These are 10 great investments.
New data from TD Ameritrade has revealed the most popular stocks among the youngest generation of American retail investors. The firm sorted through the holdings of its millennial-aged clients born since 1981 to identify the companies that young investors see as the best long-term investments. “The data points to a primary characteristic of investors,” TD Ameritrade chief strategist JJ Kinahan says. “They are inclined to invest in companies that they have a general understanding of, which are perceived by investors as good companies.” Here’s a look at millennials’ 10 favorite stocks.
No. 10: Exxon Mobil Corp. (ticker: XOM)
Blue-chip fossil fuel giants may not be the first thing that comes to mind when you think about the young generation of Americans. Perhaps millennials see the underperformance of oil stocks in recent years as a long-term buying opportunity, or maybe they appreciate Exxon Mobil’s generous 3.7 percent dividend yield. Regardless of the reason, popular tech stocks such as Alphabet (GOOG, GOOGL) are surprisingly not among millennials’ top 10 stock investments, but Exxon once again is.
No. 9: General Electric Co. (GE)
General Electric is another surprising favorite among millennial investors. GE is the longest-tenured member of the Dow Jones industrial average and has long been considered one of the bellwethers of the U.S. economy. Millennials likely appreciate many of the same traits in GE that they appreciate in Exxon, including reliability, durability and GE’s 3.4 percent dividend yield. In the past several years, GE has made moves to position itself as a potential leader in the internet of things era of U.S. industry, a long-term transition that younger investors hope will pay off for years to come.
No. 8: Walt Disney Co. (DIS)
Disney was in sixth place on TD Ameritrade’s list in 2015, but dropped two notches this year. Despite increasing concerns over cord cutting eating into ESPN subscriptions and the rest of Disney’s cable TV business, millennials are still bullish that Mickey Mouse can overcome the challenges and continue to serve as a cornerstone of a long-term investing portfolio. There’s certainly no denying the enduring power of Disney’s brands. Millennials are familiar with Disney’s products and services and likely appreciate its long-term track record of success.
No. 7: Microsoft Corp. (MSFT)
Microsoft has gained popularity among millennials in the past two years, improving from eighth place from the 2015 list. The company has made huge strides in building its cloud computing division and making Azure one of the top brands in the massive, high-growth cloud services business. Last year, Microsoft also opted to use some of its cash hoard to make a huge splash in the social media space by acquiring professional networking platform LinkedIn. Microsoft pays a 2.2 percent dividend and has plenty of long-term growth opportunities in machine learning and artificial intelligence as well.
No. 6: Tesla (TSLA)
Tesla is yet another stock that has gained popularity among millennial investors in the past two years. Young investors have high hopes for the company’s Model 3 mass market electric car, which is expected to be delivered by the end of 2017. Tesla is also among the industry leaders in autonomous vehicle development and is a leader in cutting-edge solar power and energy storage technology. CEO Elon Musk anticipates the company will produce 500,000 vehicles by 2018, making Tesla a serious threat to the established auto industry.
No. 5: Bank of America Corp. (BAC)
Bank of America has held steady in the No. 5 spot on TD Ameritrade’s list of top millennial stocks. In the past two years, the stock has delivered a 40.2 percent gain for young investors, much of it coming following President Donald Trump’s election victory in November. Trump’s platform of corporate deregulation and tax cuts could provide major long-term tailwinds for big bank stocks like BAC, which have largely underperformed in the years since the financial crisis of 2008. Millennials may recognize that banks are now extremely well-capitalized compared to a decade ago, and rising interest rates could soon help boost bank net interest margins to their highest levels in years.
No. 4: Berkshire Hathaway (BRK.A, BRK.B)
Younger investors may not yet have the wisdom and experience of Warren Buffett, but they certainly seem to appreciate both. When it comes to long-term investing, there’s nothing wrong with riding the coattails of some of the brightest minds on Wall Street, and Buffett certainly qualifies as one. Even though value investing has fallen out of fashion a bit during the current bull market, Berkshire Hathaway shares have more than doubled the return of the Standard and Poor’s 500 index over the past decade.
No. 3: Amazon.com (AMZN)
The No. 3 stock on the list didn’t even make the TD Ameritrade’s Top 10 list just two years ago. Everything that Amazon touches continues to turn to gold, including millennial investment portfolios. The size and growth of the company’s e-commerce and cloud services businesses are unparalleled in the U.S. market.
No. 2: Facebook (FB)
The top two most popular stocks among millennials remain unchanged from two years ago. Facebook once again comes in a distant second. Most millennials grew up using Facebook and recognize the long-term value and growth opportunities the stock provides. Facebook has honed its advertising business in recent years, especially within its Instagram subsidiary. Facebook is also well-positioned in the virtual reality market and has been experimenting with streaming video in recent years. As the company continues to improve its data-driven advertising business, it should maintain its position as a top-tier long-term growth investment.
No. 1: Apple (AAPL)
In many ways, Apple is a company and a stock in a class all its own. Not only is the world’s most valuable public company the top stock holding among millennials, TD Ameritrade reports Apple stock is once again the top stock holding among all generations of retail investors by a wide margin. Apple has more than $250 billion in cash alone and could even afford to buy several of the other companies on this list. A potential iPhone 8 supercycle, impressive growth in its high-margin services segment and its expanding capital return program could all serve as positive catalysts for Apple in the years ahead.
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The Top 10 Investment Portfolio for Millennials originally appeared on usnews.com
