Most financial advisors would say stocks should play a role in your investing portfolio no matter your age. However, investors have less margin for error as they get older and less time to recover from any major financial setbacks.
Most retirement investors suggest dialing back exposure to the volatile stock market as you approach retirement age, but selecting relatively stable, low-risk stocks is also important.
For investors older than 50, it’s a good idea to focus less on growth and more on cash flow, dividends and durable businesses.
Here are eight stocks for investors older than 50, according to CFRA.
Citizens Financial is a U.S. retail and commercial bank with more than 1,200 branches, primarily in New England. As an investment, it checks all the boxes older investors should want. Earnings and revenue have grown 24% and 12%, respectively, over the past three years. The stock pays a 4% dividend, and it trades at a modest 9.3 forward earnings multiple. Analyst Pauline Bell says the company’s balance sheet optimization program is offsetting margin pressures from lower interest rates. CFRA has a “buy” rating and $46 price target for CFG stock.
Fifth Third Bancorp
Fifth Third Bancorp is a U.S. regional bank operating primarily in the Midwest and Southeast. Like Citizen's, Fifth Third has generated double-digit revenue and earnings growth in the past three years. In addition, it pays a 3.2% dividend and trades at just 9.4 times forward earnings. Bell says net interest margins fell 0.03% sequentially in the fourth quarter. However, she says modest loan growth, falling deposit costs and an effective hedging strategy should get margins back on the right track in 2020. CFRA has a “buy” rating and $32 price target for FITB stock.
LyondellBasell Industries is a U.S. petrochemical company. LyondellBasell’s margins benefit from low natural gas prices and high oil prices. The company’s revenue growth over the past three years is 5.9%, and it has also grown earnings per share in the low single digits during that time. LyondellBasell shares trade at just 7.3 times forward earnings, and the stock pays a 5% dividend. Analyst Christopher Muir says LyondellBasell has plenty of additional growth opportunities moving forward as global petrochemical demand continues to rise. CFRA has a “strong buy” rating and $100 price target for LYB stock.
Prudential Financial is a global life insurer that operates primarily in the U.S. and Japan. Prudential has generated 4% revenue growth over the past three years, and EPS is also up slightly in that time. Prudential shares pay a 4.7% dividend and trade at just 6.8 times forward earnings. Analyst Cathy Seifert says Prudential faces near-term challenges due to its exposure to foreign exchange rates, but it is currently undervalued relative to both its life insurance peers and its own historical levels. CFRA has a “buy” rating and $107 price target for PRU stock.
Phillips 66 is one of the largest independent petroleum refiners and marketers in the U.S. In a difficult energy environment, Phillips 66 has grown revenue and EPS in the double digits in the past three years. The stock trades at a forward earnings multiple of 9 and pays a 4% dividend. Analyst Stewart Glickman says Phillips 66 is making the right call by diversifying into chemicals and midstream operations. This transition has weighed on margins in the near term, but Glickman says it will reduce risk over time. CFRA has a “buy” rating and $110 price target for PSX stock.
Truist Financial is one of the 10 largest U.S. banks by deposits. Despite unexpected interest rate cuts pressuring margins, Truist has increased its revenue and EPS by 8.4% and 10.1%, respectively, in the past three years. The bank stock trades at 11.5 times forward earnings and pays a 3.2% dividend. Bell says a bullish combination of modest loan growth, expanding margins, rising fee income, stable operating expenses and aggressive capital returns will drive upside for Truist in 2020. CFRA has a “buy” rating and $56 price target for TFC stock.
U.S. Bancorp is the fifth-largest U.S. commercial bank by assets. Like the other banks on this list, U.S. Bancorp has managed to grow EPS and revenue in recent years, yet its stock has lagged the market. This lag has created a potential buying opportunity for value investors who appreciate its 11.8 forward earnings multiple and income investors who appreciate its 3% dividend. Bell says the soft fundamentals that have weighed on the company’s performance metrics in recent quarters will recover in 2020. CFRA has a “buy” rating and $60 price target for USB stock.
Valero Energy Corp.
Valero Energy is one of the largest independent U.S. petroleum refiners and owns 13 refineries in the U.S., Canada and Europe. Valero’s revenue has grown by 12.5% in the past three years, while EPS has risen 5.7% during that stretch. Today, Valero shares trade at just 10.1 times forward earnings, and the stock pays a 4.6% dividend. Glickman says Valero’s exposure to the U.S. Gulf Coast makes it an attractive play on major U.S. export markets, such as Europe and South America. CFRA has a “buy” rating and $103 price target for VLO stock.