In this article, we will take a look at the 10 consumer stocks to buy for a retirement stock portfolio.
Today’s retirees face growing uncertainty about the future of Social Security. While many financial advisors and economists specializing in Social Security recommend delaying retirement benefits until age 70 to maximize monthly payouts, only 10% of pre-retirees intend to wait until that age, according to the Schroders 2024 U.S. Retirement Survey. A large majority plan to claim benefits earlier, often before reaching their full retirement age of 67 (for those born in 1960 or later). Specifically, 43% of non-retirees plan to file before 67, with 23% intending to claim at 65 and 12% planning to claim as early as 62. This trend is further influenced by financial insecurity. According to the Transamerica Institute, only 1 in 5 middle-class individuals feel confident in their ability to retire comfortably or maintain their lifestyle during retirement.
According to the Bureau of Labor Statistics, the consumer price index (CPI), which tracks the average change in prices for consumer goods and services, rose 2.6% year-over-year in October. This marks an increase from the 2.4% annual growth rate recorded in September. Month-over-month, prices grew by 0.2%, matching consensus expectations and maintaining the same pace observed over the past three months. However, President-elect Donald Trump’s proposed policies, including increased tariffs and expanded government spending, could stimulate economic growth while also exacerbating inflationary pressures. Despite inflation easing from its peak in mid-2022, it continues to weigh heavily on U.S. households.
Job creation in October slowed to its weakest pace since late 2020, reflecting the impact of storms in the Southeast and a major labor strike. Nonfarm payrolls rose by just 12,000, a sharp decline from September and far below the Dow Jones estimate of 100,000. October’s report marked the smallest monthly gain since December 2020. Despite the weak job growth, the unemployment rate held steady at 4.1%, meeting expectations. A broader measure of unemployment, which accounts for discouraged workers and those in part-time roles for economic reasons, also remained unchanged at 7.7%. The Bureau of Labor Statistics noted that the Boeing strike likely accounted for a loss of 44,000 jobs in the manufacturing sector, which saw an overall reduction of 46,000 positions. Federal Reserve Chair Jerome Powell, speaking on the labor market early in November, expressed concerns regarding the labor market:
“The labor market has cooled a great deal from its overheated state of two years ago and is now essentially in balance. It is continuing to cool, albeit at a modest rate, and we don’t need further cooling.”
These developments have raised concerns at the Federal Reserve, as cracks in the labor market emerge even as year-over-year inflation moderates. Elevated interest rates, implemented to combat inflation, could pose risks to the labor market and broader economic growth. In response to these challenges, the Fed took the unusual step in September of lowering its benchmark short-term interest rate by half a percentage point—twice the typical quarter-point adjustments policymakers prefer—despite the economy still expanding.
See also: Retirement Stock Portfolio: 12 Safe Tech Stocks To Consider.
Although workers’ and retirees’ confidence in achieving a financially secure retirement hasn’t fully recovered from the sharp decline in 2023, there are encouraging signs of recovery, according to the Employee Benefits Research Institute (EBRI). The EBRI’s 2024 Retirement Confidence Survey revealed that 68% of workers and 74% of retirees feel confident about having sufficient funds to live comfortably throughout retirement. These figures show modest improvement from 2023, when 64% of workers and 73% of retirees expressed similar confidence. However, inflation remains a significant concern, with 31% of workers and 40% of retirees citing it as a key reason for their lack of confidence. On a positive note, about 80% of workers see the SECURE 2.0 Act of 2022’s provision for employer-sponsored emergency savings accounts as a valuable benefit. Recent guidance from the Department of Labor and IRS has also provided clarity on how plan sponsors can integrate these emergency savings accounts into their offerings.
During economic turbulence, investors often turn to low-risk stocks that offer stable returns in the face of heightened uncertainty. In that regard, consumer staples stocks typically emerge as a favored option during such periods, given their ability to weather macroeconomic challenges. The demand for essential goods remains steady regardless of economic conditions, as consumers maintain consistent purchasing habits in both good times and bad.
Our Methodology
To compile our list of the 10 best consumer stocks for a retirement portfolio, we focused on companies within the Consumer Staples Select Sector SPDR Fund. These companies were chosen for their historical resilience during economic downturns and well-established operations. Additionally, we prioritized consumer stocks that offer stable dividend yields, supported by sustainable payout ratios (less than 70%) and a proven history of dividend payments. The selected stocks were ranked based on their hedge fund sentiment, as of Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. General Mills, Inc. (NYSE:GIS)
Dividend Yield: 3.76%
Number of Hedge Fund Holders: 30
General Mills, Inc. (NYSE:GIS) is a prominent American multinational corporation specializing in the production and distribution of branded processed consumer foods through retail channels. Established near Saint Anthony Falls in Minneapolis along the Mississippi River, the company initially gained fame as a major flour milling operation.
The consumer goods company is set to strengthen its position in the lucrative pet food market with the acquisition of Whitebridge Pet Brands’ North American operations. The $1.45 billion deal includes premium pet food and treat brands such as Tiki Pets and Cloud Star. This acquisition marks the latest in a series of strategic moves by General Mills, Inc. (NYSE:GIS) to expand its footprint in the pet food sector, a market valued at $52 billion in U.S. retail sales.
On September 19, Stifel analysts raised their price target for General Mills, Inc. (NYSE:GIS) shares from $70 to $82 while maintaining a Buy rating. The revision followed the company’s fiscal Q1 2025 earnings report, where earnings per share met market expectations. That said, the company’s organic sales dipped by 1%, impacted by stable volumes and a 1% decline from pricing and product mix due to a negative mix effect. Despite the flat performance, General Mills, Inc. (NYSE:GIS) reaffirmed its fiscal year 2025 financial outlook, expecting organic sales to remain steady or increase by up to 1%, with EPS projected to range between a 1% decline and a 1% rise on a constant currency basis.
9. Bunge Global SA (NYSE:BG)
Dividend Yield: 3.09%
Number of Hedge Fund Holders: 33
Bunge Limited SA (NYSE:BG) is a prominent American food company, recognized as the world’s largest oilseed processor. The company boasts a diversified business model that spans across the commodity, food oil, bakery, and other industries.
At the end of October, BMO Capital Markets adjusted its outlook on BG, lowering its price target to $110 from $120 while maintaining an Outperform rating. This revision followed the company’s third-quarter earnings report, where Bunge posted earnings per share of $2.29, exceeding both BMO’s estimate of $2.16 and the consensus estimate of $2.14. The stronger-than-expected results were driven by increased profits in the Merchandising and Refined sectors, along with reduced corporate expenses.
Although there was some underperformance in the Milling and Sugar segments, Bunge Limited SA (NYSE:BG) raised its 2024 EPS guidance to $9.25 and above, despite the anticipated $0.35 impact from the sale of its sugar business. BMO also adjusted its 2024 EPS estimates to reflect this sale, while leaving its 2025 projections unchanged.
Looking ahead, if commodity prices remain low, this could stimulate demand in emerging economies, where much of the global population resides. Bunge’s extensive global network positions it well to optimize operations and maintain healthy margins. Additionally, the company has announced the acquisition of Viterra, a global player in connecting agricultural producers and consumers. With EU approval already secured, the merger is poised to further strengthen Bunge’s role in the global food supply chain.
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