Look At These 5 Stocks If You Are Retiring

by Trefis Team
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If you are thinking of retiring, consider these stocks: Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA), Automatic Data Processing (NASDAQ:ADP), and Visa (NYSE:V). Why? When it comes to retirement, stability is the key. You want companies with strong fundamentals that can give you steady, even though not extraordinary, returns with little risk. Remember, a retirement portfolio is about sustenance and steady income, and not accumulating large wealth, as risk taking capacity diminishes significantly. Thus, we identified these 5 companies that are worthy candidates for your retirement portfolio.

Why These Stocks Make Sense For Retirement?

We picked companies that (1) Have consistently grown revenue without any down-swings in the past 4 years (2) Have registered annual revenue growth of at least 3%-5% indicating that they still have the steam left to grow faster than the economy (3) Have stable or growing operating margins, suggesting a sound cost structure. This excludes those companies that burn cash in a quest for topline growth making them a risky bet (4) Have operating margins more than 15% indicating a safety cushion in case of adverse economic conditions (5) Have consistently distributed dividends with dividend yield > 0.5%. Thus, we found Microsoft, Intel, Nvidia, ADP, and Visa – all part of the S&P 500. Interestingly, their stock price has grown between 50% to 280% since 2016 (as of July 13 2020). Except for ADP, all these companies have done well relative to S&P 500 in 2020.



Other Factors To Consider

These 5 companies have a combined market capitalization of $2,500 billion, and a combined cash amount of $140 billion, indicating stability and strong financial capacity. Interestingly, they also have very strong market position. While Intel dominates the microprocessor market for PCs, Nvidia dominates GPUs, and Microsoft dominates operating systems. Visa has one of the biggest electronic payments networks in the world. Given the use of technology in almost all industries and payments moving online, there is high and consistent demand for the products of these companies. Thus, these companies are here to stay and grow.

That was all about playing it safe so you get enough return to enjoy your retirement. But we have a portfolio of low risk high fliers too. Check out these 5 S&P 500 stocks that could be outperformers.   

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