There are many types of investors in America. Whether you are in your twenties or retired, it is important to know what strategy is the best fit for your portfolio. Investing strategies start to change for investors when they get up into their fifties and sixties, as the retirement age starts to become a future reality rather than a distant blur. And after investors reach their formal retirement age and then grow into their seventies, investing strategies should change even more.
Most retirees and people nearing retirement need to focus on income and safety over the next hot growth sector that may be quite risky. Some retirees would even prefer to just sit in bonds and rely on those interest payments to help support their retirement income.
The low interest rate environment of the past decade, even after considering the Federal Reserve’s interest rate hikes of 2017 and 2018, has created a scenario in which retirees living on investment income simply cannot only live off of bonds if they have normal retirement funds. Even in 2019 and even after the Fed’s normalization of interest rates, retirees and those who are nearing retirement simply have no choice but to have at least some investments in stocks.
24/7 Wall St. has reviewed many thematic investing strategies since its inception. That has spanned a bull market that turned into the Great Recession and then turned into the greatest bull market of the modern era. The goal always has been to keep investors and readers informed of proper investments options to help investors avoid losing their shirts when things go wrong. This focus here is what we deem to be the 15 best stocks for older investors as of 2019.
Many stocks are targeted toward mature adults and seniors. Some of these thematic companies offer classical investing themes for those who are retired now or will retire within a decade. Sometimes these companies are quite defensive in nature, but others still have exposure to the ups-and-downs of each business cycle. One thing that these companies all have in common is that their products or services are all well-known to older Americans. Another commonality among many of these companies is that retirees interact with or use them every week.
To supplement retirement income from Social Security and from traditional pension, IRA and 401(k) distributions, the best stocks for retirees have to come with dividends. Those dividends also must be considered stable now, as well as in recent years. And the companies paying those dividends should have defendable moats for their businesses to ensure plenty of earnings coverage to keep those dividends growing in the years ahead, even if the business cycle slows down sooner rather than later.
The list of the best stocks for retirees changes over time, and the current views, as of early 2019, are not necessarily intended to be an immediate portfolio of top stocks for new investors to run out and buy at any price. In fact, some of these stocks will look rather expensive under classic investor screens. The only data being offered around a share price at this time is the dividend yield and market capitalization at the start of February 2019. There also are some alternatives to these companies in some cases that could be considered.
Here is a slate of 15 companies that most retirees likely would want to own in their portfolio now.
American Water Works Co. Inc. (NYSE: AWK) is the absolute leader when it comes to American water utilities. It now serves about 14 million people in 45 states with drinking water, wastewater and water infrastructure. The company dates back to the 1880s and has been a public American company again since 2008, after Europe’s RWE utility giant unloaded it back to the U.S. markets (just in time for the Great Recession). The water giant has committed to keep raising its dividend, and at the start of 2019 it yielded 1.9% with a $17 billion market value. This is a classic defensive stock, but it has risen handily with the markets and now screens as among the most expensive large-cap utility stocks in the S&P 500 because investors are willing to pay such a premium for its business model. Its shares have risen handily over time, and very rarely has it offered investors times where it is down more 10% from its 52-week and all-time highs.
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