% and 7% above consensus, respectively. A forward earnings multiple of 7.7 limits downside. Additional cost cuts, rising net interest income and potential acquisitions could also help drive upside.

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Morgan Stanley announced a $900 million buyout of wealth management cloud services company Solium Capital in February. Bank of America has a “buy” rating and $51 price target for MS stock.

Prudential (PRU)

Life insurance giant Prudential Financial (NYSE:PRU) reported a solid fourth quarter given difficult market conditions. Cohen says there is risk to Prudential’s domestic business given its exposure to volatile equity markets.

However, a recovering annuity market and pension de-risking demand should help support domestic earnings. In addition, despite historically low international interest rates, Cohen says investors can expect modest earnings growth and mid-teens ROEs internationally.

Cohen says PRU stock will likely continue to trade at a discount to peers due to its equity market exposure. However, he says that valuation discount is currently much too large given Prudential’s forward PE of just 6.6. Bank of America has a “buy” rating and $110 price target for PRU stock.

Charles Schwab (SCHW)

Online broker Charles Schwab (NYSE:SCHW) has taken a beating in the past year as the ETF fee war ramped up. After cutting commissions on ETF trades from $8.95 to $6.95 back in 2017, Schwab quickly followed up by matching competitors’ online trading fees of just $4.95.

In February, Schwab announced it was doubling its number of commission-free ETFs. Despite the fee pressures, Carrier says organic growth and client engagement have been strong. In addition, the company has a healthy balance sheet.

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It’s 7% market share leaves plenty of room for further penetration. Carrier says Schwab’s net asset growth has been impressive given the low-interest environment. SCHW stock trades at a forward earnings multiple of 13.7 but a PEG ratio of just 0.7. Bank of America has a “buy” rating and $53 price target for SCHW stock.

SBV Financial Group (SIVB)

Analyst Ebrahim Poonawala recently spent three days meeting with the management team of U.S. regional bank SVB Financial Group (NYSE:SIVB). Poonawala says investors are overly concerned about how the company could weather a potential economic downturn.

He says SVB would actually outperform during a downturn given the bank’s below-average credit risk. In fact, Poonawala says SVB could still potentially grow EPS even in an environment of falling interest rates. SIVB stock currently trades roughly in-line with its small-cap banking peers at a forward PE of 9.7.

Poonawala says the stock should be trading at roughly a 10% premium to peers given the advantages mentioned above. Bank of America has a “buy” rating and $280 price target for SIVB stock.

State Street (STT)

State Street (NYSE:STT) is a global trust bank with operations in more than 100 countries around the world. Carrier says net interest income growth will drop from 15.9% in 2018 to just 5.9% in 2019. However, operating expenses will decline 4.7%.

In addition, Bank of America estimates customer deposits will edge slightly higher by 0.6% after restructuring dropped deposits by 13.8% in 2017 and 15.3% in 2018. Carrier says the global backdrop is mixed at best.

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But he likes State Street’s improved efficiency, generous capital returns and a compelling forward earnings multiple of 8.7. Bank of America has a “buy” rating and $80 price target for STT stock.

SunTrust (STI)

However, since it is an all-stock deal, the higher BBT stock goes, the more valuable the buyout gets. STI investors receive 1.295 shares of BBT for each share of STI.

Given Najarian’s $58 price target for BBT, it’s easy to see why she likes STI stock currently trading at under $58. Bank of America has a “buy” rating and $74 price target for STI stock.

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Last year, roughly 43.7 million retirees received Social Security benefits, according to Statistica. While the average Social Security benefit is $1,461 per month, the average living retiree left full-time work at age 60. So, considering the minimum age to collect the benefits is 62, retirees need to manage their investments and ensure that they’ll last.

With Americans living well into their mid-eighties, smart retirement investing can mean the difference between financial success and failure.

Here’s how investors can maximize their investment income to supplement Social Security and secure their financial future.

Consolidate Your Investment Accounts

Whether you’re already retired or facing the new lifestyle soon, it’s smart to roll over old 401(k) accounts into an existing (or new) IRA. This gives you control of the assets and the flexibility to invest in what you want, not what’s offered by the plan.

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If you have multiple savings, checking or investment accounts, consolidate all like accounts into one. In retirement, you typically prefer a simpler life. That means, one checking, savings, investment and retirement account, if possible.

Consider Your Investment Portfolio Holistically

Analyze your investments as if they were in one bucket. Asset allocation decisions are extremely important and affect your future returns along with your ability to stay the course during markets gyrations. Tally up the percentage in stocks, bonds and cash investments.

Use an asset allocation calculator or talk with a financial advisor about the right asset mix for your temperament and portfolio value.

Early retirees typically need a large cash cushion to get them through several years of retirement. If markets decline during the first years as a retiree, you don’t want to be forced to sell investments during a losing year.

Examine Your Investment Expenses

Many investors are unaware of the fees they’re paying on their investment accounts. It’s not unusual for unsuspecting investors to pay a 1.5% portfolio management fee to an adviser and to own funds that charge over a 1% management expense ratio. Add these figures up and you’re paying close to 3% for investment management.

If your investments earn 6% one year, you’re yielding 3 percent. And, if these funds are held in a taxable account, you’ll be luck to walk away with a 2 percent return, after taxes.

If you discover that you’re paying more than 1% for fund management and expenses, consider investing in a robo-adviser for retirees. Betterment and Personal Capital both offer well-respected digital investment managers with financial advisers, low fee funds and professional investment management. While United Income is a robo-adviser designed specifically for retirees with extra services that help with Social Security and Medicare planning.

Invest in a Retirement Income Fund for Monthly Cash Flow

Vanguard, Schwab, Fidelity and John Hancock all offer retirement income funds. The overriding objective of these funds is to diversify the holdings and pay out a regular income stream.

Each company has a distinct take on this concept, but most fund management fees are lower than 1% and provide investments in diversified stock and bond funds.

The Vanguard Managed Payout Fund (NASDAQ:VPGDX) offers a calculator to guide your monthly payments. Depending on your inputs, a portion of your payout could include return of principal.

Schwab’s Monthly Income Fund series include three funds worth considering: Schwab Monthly Income Fund – Moderate Payout (NASDAQ:SWJRX); Schwab Monthly Income Fund – Enhanced Payout (NASDAQ:SWKRX); and, Schwab Monthly Income Fund – Maximum Payout (NASDAQ:SWLRX).

Fidelity’s income replacement funds are designed to be depleted at a specific future time. Thus, for investors desiring to leave a legacy, the depletion date should be set far into the future.

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Meanwhile, John Hancock’s retirement income fund charges more than 1% to manage, and so might not be the most economical retirement fund choice.

Increase Equity Percentages as you Age

Reverse glide path strategy research found that increasing equity exposure over the retirement years can lead to higher overall investment returns.

This means that as investors age, they should consider increasing their allocation to equities. This has been shown to maximize total lifetime income. For this approach to succeed, investors are advised to keep at least three years’ worth of cash and high-quality fixed income investments available for living expenses. Next, they should have another bucket of intermediate and short-term fixed income assets for intermediate — three to seven years — expenses.

The remaining assets can be invested in stocks, to grow and support long-term spending needs.

Smart retirement planning and investing can help simplify financial management. Ultimately, having a retirement investment strategy will aid the longevity of your financial portfolio.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com , a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com . Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.

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The post 2019 – 5 Investing Tips for Retirees appeared first on InvestorPlace.

Ah, retirement. After a life’s work it’s finally time to enjoy what’s the most important to you.

But to make the most this time, it pays to focus on building an effective retirement portfolio that will build wealth as you work — and even continue to grow when you start living on this savings.

Investing for dividends is one of the usual strategies for retirement. Often, that means investing in dividend stocks for income once you reach retirement. But for me, I advocate that investing in dividend stocks shouldn’t just start after your retirement, but should be a regular part of your portfolio throughout your life. Betting on stock prices rising is a lot more risky than having stocks that pay dividends — even when you’re young.

It’s much harder to go broke when you have regular checks coming in. So even before retirement, your portfolio will have a better chance of growing in value by stacking up dividend payments and reinvesting those payments.

Click to Enlarge

And the proof element can be seen in the power of dividends in the general stock market. If you take a look at the performance of the S&P 500 over the past thirty-years you’ll see that in price, the index is up 872.07%. But if you add in the dividends — or even the average dividend yield of the index — the return swells to 1,751.42%.

An Even Better Dividend Strategy

One of my favorite strategies for a dependable retirement portfolio is dividend stocks that pay their dividends throughout the year. Now, most leading U.S. stocks pay dividends each quarter. But by selecting good dividend stocks that pay in different cycles — January, July and October, then February, May, August and November, and finally, March, June September and December — you can have dependable monthly payouts throughout the entire year.

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And this is what is behind The Incredible Dividend Machine, one of the model portfolios inside my Profitable Investing service.

As an introduction, let me walk you through the three payout cycles and some prime examples of good dividend payers for income and growth for the ultimate retirement portfolio.

Dividend Cycle A (January, April, July and October)

In Cycle A there’s a great technology company that’s increasingly focused on more dependable revenue and dividend payments that’s also a good performer. Cisco (NASDAQ:CSCO) is up 28.43% over the last year — including dividends.

Much like the strategy I’m outlining here, Cisco is also shifting to the successful business model of recurring — or subscription — income. Bundling equipment with services is adding to the rise in revenue flows. There is still a lot to be done, but I like what I’ve seen from CSCO so far during this shift. And a 2.63% yield makes CSCO a good start for the year’s income.

Drug companies are one of the big winning sectors in the market and in Cycle A, Merck (NYSE:MRK) — up 57.77% for the trailing year including dividends — is a great performer for income. Merck is balancing its management of its existing drugs and funding its development pipeline to keep the revenues coming and growing. Yielding 2.67%, MRK makes for another great Cycle A buy.

Dividend Cycle B (February, May, August and November)

In the second dividend payout cycle, there are plenty of good companies to look to for income.

In particular, the market for natural gas continues to be a bullish market on genuine supply and demand conditions. One of the best in this market is ONEOK (NYSE:OKE)  — up 27.20% over the last 12 months with dividends — is a gas-focused company that is making hay while the sun shines on gas. With its dividend running at 5.00,% OKE is a buy for income and growth.

Utilities continue to be another of the dependable part of the market. And in Cycle B, Verizon (NYSE:VZ) — up 34.35% for the trailing year including dividends keeps — delivering good income with its yield of 3.97%.

Dividend Cycle C (March, June, September and December)

The third dividend cycle, Cycle C provides many solid companies with histories of good dividend payments. Here are some highlights.

One is Pfizer (NYSE:PFE), which is up 24.65% for the trailing year including dividends. The pharmaceutical giant is now working on a co-op deal with GlaxoSmithKline (NYSE:GSK) to combine their consumer health businesses and it should be good for shareholders. It makes PFE a good buy — with a yield of 3.42%.

For another pick from the utilities sector, Public Service Enterprise Group (NYSE:PEG) serves the Northeastern and MidAtlantic. PEG is up 24.13% in 12 months and has a nice dividend yield of 3.18%.

Lastly, this REITs is set to profit as the baby boomers age. Ventas (NYSE:VTR) focuses on senior housing and healthcare properties. VTR is up 39.76% for the trailing year and pays a dividend 4.90%.

The Bottom Line on Your Retirement Portfolio

I have one more stock for you to consider that fits into my retirement strategy, but not into my cycles: Realty Income (NYSE:O) has been dubbed “The Monthly Dividend Company” and pays out its 3.69% dividend — you guessed it — monthly. This diverse REIT is up a whopping 53% in 12 months and will guarantee you a monthly check.

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All in all, by focusing on monthly dividends in your portfolio, you’ll be on your way to building the ultimate retirement portfolio that will pay you for the rest of your life.

Neil George is the editor of Profitable Investing and does not have any holdings in the securities mentioned above.

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If you’re an investor, you probably have several brokerage accounts, a 401(k) or two and a Roth IRA. Over time, it’s easy to accumulate multiple accounts for a variety of seemingly great reasons. Before you know it, you end up with a jumble of accounts with an abundance of assets and no central investment organization system. These investment moves can save time for what really matters!

As tax time rolls around and the 1099’s pour in, you realize that you can’t hide from your investments. If you want to simplify and organize your financial life, now is the best time!

Make these 6 investment moves today for a financially stress-free tomorrow.

1. Review All Accounts and Investments

The more accounts and holdings you have, the more upkeep is required. Whether you use Quicken, Personal Capital or another financial management system, tracking accounts and investments is required.

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The first step on the path to financial organization and simplicity is to total your accounts and holdings. Once your complete list is created, you’re ready to begin the simplification process with these investment moves.

2. Consolidate Accounts and Investments Whenever Possible

Roll over old 401(k) accounts into a new or existing IRA. That way, you have more control over the investments and might even eliminate one account (if you can roll over the 401(k) into an existing IRA).

If you have more than one similar-type IRA such as 2 Roth IRAs or 2 traditional IRAs, then combine them into one. Consider rolling over a traditional IRA into a Roth.

When a CD matures with the high return, eliminate the account and invest in a high-yield money market mutual fund. With rising interest rates, you’ll be poised to increase your cash returns. Three high-yield money market mutual funds are Vanguard Prime Money Market Fund (MUTF:VMMXX), Fidelity Money Market Fund — Premium Class (MUTF:FZDXX) and Schwab Value Advantage Money Market Fund (MUTF:SWVXX).

After reducing the number of accounts, you’re ready to further organize and simplify your finances.

3. Revisit Your Asset Allocation and Rebalance

Your asset allocation drives future returns. So pay attention to percentage of your money you invest in stocks, bonds and cash assets. Typically, greater stock allocation equates with higher long-term returns, but also greater portfolio volatility.

So, take an asset allocation quiz to figure out what percentages you want to allocate to stocks, bonds and cash. In general, younger investors can tilt towards greater percentages of stock assets.

Once your allocation is set up. Make certain that your investments reflect your personal asset allocation. So, your 75 percent stock allocation and 20 percent bond target with 5 percent for cash should be updated once per year. That means, if your stock allocation increases to 80 percent and bonds to a 15 percent weight at year end, then sell 5 percent stocks and buy 5 percent bonds. This keeps portfolio volatility in check and may increase long term returns too.

4.  Set up a Tax Organization System

With the new tax legislation in place, more folks will be taking the standard deduction. That should make tax prep easier. But it’s important to understand how the new tax law will affect you specifically. For instance, will your state and local tax deduction be capped? Will you miss out on the opportunity to deduct all your mortgage interest or charitable deductions?

If you have a small business and complete a Schedule C, get the categories and record keeping in order. Then, input the deductions into a computer program such as Quicken throughout the year, so tax time isn’t a time drain.

5. Create an Index of Your Financial Accounts and Investments — Just in Case

It’s a relief to have your investments and taxes in order. That makes the task of updating and maintaining accounts less time-consuming. Ultimately, it frees up time and energy better spent of other activities.

Yet, you must make sure that you have others who also understand the financial systems, as a failsafe. Even if you handle all financial matters in the family, your partner must also know what’s up, should anything happen to you.

Set up a spreadsheet of all log ins, account locations, passwords and financial information. Save it to a secure location and upload to a USB drive as well. As an extra precaution, you might print out a copy of all the relevant data and put it in a safe.

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Once your financial life is in order and your loved ones informed, you have one less worry and more time for what matters.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.

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When compared with men, women are much less likely to invest their savings and thus miss out on significant wealth, especially in retirement years. This fact is especially important when you consider the reality that, on average, women live longer but earn less than men.

In other words, there is a severe pay and pension gap between the genders.

Although closing the pay gap may be beyond the control of most workers, closing the pension gap is far easier than one initially assumes. While some might think they’d have to win the lottery in order to have millions in the bank at retirement, that’s simply not true.

Consider that if you win the Mega Millions, your prize is $1 million, but your chance of actually winning is a dismal 1 in over 12.5 million. Meanwhile, thanks to the power of compound interest, you can still have $1 million or even more in your account if you invest your savings, especially starting at a relatively younger age.

I don’t know about you, but I’d rather have reliable money in the bank rather than depend on 1 in 12.5 million odds. With that said, here’s how women (and men) can reach the $1 million goal without taking a major gamble.

Women and Investing: Knowledge Is Power

As people near retirement years, their biggest worry centers around money, or rather lack of it.

Surveys indicate that many baby boomers who are over the age of 55 have low levels of financial wealth and very little in assets other than their homes. And a large percentage believe that they have failed to plan for retirement adequately.

Financial knowledge and planning are clearly interrelated. People with higher financial literacy are more likely to plan successfully for retirement. This aspect of not having saved enough for retirement years seems to affect women even more than men.

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Almost all of us, but especially women, would benefit from educating ourselves more about the choices available for saving for retirement.

The first step would be to learn more about how much your retirement may cost and how you’ll pay for it.

There are various educational programs available through employers, federal and state governments that aim to introduce people to different retirement planning products.

One of the venues to invest your hard earned money is in the stock market, either through individual stocks or exchange-traded funds (ETFs) offered on U.S. exchanges.

At InvestorPlace, my colleagues often cover various ETFs as well as stocks to consider for a retirement portfolio.

Taking a Longer-Term ‘Bet’ for Retirement

I genuinely believe it’s better to put your money into company shares or ETFs than to risk your hard-earned money on lottery tickets.

The internet offers various investment calculators to have a better understanding of how much your savings would grow over a period of time.

For example on Jan. 1, 1990, if you had invested $1 in the S&P (through a mutual fund or ETF), at the end of Dec. 31, 2018, it would have now grown to $13.16 (including the dividends, but not adjusting for inflation). This final amount does not include any further contributions you might have made to your fund during the year.

The annualized returns could possibly be higher if one diversified and invested in a range of funds, such as those that have exposure to high-growth companies in the technology sector.

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Here is another calculation: let us assume you are 25 years old and you’d like to invest $1,000, say in an ETF, now. And going forward, you will make an additional $3,600 of contribution each year, at the end of the given year. You have 40 years to invest. And the annual return is 8%, compounded once a year. At the end of the investment horizon, the total you’d have in your account is $954,327.99.

If the annual return is 9%, the amount becomes $1,247,786.22 and if the return is 10%, the final amount is $1,638,592.46.

These numbers show that a person who saves about $300 per month for 40 years, starting at the age of 25, say through investing in various ETFs, is likely to have a savings of around $1 million when she or he retires, around the age of 65.

If you can increase how much you can save per month, say to $400 (or $4,800 a year), the final amount at the end of 40 years at an annual return rate of 8% is $1,265,195.81 (compared to $954,327.99 by saving $3,600 a year).

In other words, there is no need to play the lottery; we can pretty much all become millionaires in our lifetime!

The critical point to remember is to start early and save a definite amount each month. In a future article, I will discuss how you can make up for the difference if you started saving for retirement not in your 20’s, but rather in later years.

As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.

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So far this year, the average tax refund amount is down about 8.4% to $1,865. As should be no surprise, this has stirred up quite a bit of disappointment. A tax refund is often an important part of people’s spending.

The drop is also perplexing because of the new tax law. Wasn’t it supposed to lower taxes?

Well, this is true. However, even though the withholding levels were lowered, they did not account for some of the key changes in the tax code. The result is that for many Americans there was not enough money withheld from their paychecks.

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So what to do to boost your tax return? Unfortunately, the tax law has also cut back on many tax breaks. Here are just some examples:

• Personal exemptions have been eliminated
• Moving expenses can no longer be deducted
• Miscellaneous itemized deductions have been eliminated
• State and local tax deductions have been limited to $10,000

Despite all this, there are still benefits available and strategies to pursue. So let’s take a look:

Tax Refund Strategy: IRA and HSA Contributions

One of the best tax breaks is the IRA (Individual Retirement Account). It not only provides a lucrative deduction (whether you take the standard deduction or itemize) but is also a great vehicle for savings. The presumption is that when you reach retirement your withdrawals from the account will be at a lower tax rate.

Something else to consider: You can make a contribution by April 15th of this year. This can then be included on your 2018 tax return.

The maximum contribution amount for an IRA is $5,500 per person and this must be based on earned income. But if you are 50 or older, this goes up to $6,500.

Yet there are some wrinkles. If you are eligible for a company retirement plan, then the deduction may be limited or disallowed. This is based on your income.

OK then, what about a Roth IRA?  Can this boost your refund?  The answer is no.  While a Roth IRA has nice tax benefits (withdrawals are not taxed) you do not get deductions for the contributions.

Finally, you can setup a Health Savings Account or HSA, which allows for tax benefits when paying for medical bills. Like an IRA, the deadline for contributions is April 15th.

Tax Refund Strategy: Filing Status

What you indicate as your filing status on your tax return can make a big difference. Keep in mind that the new tax law made some significant changes with the standard deduction levels, which now include the following:

• Single: $12,000
• Head of Household: $18,000
• Qualified Widow(er) $12,000
• Married Filing Jointly $24,000
• Married Filing Separate $12,000

The rules for filing status can get complicated, especially with the Head of Household designation. You will need to understand the costs of maintaining the household and what types of dependents qualify (which may include parents who do not live with you). But it is worth evaluating.

Another strategy is to compute your tax return using different filing statuses. And yes, may be surprised by the results.  Consider that filing separate could mean bigger tax savings if you or your spouse has substantial medical expenses.

If anything, all this is a good reason to get some advice from a tax professional, say by setting up an appointment at H&R Block (NYSE:HRB) or seeking out a local CPA or Enrolled Agent. The tax benefits could easily exceed the fee.

Tax Refund Strategy: Credits

A tax credit is can go a long way to boosting your refund. The reason is that you get a dollar-for-dollar reduction of your tax liability. A deduction, on the other hand, is subtracted from your income, which is then subject to a potential tax.

There are a variety of credits available, such as for education (American Opportunity Credit) and lower income households (Earned Income Tax Credit). But they do require some research and record keeping.

The new tax law also has improved the Child Tax Credit, so as to help make up for the elimination of the personal exemption. It has been increased by $1,000 to $2,000 for a qualifying child who is under 17.

There is also a personal credit of $500 for the taxpayer, spouse and other dependents that are not eligible for the Child Tax Credit. These credits phase out at $400,000 in income for joint filers and $200,000 for all other taxpayers.

Tom Taulli is an Enrolled Agent and also operates PathwayTax.com, which is a tax advisory and preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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[Editor’s note: This story has been edited since publication.]

U.S. equities came under pressure Friday, nearly setting up the first weekly decline for the Dow Jones Industrial Average since the December low, as investors focus on profit-taking.

No major catalysts are in play, aside from a nagging fear that the U.S.-China trade talks aren’t going as well as the Trump Administration had led on. This after President Donald Trump indicated he wouldn’t be meeting with his Chinese counterpart soon. Also weighing is the approach of another government shutdown deadline, as well as the debt ceiling, which will come into play in March.

With Trump and Congressional Democrats still far apart on the border wall issue, the concern is that a 2011-style standoff (back when President Barack Obama and House Republicans faced off over the budget) is coming.

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As a result, a number of large-cap stocks are rolling over badly. Here are five to watch:

Twitter (TWTR)

Click to Enlarge Twitter (NYSE:TWTR) shares are falling away from resistance near its 200-day moving average, setting up a retest of the critical support lows near the $26-a-share threshold. The company last reported on February 7, with earnings of 31 cents per share beating estimates by seven cents on a 24.2% rise in revenues.

Monthly average users were in line with estimates, but the company’s announcement it would discontinue reporting that metric raised suspicions the company was bracing for bad news, and thus didn’t want to talk about it. The company will next report results on May 9 before the bell.

AT&T (T)

Click to Enlarge AT&T (NYSE:T) shares are falling away from resistance levels near the 200-day and 50-day moving averages, closing in on the lows set back in late December.

The telecom sector has been in the political news with reports President Trump is expected to sign an executive order banning Chinese telecom equipment from U.S. wireless networks — something that could potentially hamstring the rollout of 5G networks.

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The company will next report results on April 24 before the bell. Analysts are looking for earnings of 87 cents per share on revenues of $45.2 billion. When the company last reported on January 30, earnings of 86 cents per share beat estimates by two cents on a 15.2% rise in revenues.

Morgan Stanley (MS)

Click to Enlarge Morgan Stanley (NYSE:MS) shares are resuming their long downtrend pattern, cutting below their 50-day moving average to set up a return to the late December lows.

Shares are already down nearly 30% from the highs set in early 2018 as global market volatility weight on results. Analysts at Societe Generale recently downgraded shares to Sell from Hold.

The company will next report results on April 17 before the bell. Analysts are looking for earnings of $1.38 per share on revenues of $10.7 billion.

When the company last reported on January 17, earnings of 80 cents per share missed nine cents per share on a 10% drop in revenues.

Amazon (AMZN)

Click to Enlarge Amazon (NASDAQ:AMZN) shares are breaking down out of a two-month consolidation range, as a lot of things fall apart on the political front. CEO Jeff Bezos is embroiled in a messy divorce/lewd picture scandal playing out in the tabloids.

The turmoil surrounding the governor of Virginia could threaten its HQ2 facility there, while the Washington Post (owned by Bezos) is reporting the company is reconsidering its NYC HQ2 facility in response to local opposition.

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The company will next report results on April 25 after the close. Analysts are looking for earnings of $4.74 per share on revenues of $59.7 billion. When the company last reported on January 31, earnings of $6.04 per share beat estimates by 53 cents per share on a 19.7% rise in revenues.

Ford (F)

These five blue-chip stocks are dangerously close to rolling over.
Click to Enlarge Ford (NYSE:F) shares are breaking down below their 50-day moving average, failing to even test the prior highs set in November as evidence grows of a worsening rout in auto demand.

With inventories accumulating on dealer lots, increased promotional activity and production cuts look likely. Another big unknown is the fate of trade talks with Europe and China concerning automotive tariffs.

The company will next report results on April 25 after the close. Analysts are looking for earnings of 28 cents per share on revenues of $37.5 billion. When the company last reported on January 23, earnings of 30 cents per share matched estimates on a 0.5% rise in revenues.

As of this writing, William Roth did not hold a position in any of the aforementioned securities.

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There are some certainties when it comes to retirement investing and planning. Chief among those certainties is that investors should not put off saving for retirement. The earlier an investor starts, say in his or her 20s, the larger the retirement portfolio is likely to be given the benefit of time.

Second, instruments such as exchange-traded funds (ETFs) and index funds make for ideal retirement planning investments because many of those funds carry low fees. In addition to the diversification benefits offered by many index funds, those low fees matter over time. The less an investor loses in fund fees, the more of his or her total returns are kept.

Another retirement planning certainty is that Vanguard funds, be it ETFs or index funds, are great cornerstones of retirement portfolios because many of these funds offer diversification at attractive price points.

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Here are some of the best Vanguard retirement funds for consideration by young investors.

Vanguard Mega-Cap Growth ETF (MGK)

Expense Ratio: 0.07%, or $7 annually per $10,000 invested

Vanguard Mega-Cap Growth ETF (NYSEARCA:MGK) is one of the best Vanguard retirement funds for young investors for several reasons. One of those reasons is that an investor in her 20s, with a long-term time horizon, can withstand some of the gyrations associated with growth stocks. On the other hand, the MGK probably is not suitable for an investor in his 70s.

Data confirm growth stocks are usually more volatile than the broader market. Last year, MGK was 300 basis points more volatile than the S&P 500 and 280 basis points more volatile than the Vanguard Mega Cap ETF (NYSEARCA:MGC), this Vanguard retirement fund’s broader counterpart.

Many growth funds, including MGK, are heavily allocated to the consumer discretionary and technology sectors, meaning this Vanguard retirement fund is a suitable alternative for investors that do not want to tap sector-specific products. Technology and consumer cyclical names combine for almost 55% of MGK’s weight.

Top 10 holdings in this Vanguard retirement fund include Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN).

Vanguard Small-Cap Value ETF (VBR)

Expense Ratio: 0.07%

The Vanguard Small-Cap Value ETF (NYSEARCA:VBR) is a standout among Vanguard retirement funds because there is significant long-term potency in combining the small size and value factors. Historical data confirm the usefulness of VBR as a solid Vanguard retirement fund option.

“From 1928 through 2016, the S&P 500 index compounded at 9.7%, while small-cap value stocks grew at 13.5%,” according to MarketWatch.

VBR holds 868 stocks, giving it a deep bench relative to some other factor-based small-cap strategies. Some of the volatility associated with small caps is mitigated with this Vanguard retirement fund because, with a median market capitalization of $3.3 billion among its holdings, VBR is actually a mid-cap fund.

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VBR devotes over 54% of its combined weight to the financial services and industrial sectors.

Vanguard International Dividend Appreciation ETF (VIGI)

Expense Ratio: 0.25%

International stocks or funds should be a part of well-balanced portfolios, particularly for younger investors because investors in their 20s have time on their side, meaning they can endure some of the volatility that comes with ex-U.S. investing while waiting for some of these markets to rebound after years of disappointment.

As its name indicates, the Vanguard International Dividend Appreciation ETF (NASDAQ:VIGI) is a dividend ETF, which bolsters VIGI’s credibility as one of the better Vanguard retirement funds. Younger investors do not need to take the dividends paid by VIGI. Rather, they can reinvest those payouts. When done over the long-term, dividend reinvestment plays a major, positive role in long-term total returns.

The $1 billion VIGI holds 357 stocks, nearly 28% of which are emerging markets names. Europe is this Vanguard retirement fund’s largest regional exposure at 49.10%.

Over the past two years, VIGI is beating the MSCI All-Country Ex-US Index by nearly 400 basis points while displaying comparable volatility to that international benchmark.

As of this writing, Todd Shriber did not own a position in any of the aforementioned securities.

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[Editor’s note: This story was previously published in November 2018. It has since been updated and republished.]

November marked my 40^th anniversary as a business reporter. Obviously, I was in this profession for the long-term. I mention this because, if my editor at the Houston Business Journal had asked me for a list of the best stocks to own forever in 1978, it would have been heavy on oils, industrials and consumer staples, names like British Petroleum, General Electric and Campbell’s Soup. I might have added a strong local bank there, like Texas Commerce.

But what I called long-term thinking turned out to be short-term thinking. It didn’t take account of long-term, systemic change. The companies that now dominate the economy were then startups, such as Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL), or barely gleams in their founders’ eyes like Amazon.com (NASDAQ:AMZN). Mark Zuckerberg of Facebook (NASDAQ:FB) hadn’t even been born.

Own no stock forever. The right strategy is to buy the best stocks you can, watch them carefully, and adjust to change as it happens. The best 1978 investment for 2018 would have been an index fund tracking the S&P 500. But the First Index Investment Trust, now the Vanguard 500 Index Fund (MUTF:VFINX), was itself a virtual startup in 1978, having been launched at the end of 1975. If I were to get one investment for my as-yet-unborn grandson or granddaughter, it would be that.

The biggest change in my working life has been the one I covered — computer technology, Moore’s Law. It has made many people billionaires. It has moved the center of our economic life from Houston to San Francisco. But I can’t guarantee my son or daughter that this will remain the story. I personally believe biotechnology, through companies that have yet to be founded, will be providing more value than “tech stocks” by the middle of this century.

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But if you’re going to demand some modern names, I’ll throw these out there. Don’t come crying to me if they go under. As John Maynard Keynes said, in the long run we’re all dead:

Amazon.com (AMZN)

If I were asked to guarantee a great long-term technology bet back in 1978, I might have said Digital Equipment Corp., whose CEO, Ken Olsen, famously (although misquoted) said the year before, “there is no reason for any individual to have a computer in his home.” He was speaking, however, of massive computers that control everything in the home. Today, Amazon is attempting just that.

The PC industry has since risen and fallen. When we talk technology today, we talk of clouds and devices, neither of which existed, as such, at the start of the twenty-first century. Mostly today, we talk of the cloud. Of all the companies I call “Cloud Czars,” the one with the brightest future appears to be Amazon. That’s because its business is highly diversified. It uses the cloud in retail, in media, in computer services and it’s going to be in banking and healthcare.

Amazon represents an essential infrastructure for modern life, cloud computers and scaled fulfillment centers. Tens of thousands of companies depend upon Amazon to compete with companies like Walmart (NYSE:WMT). In any move to break up Amazon, these merchants would rise as one and stop it.

Amazon, of course, was only supposed to be an online bookstore at its founding in 1994, competing with larger, physical bookstores such as Portland’s Powell’s Books. But CEO Jeff Bezos saw new opportunities and took them, usually with an eye toward re-selling access to the infrastructure he needed to sell them.

That’s where Amazon Web Services, the company’s chief profit driver, came from. Amazon needed scaled, reliable data centers to run the online store, and found it could build more by re-selling the capacity, while larger competitors like Google, now part of Alphabet (NASDAQ:GOOGL), were keeping those resources to themselves. It was already selling access to its physical warehouses as well as its financial and delivery infrastructure. Genius is often what seems obvious at the time.

The problem here, of course, is that no one lives forever. I can’t promise that Bezos’ successors will be as quick-witted as he has been, that they won’t stumble or go down blind alleys.

JPMorgan Chase (JPM)

In the 1970s, banking was completely different from what it is today. It was done in banks, and that was considered best for the long-term. Back then, Automated Teller Machines (ATMs) were brand new. James Goodfellow, a Scot, patented the key technology, the four-digit Personal Identification Number (PIN), in 1966, and the first U.S. ATM appeared in 1969.

That ATM was owned by Chemical Bank. Chemical was one of the industry’s leading consolidators, buying other banks willy-nilly, culminating in the acquisition of Chase Manhattan in 1996, at which time it assumed the Chase name. The successor to that company, after many more mergers, is JPMorgan Chase (NYSE:JPM). JPMorgan Chase today has assets of over $2.5 trillion, and its value has doubled over the last five years under CEO Jamie Dimon. Dimon, of course, is close to my own age, and I can’t guarantee his successors will be as savvy as he has proven to be.

I can’t even guarantee that banking will remain what it is today. Few industries are being as directly impacted by technology as banking. There are now branches with no employees, and cash cards are being replaced by phone apps. Maintaining control over depositors’ money, distributing loans to businesses and individuals, and managing corporate treasuries are all subject to disruption by “fintech,” which replaces cards and mainframes with clouds and software.

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But, just as Chemical turned into JPMorgan Chase because its deposits had value, so will the larger bank evolve, and I suspect my kids’ money will evolve with it.

Regeneron (REGN)

In every generation, a new industry comes to dominate the economy, providing enormous added value, eventually gaining political power. Seeing change is the key to long-term investment success. Railroads held power when Charles Dow and Edward Jones were first getting together, in the late nineteenth century. Then utility “trusts” were built, which made mass manufacturing possible. When I started my career, oil was coming to dominate the economy. Today technology provides the fattest productivity gains, and tech is attaining political power to go along with this economic strength.

But this won’t remain the case. Biotech is the future. The next decades will be an age of miracles, as DNA itself becomes a virtual computer language, and new forms of life are created aimed at breaking the fever we call global warming, which threatens to kill mankind the way man kills a virus with fever.

Of all today’s big biotech companies I’m highest on Regeneron Pharmaceuticals (NASDAQ:REGN), not because of any particular drug they make but because they have a system for drug discovery, called VelociSuite, which allows quick manipulation of mouse DNA, so it identifies compounds for further research.

This lets Regeneron build a broad pipeline, with treatments for eye disease, cancer, arthritis, and heart disease, among other things. It’s not dependent on the fate of any single drug, and spreading risks is the key to long-term success.

Visa (V)

My wife has had a great career in the field of transaction processing. When she started in the 1980s she called it a great long-term bet. She liked to write programs that “make money” whenever they run. If running her program brought in just a few pennies, she figured, the pennies would add up. The big dog in this business is Visa (NYSE:V). When Visa says jump, other processors ask how high? Visa defines the terms of financial processing, having evolved from a Bank of America (NYSE:BAC) credit card, BankAmericard, into a cooperative owned by many international banks in the 1970s, then into today’s public company, which began trading in 2007. Since that launch, Visa stock has risen 500%-plus and delivered a steady stream of dividends.

I can’t guarantee that plastic credit cards will remain a thing in 30 years, or even that relationships with banks will remain the way you buy or sell. During this decade India has launched a major era of innovation, with cheaper payment gateways easily accessed by mobile phones. Visa is countering with a business payment network, and it opened a tech center in Bangalore back in 2014.

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Visa got into payments for convenience, India to fight crime. Whatever the motivation, electronic payments are a long-term trend any investor would be wise to be on top of.

AT&T (T)

I own AT&T (NYSE:T), but I’m not sold on its present strategy of trying to tie content to its networks. Today’s company would have also been a long-term bet in 1978, but it is a completely different outfit. That AT&T was broken up into seven regional Bell operators, a computer company and an equipment supplier.

The equipment supplier disappeared into Nokia (NYSE:NOK) and the long-distance company would have failed, too, except it bought McCaw Cellular in 1994.  Combining those operations with the wireless operations of Southwestern Bell, the regional Bell covering Texas and the Southwest, brought AT&T back once Southwestern took the AT&T name.

Today’s company is based in wireless, although it continues to run wired networks, some of which are being upgraded with optical fiber, turning them into the equivalent of cable television franchises. AT&T has assets in the internet core but is no longer the dominant player there. Cloud Czars like Alphabet, Microsoft and Facebook are now the heaviest investors in long-distance cables connecting the world.

AT&T is in the news today for its purchase of Time Warner, which means it owns CNN and other entertainment assets worth $84 billion before the deal was done. Its current strategy is to tie its network services to those assets, to guarantee people buy its movies and TV streams. I personally think this strategy is doomed. Owning a wire, or wireless infrastructure, doesn’t mean you can make me buy your TV show or movie. But as communication evolves, over the long-term, I do think AT&T will stumble into new opportunities, and so I own it. After all the dividend yields 6.5%!

Honeywell (HON)

Once upon a time, even before I became a reporter, when International Business Machines (NYSE:IBM) ruled the computer business, which was its only long-term play, its competitors were known as the BUNCH — Burroughs, Univac, NCR, Control Data and Honeywell (NYSE:HON). They all tried to compete with the giant, and all failed.

Burroughs and Univac became Unisys (NYSE:UIS), now worth under $1 billion. Control Data disappeared after trying to become an early leader in online education. NCR (NYSE:NCR) was acquired by AT&T in 1991, then spun-out. It’s now best-known for its ATMs, with a market cap of $3.3 billion, and it’s based in Atlanta. The survivor was Honeywell International, but as with AT&T, this is a completely different company. Today’s company is a conglomerate, centered in aerospace, but it also makes smart thermostats, advanced materials, and safety equipment, as well as software. The company most like it is United Technologies (NYSE:UTX).

Over the last five years, this new Honeywell is up 75% in value, with a market cap of $109 billion, and I think it will continue to thrive if it continues to evolve. Its success illustrates a key to any long-term success story, the willingness to get out of low-margin, low value-added businesses, and to try new things when you’re getting beat.

Honeywell’s oldest product, and the heart of the old company, is that humble thermostat, invented by a man named Albert Butz in 1885. Honeywell’s modern life began a century later with its acquisition of Sperry Aerospace, a defense contractor. This led to its own purchase by AlliedSignal in 1999, which kept the Honeywell name on the combined company. That, in turn, is leading to the spinoff of its home and transportation units, including the thermostat company. That should be done by the end of the year.

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There are no guarantees that future management will be as clever and forward-thinking as the people running Honeywell now. I never would have dreamt in 1978 that General Electric (NYSE:GE) could be wrecked, but it was. Still, the Department of Defense is a reliable source of revenue, and the technologies it funds remain a key to economic growth. You’re using one right now.

China Mobile (CHL)

I put China Mobile (NYSE:CHL) on this list as a warning. Don’t put all your long-term financial eggs in one basket, even if that basket is American. China’s rise as an economic power since 1978 is as remarkable as America’s own rise in the 19^th century. As with our own rise, it was built first on agriculture, then on industry, and is now entering its post-modern phase of consumer choice and technology. The best explanation of all this is Joe Studwell’s book, How Asia Works.

China Mobile is the AT&T of modern China, only without Time Warner. It was formed 20 years ago with the break-up of the nationally owned monopoly. It is based in Hong Kong and has become the dominant provider of wireless phone and internet services for China, with 887 million wireless customers and 113 million getting wired broadband. 

China Mobile’s gross profit is roughly two-thirds of its revenue, and it brings more than $1 in every seven to its net income line. It has over $66 billion in cash and short-term notes on its books, and it is now the biggest player in the world of global broadband, overtaking local rival China Telecom (NYSE:CHA). Betting on China Mobile is betting on China. That doesn’t make it a bet against the U.S., but rather a hedge based on the demographics of Asia, where there are billions of young minds eager to grab tomorrow’s opportunities.

If you want to know where the next Steve Jobs, Bill Gates or Jeff Bezos is going to come from, and if you want to be in the economy for the long-term, look there. Look wherever there are young, scrappy and hungry entrepreneurs. Don’t ignore Africa, or Latin America. Even the Middle East may someday put down the guns and get down to business. But before you buy any of these stocks, first own an index fund.

Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, REGN, T and AMZN.

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[Editor’s note: This story has been edited to correct an inaccurate statement regarding Vanguard’s compounded gains.]

John Bogle, who died yesterday aged 89, made himself the Caesar of our markets through his Vanguard index funds, which seek to track the market at the lowest possible cost to investors. Let the eulogy begin:

Friends, Americans, investors. I come to bury Bogle, not to praise him. The evil that men do lives after them; the good is oft interred with their bones; so let it be with Bogle.

Jack Bogle created the index fund, teaching that most people aren’t going to beat the market, and that if a fund merely reflects that market, ordinary investors can enjoy its fruits at very low cost.

In this, he was right … as right as right can be. If you put just $100 into the Vanguard 500 Index Fund (NYSEARCA:VFINX) when it was launched in 1976, and added monthly deposits of $100 every month, you would have roughly $800,000.

The Zombie Market

But even Bogle knew you can have too much of a good thing. Index funds are passive owners of stocks, taking the bad with the good, believing everything will even out.

Just last year Bogle warned, however, that passive funds could create problems for investors and the national interest specifically because of this passivity. Vanguard, Blackrock and State Street, the largest index fund sponsors, control 81% of all index funds, and index funds in turn own 17.2% of all U.S.-listed securities.

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Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) vice chairman Charlie Munger explained it this way in 2015. Index funds are permanent owners who never sell, he said, and usually vote management’s interests. Vanguard’s decisions in 2013 to vote against re-electing directors at Hewlett-Packard and Occidental Petroleum (NYSE:OXY) were notable for being unusual. They were not part of a trend.

When index funds own the market, figuring that good and bad management will even out, you create a zombie market, one that can no longer punish bad actions or control runaway boards. Corporate democracy is already under threat from two-tier ownership structures like those of Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) and Under Armour (NYSE:UAA), which guarantee the founders and their heirs control of the company through unequal voting weight, even if they sell out a majority stake, die or run off to some Caribbean island.

Index funds transform corporations from quasi-democracies into kingdoms.

What Hope Do We Have?

Bogle remains right. Most investors don’t have both the time and inclination to follow the stock market the way reporters or financial analysts do. For most investors, getting money into the market regularly, and at the lowest possible cost, is the right strategy.

The responsibility of index fund managers in overseeing corporate governance has thus become a subject of wide-ranging debate among market insiders. Vanguard will usually vote to re-elect directors if most are outsiders, but just how “outside” are “outside directors?” We usually don’t find out until there’s a scandal, and their faces are thrown up on TV like a criminal line-up.

If funds spend time and money policing boards, they’re no longer passive, and their fees must rise. If they don’t, corporate malfeasance runs rampant.

The Bottom Line

The story of my life is that regular investing is the way to wealth, just as Bogle says.

But that doesn’t mean investors should be as passive as the managers of their funds. My view is that once you have a nest egg you should be aggressive, placing bets on the leading edge of technology, which today means cloud applications and biotech. As you age, you should pull back, choosing big stocks that can afford dividends and bonds for income.

Jack Bogle’s great achievement was to overturn the conventional wisdom of his day, but his legacy was to create a new conventional wisdom, and as he said so often, “conventional wisdom is usually wrong.”

Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in VTI, the Vanguard Total Stock Market fund, and VWIGX, the Vanguard International Growth Fund.

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On Jan. 7, Kroger (NYSE:KR) and Microsoft (NASDAQ:MSFT) announced a partnership to build the grocery stores of the future.
A press release was posted on Microsoft’s website:

“Together, we will redefine the shopping experience for millions of customers at both Kroger and other retailers around the world, setting a new standard for innovation in the industry,” said Microsoft CEO Satya Nadella.

Microsoft stock closed at $102.06 that day, up 0.41%; KR stock gained 27 cents (0.97%), closing at $27.92.

Two high-tech stores will open. One will open in Redmond, Washington, near Microsoft’s headquarters. The other will be in Monroe, Ohio, near Kroger’s hometown of Cincinnati. These stores will be equipped with digital shelving technology, personalized ads, video analytics and other technologies.

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Some of these technologies will be displayed on Jan. 13 at “NRF 2019: Retail’s Big Show”, a trade show hosted by the National Retail Federation. The deal should boost Kroger and Microsoft stock by enabling both companies to compete against Amazon (NASDAQ:AMZN). This is true as upgrading its technology will make Kroger more competitive against Amazon. Amazon has the grocery sector in its crosshairs, buying Whole Foods in 2017. Amazon opened its high-tech, automated grocery store, Amazon Go, to the public last year.

Bloomberg reported in September that Amazon was considering opening 3,000 such stores by 2021. This could mean trouble for existing grocers such as KR. Kroger could also earn additional revenue from licensing out this technology to other grocery chains.

The technology will be powered by MSFT’s Azure (its cloud computing service). Microsoft Azure currently ranks second place in infrastructure-as-a-service (IaaS) cloud computing revenue. Azure is behind Amazon Web Services (AWS), and needs more revenue to catch up. Increased cloud computing revenue will boost Microsoft stock.

Impact on Kroger Stock

Retailers like Kroger are worried about competition from Amazon. They’ve seen what the e-commerce company has done to brick-and-mortar stores like Borders and Circuit City.

Now, with next-generation Amazon Go technology, Amazon is threatening grocery stores. Kroger and other grocery stores will have to respond.

With Amazon Go, shoppers do not take out cash or swipe a card when they check out. There is no checkout; you don’t even need to wait in line. You only take your phone out once, to scan a QR code to identify yourself; this allows you to enter the store.

Video cameras and sensors keep track of what you put in your bag. The cost is deducted from your Amazon account and you can just walk out.

Shoppers don’t like waiting in line, and this gives Amazon Go an edge over other grocery stores like Kroger. Amazon will also save money, since it won’t need to pay cashiers. To compete against Amazon Go, Kroger will need to adopt similar technology. Kroger could also earn money by selling advertising space on its new digital shelves.

Additionally, KR plans to license out this technology, which it calls “retail as a service”, to other grocery stores. This could bring in additional revenue, which would boost KR stock.

Impact on MSFT Stock

Like Kroger, MSFT is also competing against Amazon, but in a different industry: cloud computing.

According to Gartner, Amazon accounted for 51.8% of global IaaS cloud computing revenue in 2017. Microsoft was second place, with a 13.3% market share. However, Amazon’s status as a retailer could discourage other stores from doing business with Amazon Web Services. This presents an opportunity for MSFT, as more cloud computing business could boost Microsoft stock.

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Kroger’s chief information officer told CNBC in 2017 that the company would be avoiding AWS “for obvious reasons.” Kroger doesn’t want to fund a potential competitor.

Instead, Kroger went with Amazon’s rivals, MSFT and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Kroger isn’t the only retailer shunning Amazon Web Services. Walmart (NYSE:WMT) told technology companies it works with to stop using AWS in 2017.

In July, Walmart announced a partnership with MSFT. Walmart named Microsoft its “preferred and strategic cloud provider.”

Microsoft stock will benefit from this deal since KR’s technology is built on MSFT Azure. And if Kroger can sell this to other grocery stores, MSFT will earn additional revenue.

As of this writing, Lucas Hahn did not hold a position in any of the aforementioned securities.

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We’ve got a mixed bag in retail, while airlines remain in turbulent air. That being said, the overall market did pretty well on Thursday, considering we heard from Fed Chair Jerome Powell. He finally seems to know what to say to the markets and what not to say.

With that said, let’s get a look at some top stock trades for Friday.

Macy’s (M)

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Down almost 20%, bulls had a chance to defend Macy’s between $26 and $27, keeping it above a pivotal level. Below this level, I want nothing to do Macy’s.

Target (TGT)

That’s causing some hesitation, but it’s clear that Target is resonating with shoppers. The stock is holding up over $65, a key level. So long as that remains the case, bulls can stay long and look for an eventual challenge of the $74 the $76 area.

Costco Wholesale (COST)

Shares of Costco Wholesale (NASDAQ:COST) are about flat on the day, outperforming the retail sector overall. However, after December’s breakdown, the stock is still under pressure even though the recent numbers — as usual — are good.

So what do investors do?

Costco is in a “best house in a bad neighborhood” situation. At least in the short-term. Between $213 and $219, there’s a decent amount of possible overhead resistance, while we have a rising wedge situation near current levels.

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It’s possible for COST to push through all of these levels and challenge downtrend resistance (blue line). On a pullback, a decline to $190 is technically possible, but I want to give COST a few days to see how it shakes out. I don’t have a lot of confidence in a long setup right now, especially if retail remains weak.

Bed Bath & Beyond (BBBY)

Short of stocks like J.C. Penney (NYSE:JCP) and Sears (NASDAQ:SHLD), not many retailers have been worse than Bed Bath & Beyond (NYSE:BBBY). That’s not stopping shares from popping 14% on the day though, after the company beat on earnings expectations and provided a better-than-expected outlook.

Shares are ramming right into the backside of downtrend support (blue line). Can it push though? Maybe, after a move like this. Should shares fail to push through resistance, look to see if they hold up near $13. If they do get through resistance, look for BBBY to rally to the 200-day moving average.

American Airlines (AAL)

Then American slashed its guidance on Thursday, sending shares lower once again. Initially back down to $30, AAL has made up roughly half the day’s losses. If it can push higher, this low should hold once again. In 2018, we highlighted AAL as one of the cheapest in the industry and with some of the best growth. Even after the guidance cut, that remains true for American Airlines and may very well draw in some buyers.

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That said, should AAL lose $30, I wouldn’t want to stick around. The trend is clearly lower, but if $30 holds, bulls may be all right. That said, the news isn’t great and it’s hard to see what catalysts will push the industry higher in the short term.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he did not hold a position in any of the aforementioned securities.

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At the moment, insurance stocks look like an intriguing group for value investors looking for stocks to buy. Financials across the board have fallen, with several insurers hitting multi-year lows in the past few months. Yet, looking forward, there are reasons to expect the group to outperform.

Interest rates should rise, recent Fed commentary aside, and financials and insurers typically win when that happens. Higher rates mean higher returns on an insurance company’s ‘float’ — and more profits for shareholders.

Insurance stocks also are defensive — an attractive characteristic in a volatile market. And while investor attention since the US election has been focused on high-growth tech and booming cyclicals, there’s a case that insurers simply have been forgotten. In a more cautious market, that should no longer be the case.

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All told, the insurance group looks intriguing. Investors can play the space through ETFs such as the SPDR S&P Insurance ETF (NYSEARCA:KIE). But these three insurance stocks to buy should get at least a long look as well.

The Hartford Financial Services Group (HIG)

The case for The Hartford Financial Services Group (NYSE:HIG) is reasonably simple. First, HIG stock is cheap, trading at less than 9x 2019 EPS estimates. Even in the context of a sector that usually gets low multiple, that valuation looks far too conservative.

Hartford also has benefits on the way from its pending acquisition of The Navigators Group (NASDAQ:NAVG), a marine-focused insurer. With 2020 EPS – boosted by a full year of Navigators Group financials – likely to clear $5, HIG trades at something like 8x earnings while offering a dividend yield that could reach 3% next year.

There are risk. First, Hartford’s property and casualty business has benefited from lower catastrophe costs of late – which may reverse. The company’s mutual fund business gives it exposure to the equity markets – which have been roiled of late. And competition remains intense, which can pressure both pricing and revenue.

Still, with HIG touching a 30-month low last month, much of the bad news looks priced in. Sector-wide and M&A tailwinds are not. At the moment, HIG looks like one of the better “buy the dip” candidates among financials.

Chubb (CB)

The case for Chubb (NYSE:CB) is similar to that for HIG – with perhaps lower risk and lower rewards. Like The Hartford, Chubb is a property and casualty insurer. Like HIG, CB stock has pulled back, dropping 18%+ from early 2018 highs and touching a multi-year low late last year.

But Chubb is larger – and could potentially take market share from smaller players like The Hartford. Chubb also has a long history of being more conservative – which gives some comfort as its price-to-book ratio nears 1.1x.

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With a dividend yield of 2.3%, CB isn’t going to make investors rich overnight. But there’s a nice case here of a fair – and maybe cheap – price for a wonderful business. Chubb increases its dividend every year, generally grows earnings, and should hold up even if broad markets take another leg down. It’s a nice combination for near-term – and long-term – outperformance.

MetLife (MET)

Investors looking for more risk, and higher potential gains, in financials and insurers should look to MetLife (NYSE:MET). MetLife ran into trouble beginning in late 2017. The company said it had lost some 600,000 customers who were owed pension payments, which sparked investigations from state regulators.

A month later, the company had to delay its earnings report as it disclosed material weakness in internal controls. For an insurer, that type of error obviously raises red flags: MET stock unsurprisingly slid on the news.

And MET stock has continued sliding for much of 2018. But the news actually has been better. Earnings, starting with a Q4 report that answered at least some of the concerns, have been solid. The pension issue appears mostly resolved. A new CEO will bring fresh eyes next year. Meanwhile, MET stock trades at a noted discount to past valuation, with price-to-book just 0.84x and the dividend yield near 4%.

Again, this is a high-risk play by the standards of the insurance space. There’s the obvious “never one cockroach” concern after the accounting issues. But the rewards here are big too: if MetLife can convince investors it’s back on track, shareholders will be getting not just a strong dividend, but a stock that has appreciated nicely.

As of this writing, Vince Martin has no positions in any securities mentioned.

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Talk about a lot of action! Between auto sales numbers, Apple’s (NASDAQ:AAPL) guidance and the $74 billion deal between Celgene (NASDAQ:CELG) and Bristol-Myers Squibb (NYSE:BMY), we’ve got more must-see stock charts than we know what to do with. Since the move already happened in CELG-BMY, let’s look at some others that are on the move, starting with one of the biggest of them all.

Top Stock Trades for Tomorrow #1: Apple

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In response, the stock is down almost 10% Thursday to $143. Apple stock is now down 38.9% from its highs, so I’m surprised more of this news isn’t already priced in. Let’s not forget Apple trades at 11 times earnings, has a $100 billion buyback, a 2% dividend yield, a fortress balance and top and bottom line growth.

Anyway, what do the charts say? With the $140 level looking somewhat significant and the 200-week moving average just below, some may think the ~41% peak-to-trough pullback might be enough to slow Apple’s selling.

However, keep in mind Apple reports earnings on January 29th and we could very well see this stock come down into the report. If that’s the case, $140 may not hold up and a drop down to ~$120 could be in the cards. Tim Cook already said this quarter would be a record for earnings, so we know it won’t be worse than last year’s Q1 results.

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Meaning that, at the very worst we’re still looking at just under $12 in earnings over the past 12 months. If we use a trailing P/E ratio of 10 for Apple, that gets us to $120. That 10 P/E ratio isn’t pulled out of thin air either, it’s the bottom of the P/E range for Apple over the last decade.

Top Stock Trades for Tomorrow #2: Apple Fallout for Broadcom

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With its drop down to the mid-$230s, AVGO is coming into moving average support, but I wouldn’t be willing to risk much on this level holding. Should it fail, AVGO could easily be headed to the $220 level.

Down there, it’s attractive. At 10 times earnings, a ~4.75% dividend yield and after a promising quarter, I don’t want to be too bearish. But investors have realize this stock was at $200 during the summer and in this tape, revisiting that level isn’t out of the question.

Top Stock Trades for Tomorrow #3: Skyworks Solutions

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The stock is putting in an ugly candle on the four-year weekly chart and it has zilch in the way of support right now. We could easily see this name wash out down to $55, regardless of its low valuation.

$55 is a good target on the downside and a spot that bulls can take a low-risk shot at. If it fails though, look out.

Top Stock Trades for Tomorrow #4: Advanced Micro Devices

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The “why” doesn’t really matter right now. What does matter is that the stock is down almost 10% on Thursday as its moving averages and trends continue to squeeze it lower. $16 has been holding up, but I’m feeling less and less encouraged by the day.

If this level gives way, $14 to $15 is the next line in the sand. If that can’t support AMD — and after its last earnings report along with Nvidia’s (NASDAQ:NVDA), there’s no guarantee it will — then the $12 to $13 level could be next. That’s the backside of prior downtrend resistance.

Top Stock Trades for Tomorrow #5: General Motors

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Let’s also not forget that the S&P 500 fell by over 2% on the day.

Anyway, GM continues to ride its downtrend resistance mark lower and lower. It’s now resting on the 200-week moving average, a level that has been support over the past few years, but provided little help for GM back in October.

With the current environment, I wouldn’t be surprised to see GM retest the $30 level in the next few weeks. If it sells off into earnings, it may provide a worthwhile opportunity for bulls. But if the U.S. and China are slowing, GM’s not the one investors will want to hide out in.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, CELG and NVDA. 

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Once upon a time, if you wanted an all-in-one diversified investment retirement fund, you’d invest in a target date mutual fund. Each Vanguard Target Retirement Trust mutual fund invests in a few low-cost stock and bond index funds. The balance of stocks vs. bonds invested in changes as the fund’s retirement “target date” approaches. So, if you’re retiring in 2020, you’ll have a large percentage of your investments in fixed assets today.

The target date fund is a set it and forget it investment approach.

Today, you can invest in the Vanguard Personal Advisor Services robo-advisor and customize your investments to correspond with retirement and other goals along the way. The robo-advisor adds choice and a financial professional to your investment planning for a reasonable price.

So, I’m going to explore which investment approach is best for you, the target date fund or the robo-advisor.

The Vanguard Target Retirement 2045 Inv (VTIVX) — For the 35-Year-Old

If you’re 35 years old and looking to access your investments at age 62, the 2045 target date fund is for you. With a low expense ratio of roughly 0.15%, you get a diversified investment portfolio that includes U.S. stocks from the large-cap growth, value and blend categories and mid to small caps from the growth, value and blend styles. Plus, for added diversification there’s real estate investing. The target date fund also includes international stocks and REITs.

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For the fixed portion of the fund, there are allocations to a variety of types of bonds, including U.S. treasuries, corporate and foreign.

The allocations to the various assets are initially aggressive, with a greater proportion of stock investments and a lesser amount of fixed investments. As the 2045 retirement date approaches, your portfolio will shift to greater percentages of bonds and lesser allocations of stocks.

With 25 years until retirement, your asset allocation would look similar to 50% U.S. stocks, 35% international stocks, 10% U.S. bonds and 5% international bonds.

At your 2045 retirement year approaches, the asset allocation would shift to approximately 30% U.S. stocks, 20% international stocks, 30% U.S. bonds, 10% international bonds and 10% short-term treasury inflation protected securities (TIPS).

Finally, the 1.96% current yield adds stability to the ups and downs of the principal value of the Vanguard Target Retirement 2045 Inv fund. And there are 12 target-date funds from with retirement dates from 2015 through 2065.

This seems like an easy, diversified and sensible way to invest for retirement, unless you want more control over your investments. If so, then you might opt for the Vanguard robo-advisor.

The Vanguard Personal Advisor Services Robo-Advisor Competitor

If size is any indicator, the Vanguard robo-advisor is the largest of all the automated investment platforms is the winner with $112 billion assets under management as of August 2018. What you get with a robo-advisor is customization, a human financial advisor and 0.30% management fee (for portfolios below $5 million with lower fees for larger portfolios).

If you have the $50,000 entry minimum, then you’re eligible to invest with the Vanguard Personal Advisor Services robo-advisor.

It’s actually unfair to compare the target date fund with the robo-advisor, as the target-date fund offers no human financial advisor. It might be better to match up the Vanguard robo-advisor with a human financial planner. Yet, financial advisor issue aside, there are many similarities between the target date mutual fund and the digital investment advisor.

With Vanguard’s robo-advisor, a computer algorithm creates your portfolio, based your goals and risk tolerance. But here’s where Vanguard is distinct from many competitors.  Vanguard’s robo-advisor adds direct human financial advisors to the process. Your contact with the service is handled by an individual financial advisor, who acts as the point person in establishing your account and portfolio.

The greatest advantage of the Vanguard robo-advisor is the ready availability of a financial consultant, for a lower fee than you’d pay for a typical financial advisor. Your advisor is a phone call away, for quick financial questions. Yet, when choosing a robo-advisor, there are others that also offer financial advisors and low fees — such as Wealthsimple and Betterment.

Vanguard’s robo offers an array of both ETFs and mutual funds — many are like those in the target date fund. In addition to passively managed funds, the platform also offers actively managed options.

Unlike the target date fund, your asset allocation is reviewed by your financial advisor and can be changed at any time.

The final differentiating feature between the target date fund and the Vanguard robo-advisor is the availability of tax-loss harvesting. Vanguard Personal Advisor Services will use tax-loss harvesting on a case-by-case basis to reduce your tax obligation, along with smart asset location. Meanwhile, tax-loss harvesting is not available in the target date fund.

The Bottom Line on Vanguard’s Target Date Mutual Fund vs Vanguard Personal R0bo-Advisor Services

If you are seeking low-fee investment management with a hands-off approach, then the target date funds are a sound choice. If you have more than one goal, you might even invest in several target date funds, with distinct maturity dates.

On the other hand, if you want a financial advisor to speak with, and the opportunity to adjust your investment funds and asset allocation, along with tax-loss harvesting, then you’re better off investing with the Vanguard robo-advisor.

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Finally, if your investable assets are less than $50,000, then there is no choice, the target date fund is for you. Or, you could choose a robo-advisor with a lower investment minimum such as M1 Finance or Betterment.

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The stock markets finally caught a bid ahead of Thanksgiving, hoping to give investors some sort of comfort going into the holidays. Some will turn up for Friday’s session while others will stay offline and enjoy a four-day weekend. For those that can’t help but sneak a peek at their portfolios, here are our top stock trades to watch for Friday.

Top Stock Trades for Friday No. 1: Foot Locker (FL)

Shares of Foot Locker (NYSE:FL) are bursting higher on Wednesday, jumping 14% after the company beat on earnings, revenue and comp-store sales expectations. Time to pile in?

While the rally is impressive, particularly after Tuesday’s decline, FL is just too volatile for me.

FL stock held its uptrend for this year, but is being pressured by long-term downtrend resistance. Above this mark and the 200-week moving average and investors will have an attractive risk/reward on the long side. Otherwise, they may be able to buy on a pullback to uptrend support.

For me though, this name is simply too volatile right now.

Top Stock Trades for Friday No. 2: Deere (DE)

Is this a bullish sign or a fake-out on a low-volume trading day?

Shares of Deere (NYSE:DE) are up 3% on Wednesday despite missing on earnings and revenue estimates, and providing disappointing guidance for 2019. The stock was initially lower on the day, but has reversed higher.

There’s support in that $130 to $135 area, but the stock continues to put in a series of lower highs. That’s unattractive, as is Deere’s inability to get above its three major moving averages.

As it stagnates near current levels, my gut tells me Deere is a no-touch below $150. Above that mark and perhaps we can get a rally. But until the indices start playing ball, gains will be hard to come by. Look to see if Deere comes back down to support — and if it holds.

Top Stock Trades for Friday No. 3: GameStop (GME)

With a market cap of just $1.4 billion, GameStop (NYSE:GME) selling its almost 1,300 AT&T (NYSE:T) Wireless stores for $700 million is a big deal. It’s why the stock is up almost 14% on Wednesday. But is it enough to make GameStop stock a buy?

While the company will likely benefit from a strong holiday season, the long-term business is still not attractive to me. Neither are the charts.

Even after a rally like this, shares still can’t get above the 200-day moving average, as highlighted above. Until that’s the case, even short-term bulls should avoid this one. Maybe, just maybe, it can rally to $15. But that would setup as a great selling opportunity, at least in my view.

Top Stock Trades for Friday No. 4: Johnson & Johnson (JNJ)

One stock investors can consider buying on the dip is Johnson & Johnson (NYSE:JNJ). This name continued to churn higher and higher, until Wednesday’s 3% fall.

The drop put JNJ right down into its 50-day moving average. With a solid business, rock solid balance sheet and dividend dependability, many investors feel they can hide out in stocks like J&J.

They now have a solid risk/reward pullback in JNJ. If it closes below the 50-day moving average, investors can bail with minimal losses. If it holds, look for a rebound back to recent highs.

Top Stock Trades for Friday No. 5: Advanced Micro Devices (AMD)

The charts are not setting up well for Advanced Micro Devices (NASDAQ:AMD). The stock is struggling to get above the $22 level, as downtrend resistance (blue line) continues to pressure AMD stock lower.

There are a few main levels to watch here, starting with support. Look to see if AMD retests its 200-day moving average. If so, it will be the third touch since late-October and second time in just a few sessions. That’s not too bullish, but another test will likely draw in some short-term buyers.

Below the 200-day puts the October lows back in play and breaks the higher lows theme AMD had put together. Below the October lows and it can get ugly for AMD.

On the upside, let’s see if AMD can get above downtrend resistance. If so, it puts the $22 level and the 100-day moving average on the table.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, he is long T. 

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Although the markets have their own logic, highly capitalized gold-mining companies seemingly should belong on any “stocks to buy” list. Thanks to rising geopolitical tensions and soaring trading sentiment, many folks seek safe-haven assets. While gold stocks seemingly offer a viable solution, their overall performance has been unusually disappointing — with the price of gold down 6.2% as of Oct. 24.

I believe that this irrational circumstance will eventually find a logical basis. When it does, today’s beaten-up and undervalued gold stocks could witness a robust revival. Since the beginning of this decade, gold prices have only increased 10%. That’s a shockingly bad figure, even for precious metals. The Dow Jones index, however, has jumped more than 130%.

While I don’t begrudge the equities sector enjoying its resilient bull market, the underperformance in gold stocks doesn’t quite jibe. Primarily, the U.S. dollar index has cratered ever since President Donald Trump took office. Since the start of his administration, the dollar index has dropped roughly 5% in value. The losses would have been much worse were it not for a recent walk up.

A weakening dollar typically corresponds with higher commodity prices; hence, Brent crude oil gained roughly 40% since Trump’s first day as president. This makes sense: more dollars (inflation) are chasing fewer goods. In contrast, gold is up only 2% since Trump took over the helm, and for the year, bullion prices lost roughly 6.5%.

I’m not here to cry about a few percentage points. Rather, I don’t think this unusual circumstance can last. With the active conflict in Syria, an ongoing trade war with China, our relationship with Saudi Arabia on shaky ground and an unpredictable North Korea, we have massive foreign-policy crises.

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Add to that Donald Trump? Here’s my top 20 list of gold stocks to buy.

[Editor’s note: This story originally appeared in May 2018. It has since been updated to reflect changes in gold prices and gold stocks, but we believe the stock picks remain relevant today.]

#1 Gold Stocks to Buy: Franco Nevada Corp (FNV)

While gold stocks usually have a volatile reputation, Franco Nevada Corp (NYSE:FNV) is about as stable as you’ll find in this sector. As a gold royalty and streaming company, Franco Nevada isn’t levered to any one specific project. Therefore, FNV doesn’t have the sharp unpredictability of junior miners.

The overall market has been, however, decidedly illogical. We have both economic and especially geopolitical concerns, yet many gold stocks continue to flounder. That’s what we’re seeing with FNV. Despite a strong outing in its recent first-quarter 2018 earnings report – which produced nearly a 21% positive surprise – shares are down 19% year-to-date.

I can’t imagine that FNV stock will continue staying this undervalued, considering its fiscal stability and performance.

#2 Gold Stocks to Buy: Newmont Mining Corp (NEM)

If you want as close to a surefire way to buy gold without getting burned, consider Newmont Mining Corp (NYSE:NEM). Founded in 1921, Newmont Mining is currently the only gold producer listed in the benchmark S&P 500 index.

Since fiscal 2015, Newmont has enjoyed revenue growth averaging nearly 10%. Furthermore, NEM appeals to conservative-minded investors with its fiscal discipline. In the last four years, management has kept a tight lid on operating expenses. Moreover, its steadily reducing capital expenditures over the same time frame.

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On a YTD basis, NEM stock is down 15%. It’s not the sexiest play among gold stocks to buy, but it likely won’t leave you stranded for long, either.

#3 Gold Stocks to Buy: Barrick Gold Corp (ABX)

Even in an ancient industry like precious-metal mining, you can still teach an old dog new tricks. Barrick Gold Corp (USA) (NYSE:ABX) proves that with their seamless marriage of an old-school occupation with new-school applications.

Recently, Barrick Gold Corp introduced their Analytics & Unified Operations (AuOps) Center. With AuOps, ABX installs data-recording sensors throughout their projects. In addition, equipment, machinery, and even workers are hooked up to these sensors, enabling management unprecedented analytics. One of the key advantages is that ABX can improve efficiencies without taking shots in the dark.

This year, ABX stock hasn’t responded well in the markets. This despite the company producing solid results for its recent earnings report.

As with other gold stocks to buy, I don’t anticipate that this undervaluation will continue indefinitely.

#4 Gold Stocks to Buy: Agnico Eagle Mines Ltd (AEM)

Senior Canadian miner Agnico Eagle Mines Ltd (USA) (NYSE:AEM) is an ideal opportunity for those who want exposure to gold stocks but without undue market risk. All Agnico mines are located in Canada, Finland and Mexico, with developmental activities in the U.S. and Sweden. Thus, you’re unlikely to experience repatriation risk with AEM.

Agnico also has some fairly solid fundamentals. Its operating and net margins are above average against other gold stocks. The company has also enjoyed revenue growth since at least the past four years. Just as importantly, management maintains fiscal discipline, controlling cost of goods sold and operating expenses.

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For the year, AEM stock is down 20%. However, since the end of September, shares have gained 8%. I expect further market profitability as the underlying gold market improves.

#5 Gold Stocks to Buy: Goldcorp Inc. (GG)

Goldcorp Inc.’s (USA) (NYSE:GG) website emphasizes that they utilize a “lean, highly skilled” leadership team. While I usually take corporate-speak with a grain of salt, GG has quantifiably lived up to its word.

After a rough phase in the precious metals sector that wiped out several players, GG cut out the fat. Compared with their fiscal 2014 report, management sharply reduced their operating expenses. Thanks to their disciplined efforts, the company returned to profitability in 2016 and 2017. Additionally, they have reduced their annual capex from a few years back.

So far, the markets have a generally favorable view towards Goldcorp’s strategies. On a YTD basis, GG stock is down 19.3%. It’s far from stellar, but GG stock should experience upside if the gold market improves.

#6 Gold Stocks to Buy: Royal Gold, Inc (RGLD)

Another royalty and streaming company, Royal Gold, Inc (USA) (NASDAQ:RGLD) avoids the risk of putting your eggs in one basket. Moreover, Royal Gold’s target projects are in stable countries. The vast majority are in Canada and Mexico, followed by the Dominican Republic, Chile and the U.S.

A compelling reason to consider RGLD stock is that the company has thrived since the last gold bear market. Since fiscal 2014, revenue growth averages 23%. In addition, RGLD has kept expenses from blowing up. As a result, Royal Gold had a standout year in 2017, generating $101.5 million in net income.

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While RGLD stock is down 6.3% YTD, it fares much better than the competition. I expect some near-term successes, too, especially if the underlying gold market cooperates.

#7 Gold Stocks to Buy: Kinross Gold Corporation (KGC)

With a market capitalization north of $4 billion, Kinross Gold Corporation (USA) (NYSE:KGC) is one of the biggest gold stocks available. Its main claim to fame is asset diversity. Kinross Gold’s project portfolio encompasses locations in the U.S., Brazil, Chile, Ghana, Mauritania and Russia.

Conservative investors who typically shy away from this sector are attracted to KGC for its relative financial stability. Since the gold market collapsed back in 2013, Kinross has focused on chipping away at its long-term debt. In addition, management cut any excess fat that was holding back the organization. The result? KGC returned to profitability last year.

Right now, the markets aren’t respecting the corporate efforts. KGC stock is down 37% YTD. Overall, I view the bearishness as an exaggeration, especially considering its massive Q1 2018 earnings beat.

#8 Gold Stocks to Buy: Iamgold Corp (IAG)

Companies are defined not by how successful they are in bull markets but how they respond under pressure. On the one hand, when the precious metals and commodities sector fell apart in 2013, many organizations simply folded. Iamgold Corp. (NYSE:IAG), on the other hand, rolled up its sleeves.

An analysis of their longer-term financials reveals the company’s focus and determination. Any excess or unnecessary expenses were slashed. Capex fell sharply from four years prior, and in doing so, free cash flow turned positive. Overall, management’s efforts returned IAG to profitability in 2016, and they enjoyed a standout year in 2017.

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The response in the markets was muted for much of the year. While IAG stock exploded upward nearly 21% from mid-March through May, the downturn in gold in mid-August took IAG stock down to a loss of 38% for the year. IAG looks promising, especially considering how geopolitical events are stacked up.

#9 Gold Stocks to Buy: Wheaton Precious Metals Corp (WPM)

Formerly known as Silver Wheaton, Wheaton Precious Metals Corp (NYSE:WPM) is one of the most popular stocks to buy. Utilizing a streaming business model, WPM offers relative cost predictability. In addition, the company provides direct-leverage as precious-metal prices increase.

As with other sector players, the gold bear market hasn’t been kind to WPM. That said, Wheaton’s streaming business model mitigated much of the damage. For instance, their expenditures are stable from year to year. In addition, management focused on controlling its capex, while steadily chipping away at its debt exposure.

On a YTD basis, WPM stock is down 22.5%. However, since the beginning of March, shares have jumped over 14%. With cleaner financials, and a better market environment, I see much potential with Wheaton Precious Metals.

#10 Gold Stocks to Buy: Newcrest Mining (NCMGY)

Risk-averse investors often pick large capitalization gold stocks to avoid the volatility associated with junior miners. But every once in a while, you’ll come across big names that are experiencing uncharacteristic choppiness. That’s the case for Newcrest Mining LT/ADR (OTCMKTS:NCMGY).

With a market cap just under $12 billion, Newcrest Mining is easily among the top industry stalwarts. However, investors haven’t been impressed with Newcrest’s pedestrian revenue growth. In addition, net income has declined in the past three years.

On a YTD basis, NCMGY stock has dropped nearly 20% of market value. However, the bears could be overlooking some important factors. For instance, management has significantly reduced operating expenses compared to four years prior. Debt levels, while high, have also declined.

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It’s a risk, but one I believe is worth taking with speculative money given the company’s overall reputation.

#11 Gold Stocks to Buy: Eldorado Gold Corp (EGO)

Another big name among gold stocks, Eldorado Gold Corp (NYSE:EGO) has a market cap over $757 million. Eldorado also has an enterprise value a few million shy of $1 billion. But despite its relatively sizable presence, EGO could use a break.

On a YTD basis, EGO stock has dropped nearly 33%. Much of that has to do with disappointing fiscal performances. Revenue growth cratered over the last four years. Not only that, its operating expenses uncomfortably increased last year. Furthermore, its debt levels and capex remain elevated.

So why am I discussing Eldorado Gold Corp? Its speculation, but EGO stock has stabilized since early last month. Should the underlying gold market improve, and I believe it will, EGO could rise along with everyone else.

#12 Gold Stocks to Buy: Compania de Minas Buenaventura SAA (BVN)

Headquartered in Lima, Peru, Compania de Minas Buenaventura SAA (ADR) (NYSE:BVN) is one of the underappreciated plays among top gold stocks to buy. BVN has a market cap just a little shy of $4 billion. It also features a $4.56 billion enterprise value.

Since fiscal 2015, BVN averages 17% top-line sales growth. Moreover, management has maintained strong fiscal discipline, with operating expenses down over the past few years. As a result, operating margins improved to 11% from 3% in fiscal 2014. Most importantly, Compania de Minas Buenaventura returned to profitability last year.

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BVN stock is one of those cases where the markets’ price discovery makes logical sense. Shares are only down a percent, although I feel upside is coming. Generally speaking, BVN is riding a bullish trend channel since July of last year.

#13 Gold Stocks to Buy: Gold Fields Limited (GFI)

With a market cap of just under $3 billion, and an enterprise value of $4.56 billion, Gold Fields Limited (ADR) (NYSE:GFI) is not what you would call a small player in precious-metal mining. However, GFI has taken a huge dump so far this year.

Against the January opener, GFI stock dropped more than 16%. That’s really bad, even compared against other volatile gold stocks. Not to pour salt on festering wounds, but GFI peaked in September of last year. Since then, Gold Fields has been mired inside a frustrating bearish trend channel.

The financials aren’t helping matters much, either. Revenue growth is pedestrian, and Gold Fields’ earnings fell into red ink last year, while its competitors have become profitable. Furthermore, its capex has increased uncomfortably for potential investors.

Ordinarily, GFI isn’t something I’d like to touch. But with potentially rising sentiment in the precious metals and commodities sector, GFI offers an intriguing, albeit speculative opportunity.

#14 Gold Stocks to Buy: Evolution Mining (CAHPF)

Headquartered in New South Wales, Australia, Evolution Mining Ltd (OTCMKTS:CAHPF) may not be a household name here. But that could quickly change if the gold sector turns around decisively. Evolution Mining has a market cap just over $4 billion, and a $4.2 billion enterprise value.

Revenue growth has been very strong over the past three years, averaging 52.5%. Most of that haul occurred in fiscal 2016. However, Evolution Mining returned to profitability last year in part thanks to higher nominal sales and disciplined fiscal controls.

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CAHPF stock is one of the bright stars among high-market cap gold stocks. For this year, shares have gained over 10%, and against the trailing year, CAHPF is up an amazing 30%. Put Evolution Mining on your watch list, especially if the underlying sector improves.

#15 Gold Stocks to Buy: Randgold Resources Ltd. (GOLD)

Sometimes, the markets punish good companies excessively for not hitting certain benchmarks. Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) is a recent example of this unfortunate dynamic. Despite being a top contender among gold stocks, Randgold fell short in its Q1 2018 earnings report.

I get that investors typically want to sell a poor earnings performances, but this usually occurs for high-flyers. In Randgold’s case, GOLD stock is down nearly 18% YTD. That’s not a great time to give up, especially with geopolitical concerns heightening.

More so, investors should consider the overall picture. Randgold is one of few gold miners who is consistently delivering profitable earnings. Management is also very disciplined, reducing operating expenses and keeping capex in line. It also has consistently positive free cash flow.

I’d keep a close eye on GOLD stock as I believe it’s significantly undervalued right now.

#16 Gold Stocks to Buy: Alamos Gold Inc (AGI)

Another big player in the precious-metals market, Alamos Gold Inc (NYSE:AGI) has a market cap just shy of $2 billion. Yet despite its relatively lofty status, AGI like so many others has faltered this year.

I’m not seeing eye-to-eye with Wall Street here. Since fiscal 2014, Alamos has averaged nearly 24% top-line sales growth. Management has also maintained fiscal discipline and strong cost controls. Thanks to the leadership team’s efforts, AGI reversed its horrific losses from years past. Last year, it decisively returned to profitability.

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Yet so far this year, AGI stock is down 29%. Perhaps investors weren’t too thrilled about Alamos merely meeting expectations in Q1 2018. Whatever the reason, AGI seems awfully undervalued considering its solid efforts.

#17 Gold Stocks to Buy: B2Gold Corp. (BTG)

Looked at from a nearer-term perspective, B2Gold Corp. (AMEX:BTG) doesn’t seem appealing, especially to conservative investors. On a YTD basis, BTG stock is down nearly 15%, making it one of the worst sector performers.

However, broaden the scope and BTG appears much more compelling. Shares hit close to rock bottom in mid-January of 2016. At the time, BTG was trading hands at 72 cents. Against that level, shares have veritably skyrocketed 276%.

Generally speaking, B2Gold has been charting a series of higher lows over the past two-and-a-half years. I expect BTG to continue its positive performance. Management runs a fairly tight ship in terms of cost control. The company is also focused on reducing its long-term debt exposure.

#18 Gold Stocks to Buy: New Gold Inc. (NGD)

Compared to top market cap gold miners, New Gold Inc. (AMEX:NGD) is one of the riskiest plays. The company has a $1.34 billion market cap, along with a $2.15 billion enterprise value. However, NGD stock is clearly a disappointment, and it’s not hard to see why.

Although fiscal 2017 annual revenue increased significantly against the prior year, NGD slipped sharply against 2014 and 2015 results. Not only that, its earnings are awash in red ink despite management efforts to reduce operating expenses. Long-term debt has ballooned over the years to $1 billion, and free cash flow is a mess.

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So why take a shot at NGD stock? Again, it’s very speculative, but shares hit rock bottom back during the 2008 financial crisis. Since then, on a broader view, NGD has charted a series of higher lows. Perhaps, if bullion enters a strong bull market, NGD would likely moon.

#19 Gold Stocks to Buy: Yamana Gold Inc. (AUY)

Presently, Yamana Gold Inc. (NYSE:AUY) is a bit of a basket-case. Yamana has a strong brand presence in the mining sector, with a market cap exceeding $2.6 billion. That said, AUY stock absorbed some tough blows in 2018.

I can’t say I blame investors for not seeing the light. Yamana’s COGS are out of control, putting the company in a bad position before it gets to the middle of the income statement. The bottom line has improved significantly in recent years, but its still mired in red ink. Capex also ballooned last year, and free cash flow is negative over the past five quarters.

In other words, AUY stock is a technical speculation. However, I think you can make a strong case here. AUY charted rising lows since December of last year. Generally speaking, shares have steadily risen since January 2016.

If decisively positive sentiment returns to the precious-metals market, AUY could accrue benefits from mere association.

#20 Gold Stocks to Buy: Harmony Gold Mining Co. (HMY)

Harmony Gold Mining Co. (ADR) (NYSE:HMY) was off to a great start this year. At one point, HMY stock gained over 32%. Unfortunately, investor sentiment dramatically collapsed, sending Harmony Gold careening to the ground floor.

The company’s financials reveals a mixed bag. Revenue growth was strong in 2017, gaining 12% against the prior year. However, at $1.42 billion, sales were down 6.5% from four years prior. Not only that, COGS increased significantly in 2017, resulting in lackluster earnings. Finally, capex remains elevated, applying pressure on free cash flow.

That said, a 15% loss against this year’s closing high seems a bit overdone. Additionally, HMY stock hit bottom in November 2015. While the price action has been extremely choppy, the general sentiment is positive.

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If the underlying gold market can break free from its funk, HMY stock might surprise Wall Street.

As of this writing, Josh Enomoto is long gold bullion.

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The week started off on a strong note, but the market gave way to mixed signals throughout the week. While markets are mostly flat through most of Friday’s session, they are setting up as questionable going into next week. Here are our top stock trades in light of this action:

Procter & Gamble (PG)

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If we can get a pullback in the broader market next week, let’s see if we can get PG a little cheaper, say somewhere between $84 to $85. That will be an attractive risk-reward.

Cleveland Cliffs (CLF)

After a colorful conference call to say the least, Cleveland Cliffs (NYSE:CLF) is down about 5.5% Friday. Finding resistance near $12.50 to $13 isn’t much surprise and really as long as CLF stays over uptrend support, investors can stay long.

Back over the 50-day would make me feel better, but really so long as it’s above $10, it’s okay. Below that and a $9 stock price is in the cards for CLF stock holders.

Electronic Arts (EA)

The price action in video game stocks has been uninspiring to say the least. That’s highlighted by the recent moves in Activision Blizzard (NASDAQ:ATVI), as well as Electronic Arts (NASDAQ:EA).

The company broke below 18-month support at $105 after hitting $150 just a few months ago. The one-year low near $100 may give EA a bounce, but below that and a gap-fill down to $96 is in the cards.

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Bears can go short w/ a stop on a close above $105. Bulls should wait for a close above $105 before going long again.

Netflix (NFLX)

The stock is now coming back down toward the 200-day and possible support near $320.

There should be decent support in this $310 to $320 level too. For 2018, the 50% Fibonacci retracement level sits near $310, while the 61.8% retracement from the January gap-up sits near $315.

Below these marks, and NFLX is heading for no man’s land.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell held no positions in any stocks mentioned.

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For a few days, it looked like the market might get back into a “risk on” mood again, favoring growth names over “cheap stocks” regardless of their frothy valuations, at the expense of consumer-oriented stocks regardless of their all-weather reliability. Now the question is back on the table.

Or, maybe it was never really off the table. A look back at the way things have taken shape over the course of the past few weeks indicates that consumer-oriented and safe-haven names have actually done rather well, while growth names haven’t.

Better still, some of the most compelling picks from the consumer sectors are still stunningly cheap stocks right now. Considering the uncertainty ahead, wise investors should make a point of upping their exposure to this sliver of the market for the indefinite future.

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With that as the backdrop, here’s a run-down of the top ten most attractive consumer stocks you can own right now.

[Editor’s note: This story was originally published in July 2018. It has since been updated and republished to coincide with the similar consumer stocks market environment of October 2018.]

Cheap Consumer Stocks: Packaging Corp (PKG)

It’s boring, but that’s the point.

You’ve probably held a Packaging Corp (NYSE:PKG) product in your hands without even realizing it. The company makes all sorts of boxes, including those used to transport fruits and vegetables that then become suitable displays in a grocery store. That’s only the beginning though. Packaging Corp makes storage and display solutions of all sorts, most of which consumers and corporations purchase regardless of the economic backdrop.

It’s unlikely the outfit will ever post jaw-dropping sales or earnings growth, but with a forward-looking P/E of less than 13, there’s certainly plenty of value on the table.

Cheap Consumer Stocks: Hanesbrands (HBI)

Socks and underwear? Like Packaging Corp, it’s a product line that never goes out of style. That alone isn’t a reason one might want to own Hanesbrands (NYSE:HBI) though. Neither is the perfectly palatable forward-looking P/E of 11.5. Even the dividend yield of 2.7% isn’t necessarily a must-have.

Rather, the reason HBI is so compelling here is that the analyst community is only lukewarm on the stock, sporting an average price target of $22.47. That’s almost where the stock’s priced right now.

There’s a method to the madness. It’s called contrarianism. The time to step into a solid name is when it’s out of favor. If Hanesbrands continues to product the kind of sales and profit growth it’s been driving, the professionals will have to warm up to it again.

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Those impending upgrades could light a real fire below the stock.

Cheap Consumer Stocks: Edgewell Personal Care (EPC)

Edgewell Personal Care (NYSE:EPC) is probably a name most investors haven’t heard of. It’s a name most investors are more familiar with than they realize though.

Ever heard of Schick shaving products? How about Hawaiian Tropic suntan lotion? Playtex? Those are all personal care products made by Edgewell.

It hasn’t been the strongest of companies for the past few years, and subsequently, analysts are less-than-thrilled. Like Hanesbrands though, that sets the stage for lots of upgrades and increases in price targets. And, with next year projected as something of a turning point in terms of sales and profits, those improved opinions may start to take shape sooner than later… particularly if other sectors start to fall out of favor.

The forward-looking P/E of 14.3 doesn’t exactly place Edgewell among the cheapest of the cheap stocks, but it’s certainly far from being expensive given the backdrop.

Cheap Consumer Stocks: Brunswick (BC)

You may know the name Brunswick (NYSE:BC) as a maker of bowling balls and bowling pins. But, that’s not all the company does. In fact, it doesn’t even do that anymore, having sold its bowling business off to a privately held outfit back in 2015. All it does now is make boats and billiard products, and fitness equipment.

It’s good at what it does though … real good. Even when the economy was just so-so a couple of years ago, the company was producing growth. Now that the economy is humming and consumer confidence is soaring, they’re willing and able to splurge a little.

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That makes BC shares, priced at only 13 times next year’s expected profits, a compelling prospect.

Cheap Consumer Stocks: Apple (AAPL)

That’s not a misprint. Though iPhone-maker Apple (NASDAQ:AAPL) is often thought of a technology stock, it’s much more aligned with (and dependent on) consumers and their moods. Its products are built for all sorts of people, customizable for various preferences, and serve as a delivery vehicle for all sorts of digital entertainment ranging from music to video to games.

It’s a consumer-centric company, whether its future focus is hardware or the digital content that makes its hardware fun and fulfilling to use.

It’s also a relatively cheap company, given its revenue growth rate. Its top line is expected to improve to the tune of 14% this year, versus a trailing P/E of 18.4 and a forward-looking one of only 14.4. That’s cheap, and even more so by technology stock standards.

Cheap Consumer Stocks: Carter’s (CRI)

Yes, this is the same Carter’s (NYSE:CRI) that makes baby clothes — an arena where consumers tend not to skimp.

Like most of the other value-priced names on this list of cheap stocks within the consumer goods sector, Carter’s isn’t growing like gangbusters. Indeed, it’s barely growing at all. This year’s top line is projected to improve by less than 3%, and then ramp up by only 4% next year.

Slow and steady wins the race, particularly when earnings are growing considerably faster than sales are. This year’s expected income of $6.45 per share is a 12% improvement on last year’s $5.76, while next year’s estimate of $7.05 is 9% better than this year’s expected bottom line. And for the record, Carter’s has topped estimates for six straight quarter’s now.

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All of a sudden that relatively low projected P/E of 16.4 looks like even more of a bargain.

Cheap Consumer Stocks: Mohawk Industries (MHK)

Although there’s no denying the home-construction market is better than it was just a few years ago following the post-subprime-meltdown malaise, there’s also no way of denying it may never become the fever-pitched frenzy it was back in 2006.

Instead, people are staying put, choosing to improve the home they live in now rather than buy a new home. Harvard University’s Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) suggests remodeling expenditures will remain above 7% over the remainder of 2018 and into 2019, which is even more growth than we’ve seen in recent years.

It’s a trend that bodes quite well for Mohawk Industries (NYSE:MHK), which is the world’s largest carpet and flooring materials company. It’s also a trend that makes its projected P/E of 13.1 an even juicier bargain.

Cheap Consumer Stocks: Newell Brands (NWL)

If the name Newell Brands (NYSE:NWL) seems familiar but you can’t quite make the connection, add the word ‘Rubbermaid’ to it. Yes, Newell Brands is the parent of Newell Rubbermaid. It also owns brands like Yankee Candle, Graco, Oster, Sharpie and more. It makes a little of everything, and most of its products are goods you don’t give a second thought about.

The past twelve months have been tough ones for shareholders. NWL stock has lost roughly half of its value since July of 2017, with most of the concern centering on a sales slowdown that’s forced the company to take rather drastic action.

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The sellers have arguably overshot though. Newell shares are priced at 6.2 times their trailing income and less than 10 times next year’s expected income at a point in time when consumer spending is strengthening and a legitimate company turnaround is in view.

Cheap Consumer Stocks: Whirlpool (WHR)

There used to be a time when Whirlpool (NYSE:WHR) dominated the home appliance, if only because it was the most assessable name in the business. Those days are gone though, with newcomers entering the washer and dryer market, displacing Whirlpool. The stock, once a stalwart, has been shelved by many investors as a has-been.

Big mistake.

Though Whirlpool still has plenty to figure out about doing business in the modern era, sales are stabilizing, and the bottom line is growing in earnest again. The pros are calling for last year’s per-share profits of $13.74 to swell to $15.63 this year, and reach $17.91 per share next year.

That double-digit earnings growth pace makes the forward-looking P/E of 8.6 a screaming bargain.

Cheap Consumer Stocks: Fortune Brands (FBHS)

Last but not least, put Fortune Brands (NYSE:FBHS) on your watchlist of cheap stocks from the consumer sector to consider.

You’ll likely know it as a cabinetry and fixture, and for good reason — it still makes plenty of both, under the KitchenCraft, Moen and Norcraft brands, just to name a few. The same remodeling spending news that could prove huge for Mohawk is also a wave that Fortune Brands can ride.

That’s not all Fortune Brands has going for it now though. The company has also gotten in on the smart-home craze, leveraging its MasterLock and American Lock brands to enter the digitally-managed lock fray (not that the basic padlock still isn’t an important piece of its business).

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However it makes its money, the projected P/E of 13.6 is a relative bargain given its forward-looking P/E of 13.6.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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