In this article, we discuss 10 best Roth IRA stocks to buy and hold for long term.
Over the years, a growing number of people have converted their traditional accounts into Roth IRAs. According to a report published by Wall Street Journal, taxpayers reported Roth conversions amounting to nearly $17 billion in 2019, up from $8 billion worth of conversions reported in 2014.
In 2022, investment trends are shifting from tech players like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), to income-generating stocks due to soaring inflation and rising interest rates. According to analysts, stocks with strong business fundamentals and dividend history offer the best Roth IRA investments as they generate stable income for investors, especially during these times. This uncertain market situation has resulted in the growth of Roth IRA accounts, which are up 18% in the first quarter of 2022, compared with the same period last year. Similarly, millennial Roth IRA accounts increased by 11.3% in Q1, from a prior-year period, according to recent data by Fidelity Investments. In addition to this, online trading platforms like Robinhood Markets also announced the launch of retirement accounts to facilitate its customers. In light of this, we will explore some of the best Roth IRA stocks to buy and hold.
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Our Methodology:
Stocks offering strong dividend history with low risks are the best Roth IRA accounts. In addition to this, companies with impressive balance sheets and growth potential are also considered important for retirement-related investments. In this list, we added companies with strong financials and stable dividend history. We also considered analysts’ ratings and hedge fund sentiment around each stock, according to Insider Monkey’s Q1 2022 database.
Best Roth IRA Stocks to Buy and Hold for Long Term
10. National Retail Properties, Inc. (NYSE:NNN)
Number of Hedge Fund Holders: 18
National Retail Properties, Inc. (NYSE:NNN) is a Florida-based real estate investment trust that invests in single-tenant stores. At the end of June, the company has properties across 48 states.
In June, Credit Suisse appreciated the relationship-driven acquisition strategy of National Retail Properties, Inc. (NYSE:NNN) which helps the company to expand its footprint in the country. The firm initiated its coverage on the stock with an Outperform rating and a $46 price target. Like NNN, analysts are also hopeful about Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) for long term, despite their underperformance in 2022.
At the end of Q1 2022, National Retail Properties, Inc. (NYSE:NNN) had over $53.7 million available in cash and generated $190.2 million in revenues, up from $180 million during the same period last year. On July 15, the company declared a quarterly dividend of $0.55 per share, up 3.8% from the previous dividend. National Retail Properties, Inc. (NYSE:NNN) has been raising its dividend consecutively for the past 32 years, which is the third-longest dividend growth streak of all public REITs. As of July 15, the stock’s dividend yield came in at 4.68%.
As per Insider Monkey’s Q1 2022 database, 18 hedge funds owned stakes in National Retail Properties, Inc. (NYSE:NNN), up from 16 in the previous quarter. The collective value of these stakes is over $92.5 million. Millennium Management was the company’s largest stakeholder in Q1, with stakes worth over $19.4 million.
9. Flowers Foods, Inc. (NYSE:FLO)
Number of Hedge Fund Holders: 25
Flowers Foods, Inc. (NYSE:FLO) is a producer and marketer of packed bakery goods, which has been operating for over 100 years. The company’s products are baked and shipped daily from 46 bakeries.
At the end of Q1 2022, Flowers Foods, Inc. (NYSE:FLO)’s cash flow from operating activities grew to $124.2 million, from $98 million in the same period last year. The company ended the quarter with over $205 million in cash and cash equivalents. Moreover, in Q1 2022, the company paid $46.7 million in dividends, up from $42.5 million paid during the prior-year quarter. On May 26, Flowers Foods, Inc. (NYSE:FLO) hiked its quarterly dividend by 4.8% to $0.22 per share. The company has been raising its dividends consecutively for the past 20 years. As of July 15, the stock’s dividend yield was recorded at 3.23%.
At the end of Q1 2022, 25 hedge funds in Insider Monkey’s database held investments in Flowers Foods, Inc. (NYSE:FLO), up from 20 a quarter earlier. The combined value of these investments stood at nearly $318 million.
8. Consolidated Edison, Inc. (NYSE:ED)
Number of Hedge Fund Holders: 26
Consolidated Edison, Inc. (NYSE:ED) is a New York-based energy company that operates one of the world’s largest energy delivery systems and serves over 10 million customers.
Consolidated Edison, Inc. (NYSE:ED) currently offers a quarterly dividend of $0.79 per share. The company has been paying dividends for the past 48 years and managed to raise its payouts each year. The payout ratio of 72% is considered safe in the utility sector. Moreover, Consolidated Edison, Inc. (NYSE:ED) had over $64 billion in assets available at the end of Q1. The stock’s dividend yield came in at 3.39%, as of July 15.
Appreciating the company’s clean energy business, Mizuho set a $99 price target on Consolidated Edison, Inc. (NYSE:ED) in June, with a Buy rating on the shares.
As of the quarter ended March 2022, 26 hedge funds owned stakes in Consolidated Edison, Inc. (NYSE:ED), up from 22 in the previous quarter, according to Insider Monkey’s data. The combined value of these stakes is $485.7 million. AQR Capital Management was the company’s leading shareholder in Q1.
7. Old Republic International Corporation (NYSE:ORI)
Number of Hedge Fund Holders: 28
Old Republic International Corporation (NYSE:ORI) is an American property insurance company that provides services in mortgage guarantee, title, and life and health insurance fields.
Old Republic International Corporation (NYSE:ORI) has been making dividend payments consecutively for the past 81 years while maintaining a 41-year streak of dividend growth. Moreover, in the last five years, the company also offered generous special dividends to shareholders. Old Republic International Corporation (NYSE:ORI)’s dividends are well covered, with a payout ratio of 30%, which shows its financial strength. As of July 15, the stock’s dividend yield was recorded at 4.31%.
The number of hedge funds tracked by Insider Monkey owning stakes in Old Republic International Corporation (NYSE:ORI) stood at 28 in Q1 2022, compared with 27 a quarter earlier. The collective value of these stakes is over $314.7 million.
6. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 32
Duke Energy Corporation (NYSE:DUK) is a North Carolina-based electric power and natural gas holding company. In June, Wells Fargo added the company to its list of recession-proof stocks. The firm raised its price target on the stock to $120, with an Overweight rating.
At the end of Q1, Duke Energy Corporation (NYSE:DUK) reported $853 million available in cash and cash equivalents, up from $343 million in the previous quarter. On July 13, the company announced a 2% increase in its quarterly dividend to $1.005 per share. This was its 16th consecutive year of dividend growth. Duke Energy Corporation (NYSE:DUK) has raised its dividend at a CAGR of 3.1% since 2015. Though the dividend growth is slow, the company has paid uninterrupted dividends to shareholders for the past 95 years. The stock’s dividend yield was recorded at 3.74% on July 15.
Jim Simons’ Renaissance Technologies was the largest stakeholder of Duke Energy Corporation (NYSE:DUK) in Q1, owning over 1.6 million shares. Overall, 32 hedge funds in Insider Monkey’s database held stakes in the company in Q1, valued at over $1 billion.
In addition to famous blue-chip stocks like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Duke Energy Corporation (NYSE:DUK) is also gaining ground among investors.
5. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 33
American Electric Power Company, Inc. (NASDAQ:AEP) is an Ohio-based electric utility company that serves customers in 11 states.
American Electric Power Company, Inc. (NASDAQ:AEP) currently pays a quarterly dividend of $0.78 per share, raising it by 5% in October 2021. The company has been raising its dividends for the past 12 years and has been making dividend payments every quarter since 1910. Its operating EPS payout ratio stands at 63.3% and is expected to reach 63.8% in FY22. As of July 15, the stock’s dividend yield came in at 3.28%.
In May, Credit Suisse initiated its coverage of American Electric Power Company, Inc. (NASDAQ:AEP) with an Outperform rating and a $113 price target, appreciating the company’s operating portfolio and its growing assets.
At the end of March 2022, 33 hedge funds in Insider Monkey’s database owned stakes in American Electric Power Company, Inc. (NASDAQ:AEP), down from 34 a quarter earlier. The collective value of these stakes is nearly $430 million. Cliff Asness, Israel Englander, and Jim Simons were some of the company’s major stakeholders in Q1.
ClearBridge Investments mentioned American Electric Power Company, Inc. (NASDAQ:AEP) in its Q1 2022 investor letter. Here is what the firm has to say:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
4. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 56
Lockheed Martin Corporation (NYSE:LMT) is an American aerospace company that specializes in defense and information security. In July, the US Air Force successfully tested the company’s hypersonic missile off the California coast, which shows progress in the country’s hypersonic weapons development.
In Q1 2022, Lockheed Martin Corporation (NYSE:LMT) reported $1.4 billion in cash from operations and $1.1 billion in free cash flow. The company paid $767 million in dividends in Q1, which shows that its payments are well-covered by its assets. Lockheed Martin Corporation (NYSE:LMT) currently offers a quarterly payout of $2.80 per share, with a yield of 2.79%, as of July 15. The company has a solid dividend history, paying consistent dividends to shareholders since 1996. It maintains a 19-year track record of consecutive dividend growth.
In May, Argus lifted its price target on Lockheed Martin Corporation (NYSE:LMT) to $500 with a Buy rating on the shares. The firm appreciated the company’s consistent results over the years.
Insider Monkey’s Q1 2022 database shows that Lockheed Martin Corporation (NYSE:LMT) was popular among elite funds, as the company was a part of 56 hedge fund portfolios, up from 42 in the previous quarter. These hedge funds hold collective stakes in the company worth over $2.4 billion.
Ariel Investments mentioned Lockheed Martin Corporation (NYSE:LMT) in its Q3 2021 investor letter. Here is what the firm has to say:
“Conversely, leading global defense contractor Lockheed Martin Corporation (LMT) was the greatest detractor over the trailing one-year period due to pared back F-35 delivery plans and weaker than expected 2022 sales guidance. Nonetheless, we remain confident in LMT’s positioning as they continue to secure a steady stream of lucrative contracts and benefit from a sizeable backlog. Looking ahead, management is focused on driving innovation, underscored by the pending acquisition of Aerojet Rocketdyne enabling vertical integration in propulsion systems for space and missile defense. At today’s valuation, LMT is currently trading at a 32% discount to our estimate of private market value.”
3. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 69
An American multinational tech company, Verizon Communications Inc. (NYSE:VZ) was appreciated by Street analysts as it reported strong growth on various accounts in Q1. In June, Scotiabank assumed its coverage on the stock with an Outperform rating and a $59 price target, calling it defensive stock to buy during a recession.
Verizon Communications Inc. (NYSE:VZ) has not trimmed its dividend since 1985 and maintains a 15-year streak of dividend growth. The company currently pays a quarterly dividend of $0.64 per share, with a yield of 5.02%, as of July 15. In Q1 2022, the company’s cash from operating activities came in at $6.8 billion and its free cash flow amounted to $1 billion.
As per Insider Monkey’s data, 69 hedge funds held positions in Verizon Communications Inc. (NYSE:VZ) in Q1, with stakes valued at over $4 billion. In comparison, 63 hedge funds owned stakes in the New York-based company in the previous quarter, valued at over $10.8 billion. Fisher Asset Management was the company’s leading shareholder in Q1.
Weitz Investment Management mentioned Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter. Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 76
AbbVie Inc. (NYSE:ABBV) is a strong dividend player, raising its dividend consecutively for the past 50 years, including its years as Abbott’s subsidiary before 2013. The biopharmaceutical company’s current quarterly dividend stands at $1.41 per share. In the past five years, the company raised its dividend at a CAGR of 17.5%. Moreover, AbbVie Inc. (NYSE:ABBV) expects to exceed $13 billion in free cash flow in FY22.
In July, Morgan Stanley raised its price target on AbbVie Inc. (NYSE:ABBV) to $191 with an Overweight rating on the shares, ahead of the company’s Q2 results. The firm further expects the company’s revenues to remain resilient if the economy slows down in the last six months of the year.
As per Insider Monkey’s database, 76 hedge funds owned stakes in AbbVie Inc. (NYSE:ABBV), down from 82 in the previous quarter. The collective value of these stakes is over $3.6 billion.
Carillon Tower Advisers mentioned AbbVie Inc. (NYSE:ABBV) in its Q1 2022 investor letter. Here is what the firm has to say:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. AbbVie (NYSE:ABBV) is a research-based biopharmaceutical company. Shares gained after the company reported earnings that missed revenue but beat earnings-per-share estimates. Discussion around the report was mixed but skewed positive.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) is a California-based multinational technology company that specializes in artificial intelligence hardware and software.
NVIDIA Corporation (NASDAQ:NVDA) ended Q1 2022 with $20.3 billion available in cash and cash equivalents and $1.34 billion in free cash flow. The company paid $2.10 billion to shareholders in share repurchases and cash dividends during the quarter. NVIDIA Corporation (NASDAQ:NVDA) currently offers a quarterly dividend of $0.04 per share, with a yield of 0.10%, as of July 15.
Of the 900+ elite funds tracked by Insider Monkey, 102 hedge funds owned stakes in NVIDIA Corporation (NASDAQ:NVDA) in Q1, down from 110 in the previous quarter. The total value of these stakes is over $6.3 billion.
RiverPark Funds mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2022 investor letter. Here is what the firm has to say:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
You can also take a look at 12 Best Bear Market Stocks to Buy Now and Top Stock Picks of Michael Burry.
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Disclosure. None. 10 Best Roth IRA Stocks to Buy and Hold for Long Term is originally published on Insider Monkey.
