Building a retirement nest egg requires the three “Ps” — patience, perseverance and planning. Rome wasn’t built in a day and neither is a retirement fund. Investors need to carefully build a well-diversified portfolio that provides them with consistent and reliable gains over many years and decades. Long-term investors need to a portfolio of retirement stocks that can perform well in both bull and bear markets.
And while many stocks and market trends come in and out of favor, there are some stocks that can be relied on during good times and bad. These are stocks that have stood the test of time and proven themselves over many years of strong performance. For investors wanting to grow their nest egg, these are dependable stocks that have a track record of growth and strong returns.
Here are seven great retirement stocks to buy to start growing your nest egg today:
Now is a great time to buy Amazon stock (AMZN). It is down more than 7% after the company forecast weaker revenue for the current third quarter and slowing growth in this year’s second half. While Amazon’s downbeat outlook was enough to spook investors, the news obscured the fact that the online retail giant reported its third consecutive quarter of revenue that exceeded $100 billion. Earnings per share (EPS) for this year’s second quarter amounted to $15.12 compared to $12.30 that analysts had expected.
Amazon also has a new chief executive officer in Andy Jassy and continues to diversify beyond its flagship e-commerce business, expanding in cloud computing, artificial intelligence, streaming and many other businesses. The company is currently in the process of completing an $8.45 billion acquisition of MGM Studios, which will give it a number of popular franchises ranging from James Bond and Fargo to Shark Tank. Amazon is the type of dominant and diverse company that can provide consistent gains to a retirement fund for decades to come.
So far this year, AMZN stock is only up by a bit under 4% at $3,340.72 at the start of August 3. However, over the past five years, the share price has risen 334%. Since going public in 1997, the company’s stock has grown by nearly 200,000%. Buy the dip!
Ford (F) is a stock that has stood the test of time. The original automotive manufacturer has been a publicly traded company since 1956. Today, Ford is one of the most innovative automakers in the world. The company is investing $30 billion in electric vehicles, transforming many of its best known nameplates into battery-powered versions, including the Mustang muscle car and F-150 pickup truck. Plus, Ford is getting involved in battery production, opening a 270,000 square foot battery factory in Romulus, Michigan.
Now is the time to build a position in F stock and hold it for the long-term. While Ford stock has gained nearly 60% year-to-date, it is still trading at less than $14 a share, making it one of the most affordable blue chip retirement stocks to own. For investors who plan to hold the stock for a long time, Ford offers plenty of upside potential.
Beyond electric vehicles, the company is also pushing into self-driving car technology and is also getting into artificial intelligence. Ford stock is extremely affordable, especially when compared to other high flying auto stocks such as Tesla (TSLA).
Retirement stocks don’t come more rock solid than Berkshire Hathaway (BRK/B, BRK/A). While most investors can’t afford the company’s Class A shares that have been trading at around $420,000 since mid-June, the Class B shares are relatively affordable at $279.05 as of the start of August 3. And with Berkshire Hathaway, investors get a holding company that owns a diverse range of businesses, from railroads to insurance companies, to the Dairy Queen restaurant chain. Plus, Berkshire Hathaway owns a massive and hugely successful stock portfolio.
Berkshire Hathaway is currently one of the largest shareholders of Apple (AAPL), Bank of America (BAC) and Coca-Cola Co (KO). Under the guidance of legendary investor Warren Buffett, Berkshire Hathaway’s portfolio has beaten the returns of the S&P 500 index (.SPX) in 12 of the past 20 years, which is an enviable track record that most fund managers on Wall Street have been unable to match. Buffett recently announced his planned successor at Berkshire Hathaway in Greg Abel. Regardless of who runs the company, it can be expected to continue providing investors with consistent gains over the long term.
Vanguard 500 Index Fund
Investors don’t need to only own stocks. A well diversified portfolio should also include exchange traded funds (ETF) that track a particular stock index. And among ETFs, few are better than Vanguards’s 500 Index Fund (VOO) that trades under the ticker symbol “VOO” and tracks the S&P 500 index that is comprised of the largest 500 U.S. stocks based on market capitalization. While there are several ETFs that track the S&P 500 index, Vanguard’s charges the lowest fees at an expense ratio of just 0.03%.
Vanguard is the company that started the entire ETF industry. Vanguard founder John Bogle came up with the idea of tracking a specific stock index after he realized that most fund managers underperform the Dow Jones Industrial Average (.DJI) and S&P 500 on a yearly basis. The logic behind ETFs is that if nobody beats the market, then why not just track the market? Today, ETFs are an affordable and efficient way to invest and ensure that investors, at a minimum, do not underperform the stock market.
Even Warren Buffett holds VOO in his Berkshire Hathaway portfolio and is on record saying that an ETF that tracks the S&P 500 is all most investors need. Year-to-date, VOO is up 17% at $403.08 per share as of the August 3 open, mirroring the performance of the S&P 500 index.
Home Depot (HD) is one of the best long-term stocks that retirees can buy. HD stock offers healthy dividend payments and strong share price appreciation. In the past decade, Home Depot’s share price has grown over 900%, more than triple the cumulative gain for the S&P 500 stock index during the same period of time. Dividends over the past decade have risen to $1.65 a share per quarter from just $0.25. Strong returns such as that make Home Depot a buy and hold forever stock.
The leading home improvement retailer in the North America, Home Depot today boasts $140 billion in annual sales across around 2,300 store locations. A cyclical stock that tends to move in tandem with the economy, Home Depot has delivered steady and reliable profits to shareholders since it made its stock market debut back in 1981. Year-to-date, HD stock has risen 24% and now trades at $328.35 a share as of August 3. Home Depot has been a strong stay-at-home and reopening stock.
Every retiree should hold at least one bank stock in their portfolio, and JPMorgan Chase (JPM) is among the very best. As the largest lender in the U.S. with more than $3 trillion in assets. JPMorgan Chase is a stock to buy and hold for the long haul. The company is one of the most diversified, stable and profitable banks in the world. The bank consistently produces strong earnings, including just announced second-quarter earnings of $3.78 per share, exceeding the $3.21 estimate of analysts. Revenue of $31.4 billion also exceeded the $29.9 billion estimate of analysts.
JPM stock is a consistent strong performer, having risen nearly 21% so far in 2021 to $151.95 a share at the start of August 3. However, given its track record, many analysts feel that JPMorgan Chase is undervalued at its current share price, noting that the stock trades at a forward price-to-earnings (P/E) ratio of about 14, which is average for financial institutions but low considering this bank’s market leading position and future growth potential. In the past month, the stock has dropped by about 2%, presenting a nice entry point at its current price.
Deere & Co.
Deere & Co. (DE) is another solid blue chip company whose stock can provide consistent, long-term growth for people looking to build a nest egg. The maker of John Deere lawn mowers and construction and agriculture equipment is benefitting right now from the reopening of the U.S. economy and investments in infrastructure. The company is due to next report earnings on August 20 and they are likely to be exceptionally strong. In May, the company reported a second consecutive quarter of record profits, saying it is seeing an improved outlook for farm and construction equipment sales.
The Moline, Illinois-based company’s revenue in the first two quarters of its 2021 fiscal year surpassed the $2.75 billion that Deere & Co. earned in all of its 2020 fiscal year. This kind of performance is why Deere & Co. should be apart of a diversified portfolio. And, as with many securities on this list, DE stock is affordable right now, having fallen about 10% since peaking at $400.34 a share in early May. However, continued blowout quarters will no doubt send the share price higher. Investors should grab this stock ahead of its next earnings announcement.
On the date of publication, Joel Baglole held long positions in HD and DE. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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