In this article, we discuss the 10 best stocks for retirement.
Chalking out a financially secure retirement plan can be difficult, especially in times of financial volatility. According to a report published by Natixis Investment Managers, over 40% of the investors believe that retiring securely will be difficult, while 42% don’t take retirement as an option, considering their current financial situation.
Safe dividend stocks with a strong history remain one of the best investment options for retirement even during volatile times. For example, shares of Johnson & Johnson fell by 40% during the financial crisis of 2008, but the company paid regular dividends to shareholders during that time.
Another option to save enough money for retirement is to invest in growth stocks with strong upside potential.
Moreover, businesses in nearly every sector deploy the recent technological advances, making way for tech stocks to rise. As reported by Deloitte, the tech industry is well-positioned to grow in 2021, given the current market situation. According to analysts, the EPS of tech stocks is expected to grow by 20% to 40% by 2025. Even during the global market meltdown in 2020 due to the Covid-19, the S&P 500’s technology index gained 43.89%, compared with other sectors such as financials and real estate which dipped 1.7% and 2.2%, respectively, as reported by S&P Global. Some of the notable and famous stocks for retirement include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), QUALCOMM Incorporated (NASDAQ:QCOM), and Cisco Systems, Inc. (NASDAQ:CSCO).
Our Methodology:
Let’s analyze our list of the best retirement stocks. The companies mentioned below are the tech stocks selected on the basis of their dividend policy, future growth potential, and overall performance. In addition to this, we took into account hedge fund sentiment, analysts’ ratings, and fundamentals while choosing these stocks.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Retirement Stock Portfolio: 10 Safe Tech Stocks To Consider
10. Comtech Telecommunications Corp. (NASDAQ:CMTL)
Number of Hedge Fund Holders: 13
Comtech Telecommunications Corp. (NASDAQ:CMTL), an American tech company, recently received $4.6 million in funding from the U.S. Army to refurbish the ongoing system and services. The company stands tenth on our list of the best stocks for retirement.
In October, Citigroup lifted its price target on Comtech Telecommunications Corp., with a Neutral rating on the shares. The firm expects significant growth in company’s revenue in the second half of 2021. Comtech Telecommunications Corp. pays an annual dividend of $0.40 per share, yielding 1.70%. Its dividend payout ratio stands at 51.9%.
Royce & Associates is the company’s largest shareholder, with shares worth roughly $24 million. Overall, 13 hedge funds tracked by Insider Monkey reported having positions in Comtech Telecommunications Corp. in Q2, up from 10 in the previous quarter. The total value of these stakes is over $5.1 million. Comtech Telecommunications Corp. delivered a 118.2% return in the past 5 years, while its 12-month returns stood at 43.66%.
9. ADTRAN, Inc. (NASDAQ:ADTN)
Number of Hedge Fund Holders: 15
ADTRAN, Inc. (NASDAQ:ADTN), an American technology company, has recently entered into a strategic partnership with Germany-based telecommunications company, ADVA, in a deal worth €759 million. This collaboration is aimed to develop and deliver leading global fiber networking solutions. The company ranks ninth on our list of the best stocks for retirement.
In Q2 2021, ADTRAN, Inc. posted an EPS of $0.16, beating the estimates by $0.04. The company’s revenue for the quarter stood at $143.2 million, up 11.3% from the prior-year quarter. ADTRAN, Inc. pays an annual yield of $0.36 per share, yielding 1.89%. The stock gained 75.9% in the past year.
This August, Northland lifted its price target on ADTRAN, Inc. to $27.50, while keeping an Outperform rating on the shares. In Q2 2021, 15 hedge funds tracked by Insider Monkey were bullish on the company, up from 10 in the previous quarter. These stakes are valued at $91.4 million.
Bernzott Capital Advisors mentioned ADTRAN, Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“Adtran (ADTN): A leading provider of broadband equipment solutions for high-speed digital communications. The company should benefit from the increasing global demand for broadband connectivity, which has accelerated as a result of the pandemic. There are significant amounts of funding both domestic and abroad supporting a multi-year roll-out of broadband infrastructure which should benefit ADTN in the coming years. Additionally, the potential for a US infrastructure bill passing could be additive to an already robust spending backdrop. Gross margins should benefit as revenue mix improves as a result of their increasing exposure to higher margin software sales. ADTN also has significant operating leverage to an improving environment based on the fixed cost nature of their expenses, which should translate into accelerating earnings growth and robust free cash flow generation.”
8. Corning Incorporated (NYSE:GLW)
Number of Hedge Fund Holders: 42
In October, Matthew Niknam of Deutsche Bank appreciated the high-quality products of Corning Incorporated (NYSE:GLW), an American multinational telecommunications company, and their importance in the growing tech market. The firm initiated its coverage on the stock with a Buy rating and a $45 price target, which implies a 25% upside. Corning Incorporated ranks eighth on our list of the best stocks for retirement.
Corning Incorporated has a track record of 7 years of consistent dividend growth and currently pays an annual dividend of $0.96 per share, yielding 2.55%. In Q2 2021, the company’s EPS of $0.53 beat the market consensus by $0.02. Corning Incorporated generated stable returns for shareholders over the years, gaining 61.2% in the past 5 years.
In Q2, Arrowstreet Capital is the largest shareholder of Corning Incorporated, holding over 5 million shares, worth $209 million. In addition to this, 42 hedge funds tracked by Insider Monkey reported having positions in Corning Incorporated, valued at $521.7 million. This shows that hedge fund sentiment is positive for the company as the number of hedge funds having stakes in Corning Incorporated was 32 in the previous quarter.
In addition to Microsoft Corporation, Apple Inc., Intel Corporation, QUALCOMM Incorporated, Johnson & Johnson, and Cisco Systems, Inc., analysts and investors are also paying attention to Corning Incorporated in 2021.
7. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 47
Broadcom Inc. (NASDAQ:AVGO) ranks seventh on our list of the best stocks for retirement. A California-based semiconductor company pays an annual dividend of $14.40 per share, yielding 2.90%. The company has increased its dividend by 177.5% in the past three years.
Cantillon Capital Management is the leading shareholder of Broadcom Inc., with roughly 1.1 million shares. Overall, 47 hedge funds tracked by Insider Monkey have positions in the company in Q2, compared with 53 in the previous quarter. The total value of these stakes is over $3.03 billion.
This September, Craig Hattenbach of Morgan Stanley lifted the firm’s price target on Broadcom Inc. to $572, with an Overweight rating on the shares, highlighting the company’s significant EPS growth. In fiscal Q3 2021, Broadcom Inc. posted an EPS of $6.96, beating the consensus by $0.05. The stock gained 192.3% in the past 5 years.
ClearBridge Investments mentioned Broadcom Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience and consistency for the Strategy. We think these companies should comprise just under half of portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.
Broadcom has delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”
6. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 52
Accenture plc (NYSE:ACN) recently caught the attention of investors after it announced the acquisition of Argentinian e-commerce company, Glamit, to enhance the digital commerce transformation in Argentina. Accenture plc (NYSE:ACN) stands sixth on our list of the best stocks for retirement.
Accenture plc (NYSE:ACN) is a professional IT services company, based in Ireland. On September 23, Accenture plc (NYSE:ACN) announced to increase its quarterly dividend by 10% to $0.97 per share, yielding 1.04%. The company’s dividend payout ratio stands at 47.18%. In fiscal Q4 2021, Accenture plc (NYSE:ACN) posted a GAAP EPS of $2.20, beating the estimates by $0.01. The company reported quarterly revenue of $13.4 billion, up 23.8% from the same period last year.
This September, Barclays lifted its price target on Accenture plc (NYSE:ACN) to $384, while keeping an Overweight rating on the shares. The stock gained 47.7% in the past year. The number of hedge funds tracked by Insider Monkey bullish on Dublin-based Accenture plc (NYSE:ACN) grew to 52 in Q2, compared with 48 in the previous quarter. These stakes are valued at over $3.1 billion.
Fiduciary Management Inc. mentioned Accenture plc (NYSE:ACN) in its Q1 2021 investor letter. Here is what the firm has to say:
“Even great companies can get too expensive. In early January, we sold our long-standing position in Accenture PLC after the company’s valuation exceeded 30 times next 12 months (NTM) earnings per share (EPS). We originally invested in Accenture at the launch of the FMI International strategy at a valuation below 15 times NTM EPS and held the stock for over ten years. We added to the holding numerous times in the early years, growing the position size to as high as 5.5% in late 2014, before dialing it back in recent years as the valuation became less compelling. It is one of the world’s largest information technology services firms, specializing in helping complex, global businesses navigate disruption, and focusing on next-generation services like digital, cloud, and security. For years, the investment allowed FMI to capture the inherently higher growth of technology-related industries (GDP+) without investing directly in pure “invention-oriented” technology companies. Through Accenture we were able to avoid some of the shortfalls of tech investing: technology obsolescence, short product cycles, and subpar return on invested capital (ROIC). It grew steadily, was solidly profitable, capital-light, and generated high returns, all while maintaining a rock-solid balance sheet. It compounded its business value for many years, outperforming the MSCI EAFE indices by over 450% during our holding period. Unfortunately, the market increasingly recognized the company’s positive attributes, and the stock’s discount to intrinsic value slowly evaporated. Despite our admiration for the business, it exceeded our valuation threshold. We will continue to follow the company closely for future opportunities.”
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Cisco Systems, Inc. ranks fifth on our list of the best stocks for retirement. An American multinational technology company reported solid fiscal Q4 results, with EPS beating the market estimates by $0.01 at $0.84. Cisco Systems, Inc. reported revenue of $13.13 billion, showcasing an 8.1% year-over-year growth.
Since the beginning of the year, Cisco Systems, Inc. delivered a 26.9% return to shareholders, while the stock gained 39.9% in the past year. Over the years, the stock has generated profitable results, soaring by 84.9% in the past five years. Cisco Systems, Inc. pays an annual dividend of $1.48 per share, yielding 2.65%. The company has increased its dividend by 26.55% in the past three years, with its dividend payout ratio of 51.2%.
In September, Fahad Najam of MKM Partners raised the firm’s price target on Cisco Systems, Inc. to $69, while keeping a Buy rating on the shares. As of Q2, 60 hedge funds are reported having stakes in the company, up from 59 in the previous quarter. The total value of these stakes is over $4.2 billion.
ClearBridge Investments mentioned Cisco Systems, Inc. in its Q1 2021 investor letter. Here is what the firm has to say:
“Also in IT, we added Cisco Systems, which provides IT and networking services in the form of network security, software development and cloud computing. Cisco continues to derive over 50% of its sales from on-premise deployments of its products of enterprise and small and midsize customers, while recurring revenues from software are becoming a larger part of the mix. Return-to-office enterprise spending should offer upside to its core campus business. Cisco was an early technology leader in sustainability over two decades ago, through its Internet-connecting capabilities which supported live concerts in partnership with the United Nations Development Program to raise awareness and funds to fight poverty. Cisco has very strong environmental standards (including driving lower energy consumption in IT departments through new product innovations and a longstanding goal to reduce emissions and reliance on non-renewable energy sources). Its data privacy and supply chain management policies are best in class.”
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 72
On October 13, QUALCOMM Incorporated, an American multinational company announced a quarterly dividend of $0.68 per share, yielding 2.21%. The company has grown its dividend by 14.7% in the past 3 years. QUALCOMM Incorporated ranks fourth on our list of the best stocks for retirement.
This September, Tigress Financial lifted its price target on QUALCOMM Incorporated to $195, with a Buy rating on the shares. The firm’s analyst noted that the company will benefit from the raised smartphone demand in the coming quarters. QUALCOMM Incorporated gained 95.7% in the past five years.
In fiscal Q3 2021, QUALCOMM Incorporated posted an EPS of $1.92, beating the estimates by $0.24. The company’s revenue stood at $8.06 billion, up 64.5% from the prior-year quarter. As of Q2 2021, 72 hedge funds were bullish on QUALCOMM Incorporated, compared with 73 in the previous quarter. The total value of these stakes is over $4.04 billion.
ClearBridge Investments mentioned QUALCOMM Incorporated in its Q1 2021 investor letter. Here is what the firm has to say:
“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns and one-off production delays as well as demand resilience in areas like autos and smartphones. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 78
Though Intel Corporation is considered as one of the pioneer semiconductor companies, its reputation has been targeted recently due to the global chip shortage. To overcome the loss, the company has decided to cut the prices of its GPUs to drive more customers. However, the quarterly earnings of Intel Corporation remained intact as the company posted an EPS of $1.28 in Q2, beating the market consensus by $0.19.
Intel Corporation pays an annual dividend of $1.39 per share, yielding 2.58%. The company has a track record of four years of consistent dividend growth, with a dividend payout ratio of 26.2%. Ken Fisher’s Fisher Asset Management is the company’s leading shareholder, with shares worth $1.7 billion. In addition to this, 78 hedge funds tracked by Insider Money reported having stakes in Intel Corporation in Q2 2021, compared with 83 in the previous quarter. The value of these stakes is $6.76 billion.
Alger, an investment management firm, mentioned Intel Corporation in its Q1 2021 investor letter. Here is what the firm has to say:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Apple Inc., a multinational technology company, recently came under hot water as it announced to cut its production targets for its most anticipated iPhone 13, due to the global chip shortage. However, Wall Street presented a positive outlook for the company. Recently, Citigroup lifted its price target on Apple Inc. to $170, while keeping a Buy rating on the shares. The firm’s analyst appreciated the company’s solid cash flow generation, despite experiencing supply chain troubles.
Apple Inc. gained 388.6% in the past five years, showing stable returns for shareholders. The company pays an annual dividend of $0.88 per share, yielding 0.61%.
Of the 873 elite funds tracked by Insider Monkey, 138 hedge funds are reported having stakes in Apple Inc. in Q2 2021, valued at $145.5 billion. This shows that the hedge fund sentiment remained positive for the stock, as 127 hedge funds had positions in the company in the previous quarter.
ClearBridge Investments mentioned Apple Inc. in its first-quarter 2021 investor letter. Here is what the firm has to say:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation tops our list of the best stocks for retirement. On September 30, the tech giant announced to expand its Xbox cloud gaming service to Australia, Japan, Brazil, and Mexico. The Xbox Game Pass Titles will be accessible through the respective country’s supported devices.
In October, Morgan Stanley lifted its price target on Microsoft Corporation to $331, while maintaining an Overweight rating on the shares. The firm’s analyst appreciated the company’s new developments in its new segments, Public Cloud and Collaboration and Robotic Process Automation and Task Management. In the past year, Microsoft Corporation delivered a 37.8% return to shareholders, while the stock gained 407.4% in the past 5 years.
Microsoft Corporation pays an annual dividend of $2.24 per share, yielding 0.74%. The company has increased its dividend by 31.45% in the past three years. As of Q2 2021, 238 hedge funds tracked by Insider Monkey have positions in Microsoft Corporation, compared with 251 in the previous quarter. The total value of these stakes is $62.4 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
You can also take a look at 10 Monthly Dividend Stocks To Breeze Through Your Retirement and 10 Dividend Stocks for the Small-Cap Investor
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This article is originally published at Insider Monkey.
