Analysts recommend these stocks for older investors.
Most financial advisors would say stocks should play an important role in retirement investing at any age. However, the percentage of your retirement portfolio allocated to stocks and the types of stocks you own should change as you approach retirement age. Older investors have less time to recover from any financial setbacks, so a more conservative approach to investing is usually better. In addition, investors over 50 may want to focus more on stocks with reliable cash flows, higher dividend yields and relatively stable, low-risk businesses. Here are eight stocks to buy for investors over 50, according to Morningstar.
Microsoft Corp. (ticker: MSFT)
Microsoft is the world’s largest software company and is best known for its Windows operating system and Azure cloud services. Microsoft is also an attractive stock for older investors given its diversification and consistent profitability. Analyst Dan Romanoff says Microsoft’s future will be built around Azure, which, for a $45 billion business, is growing at a staggering 40%-plus rate. Romanoff says Microsoft is still transitioning its legacy customers to the cloud, and the company will continue to generate robust revenue growth and expanding margins. Morningstar has a “buy” rating and $352 fair value estimate for MSFT stock, which closed at $240.98 on Sept. 22.
Wall Street legend Warren Buffett is one of the most successful investors of all time, so it makes sense that one of the best ideas for investors over 50 is to buy Berkshire stock and put their money in Buffett’s hands. Analyst Greggory Warren says Berkshire’s diversification and low risk profile make it one of the most attractive investments within the financial services sector, providing downside support during periods of market weakness. In addition, Warren says the 92-year-old Buffett has chosen capable successors. Morningstar has a “buy” rating and $357 fair value estimate for BRK.B stock, which closed at $268.51 on Sept. 22.
Visa Inc. (V)
Visa is the world’s largest retail electronic payment network and is a leading payments brand. Analyst Brett Horn says Visa is generating “unusually high growth” and should continue to do so barring a severe economic downturn. Visa is benefiting from post-pandemic rebounds in cross-border transactions and travel. In fact, constant currency cross-border transaction volume excluding intra-Europe transactions was up 48% in the fiscal third quarter. Horn says Visa is a unique investment given few blue-chip industry leaders with Visa’s scale have such impressive growth outlooks. Morningstar has a “buy” rating and a $229 fair value estimate for V stock, which closed at $185.79 on Sept. 22.
JPMorgan Chase & Co. (JPM)
JPMorgan Chase is the largest U.S. bank by market capitalization and is an attractive stock for older investors. Earnings per share and revenue have grown at compound annual growth rates of 19.5% and 3.7%, respectively, over the past three years. The stock pays a 3.6% dividend, and it trades at a modest forward price-to-earnings ratio of 8.8. Analyst Eric Compton says JPMorgan is arguably the most dominant U.S. bank, with leading positions in investment banking, retail banking, commercial banking, credit cards and asset and wealth management services. Morningstar has a “buy” rating and $149 fair value estimate for JPM stock, which closed at $111.21 on Sept. 22.
Bank of America Corp. (BAC)
Bank of America is one of the four largest U.S. banks. Compton says acquisitions of Merrill Lynch and Countrywide Financial during the global financial crisis in 2008 and 2009 plagued Bank of America for more than a decade, but the bank has emerged as one of the strongest U.S. banking franchises. Bank of America’s asset portfolio has a higher sensitivity to rising interest rates than its top competitors, suggesting rate hikes could benefit Bank of America’s net interest margins and net interest income. Morningstar has a “buy” rating and $40 fair value estimate for BAC stock, which closed at $32.50 on Sept. 22.
Broadcom Inc. (AVGO)
Broadcom is a diversified supplier of analog semiconductor devices. Analyst Abhinav Davuluri says Broadcom reported impressive networking demand in the fiscal third quarter. Davuluri says Broadcom has successfully executed its large acquisitions of software companies Symantec and CA Technologies and estimates the company has roughly a 75% chance of completing its massive $61 billion pending acquisition of VMware Inc. (VMW). He says Broadcom’s wireless segment should get a big boost from the launch of the new Apple Inc. (AAPL) iPhone 14. Broadcom also pays a 3.4% dividend. Morningstar has a “buy” rating and $624 fair value estimate for AVGO stock, which closed at $477.61 on Sept. 22.
Cisco Systems Inc. (CSCO)
Cisco Systems designs and sells a wide range of networking, security, collaboration and cloud technologies. Analyst William Kerwin says he is increasingly confident Cisco will maintain its leadership position and impressive financial return profile. Kerwin says Cisco is well positioned to benefit from hybrid work and cloud environments and has a comprehensive portfolio of sticky and intertwined products. He is also bullish on Cisco’s shift to a higher mix of software and subscription revenue. In addition, Cisco has a strong balance sheet and generates dependable cash flow. Morningstar has a “buy” rating and $54 fair value estimate for CSCO stock, which closed at $41.15 on Sept. 22.
Verizon Communications Inc. (VZ)
Verizon Communications is the largest U.S. wireless carrier. Analyst Michael Hodel says Verizon is facing an inevitable decline in wireless market share as its largest competitors reach service parity. However, he says Verizon will continue to deliver consistent, modest growth for investors in the long term. Hodel says Verizon has invested heavily in its network quality, building a valuable brand and attracting a large, loyal customer base. Verizon also pays a 6.5% dividend, the highest yield of any Dow Jones Industrial Average stock. Morningstar has a “buy” rating and $59 fair value estimate for VZ stock, which closed at $39.93 on Sept. 22.
8 stocks to buy if you’re over 50:
— Microsoft Corp. (MSFT)
— Visa Inc. (V)
— JPMorgan Chase & Co. (JPM)
— Bank of America Corp. (BAC)
— Broadcom Inc. (AVGO)
— Cisco Systems Inc. (CSCO)
— Verizon Communications Inc. (VZ)
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Update 09/23/22: This story was previously published at an earlier date and has been updated with new information.