We recently published the Best Retirement Portfolio for a 65-Year-Old. In this article, we are going to take a look at where Cardinal Health, Inc. (NYSE:CAH) stands against other stocks in the best retirement portfolio.

The American retirement system is feeling the strain, with challenges like shrinking fees, underfunded plans, and an aging population slowing down industry growth. Over the last decade, 401(k) expense ratios have declined by a third, according to a PwC report, and recordkeeping fees dropped 8% between 2015 and 2019, making it harder for retirement firms to stay profitable. Some companies have had to merge or shut down, but there is still a big opportunity. Businesses that offer better retirement benefits, financial advice, and affordable plans for small companies could attract more people and unlock an extra $5 trillion in retirement savings.

The urgency is real. A quarter of US adults have no retirement savings at all, and only 36% feel on track. Even those who are saving may not have enough. For people nearing retirement, between the ages of 55 to 64, the median savings of $120,000 might provide less than $1,000 a month for 15 years. This is hardly enough, especially with longer life expectancies and rising healthcare costs.

For most Americans, retirement means either living off of savings or finding ways to generate passive income. While some can count on Social Security or a pension, many have to plan their own financial future. Savings usually involve withdrawing money over time, while passive income could mean anything from rental properties to online businesses. Brian Bollinger, founder of Simply Safe Dividends, believes dividend-paying stocks can be a game-changer. Instead of selling stocks to make money, retirees can rely on regular dividend payments, helping stretch their savings.

Dividends have been a huge part of stock market returns, making up about 45% of the broader market’s total gains since 1900. But despite their importance, they are often overlooked when planning for retirement, especially as baby boomers look for reliable income sources. According to Thornburg Investment Management, retirees typically fund expenses through either a total return approach, investing for growth and selling assets as needed, or a high-income approach, relying on high-yield investments for steady income. The first risks selling in down markets, while the second limits portfolio growth. A better strategy combines both; investing in stocks that not only pay dividends but also increase them over time can provide a steady income while allowing retirees to grow their wealth. Unlike bonds with fixed returns, dividend stocks can grow income, offering both stability and long-term financial growth. Over 30 years, dividend income has outpaced bond payouts, making it a strong option for retirees.

Our Methodology 

For this article, we searched the internet for widely recommended retirement stocks and selected those with at least a decade of consistent dividend growth and an average 5-year return of 50% or more as of March 24. We also selected stocks from different industries to make a well-rounded portfolio. Additionally, we have mentioned the hedge fund sentiment for each stock, as per Insider Monkey’s database of Q4 2024, and ranked the list based on that data.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Cardinal Health, Inc. (NYSE:CAH)

Number of Hedge Fund Holders: 63

Number of Consecutive Years of Dividend Growth: 29

Average 5-Year Share Price Returns: 197.18%

Cardinal Health, Inc. (NYSE:CAH) provides healthcare solutions worldwide, distributing pharmaceuticals, medical supplies, and over-the-counter products. The company manufactures surgical and laboratory items, manages hospital pharmacies, and delivers radiopharmaceuticals. With a strong industry presence since 1979, its stability and dividend growth make it a solid contender for the best retirement portfolio.

On January 14, Cardinal Health, Inc. (NYSE:CAH) announced that it is building a new distribution center in Fort Worth, Texas, to support its at-Home Solutions business, which delivers medical supplies to over 5 million patients each year. The 340,000 square-foot facility will replace two existing warehouses, adding more inventory space while keeping its current workforce. Once up and running, it will ship around 10,000 packages daily. The center is expected to be fully operational by summer 2025.

Cardinal Health, Inc. (NYSE:CAH) reported $55.3 billion in Q2 FY25 revenue, down 4% from last year but up 16% when excluding the impact of a major expired contract. GAAP operating earnings rose 9% to $549 million, while non-GAAP earnings grew to $635 million, driven by strong performance in the Pharmaceutical and Specialty Solutions segment. CEO Jason Hollar highlighted the company’s recent acquisitions, including a majority stake in GI Alliance and the full acquisition of Integrated Oncology Network, reinforcing its focus on specialty growth. As a result, the company raised its FY25 non-GAAP EPS forecast to $7.85-$8.

On February 3, Cardinal Health, Inc. (NYSE:CAH) approved a quarterly dividend of $0.5056 per share. The dividend will be paid on April 15, 2025, to shareholders recorded as of April 1. The company has a 29-year streak of consistent dividend increases.

Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Cardinal Health, Inc. (NYSE:CAH) at the end of Q4 2024, up from 40 funds in the prior quarter. Israel Englander’s Millennium Management was the largest stakeholder of the company, with nearly 3.4 million shares worth $401.6 million.

Overall, CAH ranks 8th on our list of the best retirement portfolio for a 65-year old. While we acknowledge the potential of CAH to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CAH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.