More and more Americans are looking for reliable, long-term stocks to bolster their retirement portfolios. While Americans continue to look for ways to retire younger, it is becoming harder to save for retirement. The effects of inflation and rising housing costs and future medical expenses have made it harder to retire. One way to counteract the rising issue is to bolster future income through income-producing stocks that investors can set and forget.
There are certain stocks that will effectively pay investors forever through a combination of dividends, growth, and compounding through reinvestment. Investing in these assets can help to relieve the retirement crisis that many economists continue to warn about.
Future retirees are likely to require substantial funding based on current trends. Today’s 60-year-olds spend an average of $5,445 monthly, 18% more than the general population. Those figures are going to rise in the future as inflation continues. Again, counteracting those effects through wise investments today is key.
Sempra (SRE)
Investing in companies that build and operate energy infrastructure like Sempra (NYSE:SRE) is a great way to get paid over the long term. Utilities stocks are well-known for their income generation and their relative stability makes them a set-and-forget opportunity.
The firm operates energy infrastructure in California, Texas, Mexico, and engages in LNG exports. That covers regulated natural gas and electricity services.
Sempra includes a dividend yielding 3.1% and is forecast for steady growth over the long term. Earnings growth is expected at a steady pace which suggests Sempra’s dividend is very safe. The company projects long-term EPS growth in the 6-8% range, again suggesting safety and predictability. The payout ratio sits at a healthy 0.56 and Sempra last reduced its dividend in 2000.
Sempra is one of many utilities investments worth considering for income generation. Texas is also experiencing historic increases in energy demand growth currently. The company is strengthening its infrastructure there to handle the increase. That investment, coupled with growth, should produce returns in the future.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a stock that most investors associate with growth and price appreciation rather than income generation. That’s fair given its position as a tech leader and massive investor in growth areas like artificial intelligence.
At the same time, Microsoft does include a dividend currently yielding 0.7%. It has never been reduced since it was instituted in 2003. It has also grown by 10% over the last five years. It’s certainly a more modest yield than many income investors will be used to but it offers growth that income investors are unaccustomed to.
The point here is that Microsoft is expected to dominate far into the future and should yield strong returns through price appreciation. Investors should expect big returns upon selling in the future. They also get a modest income from the dividend which continues to grow. The AI growth narrative is worth chasing but Microsoft is much more than that alone and deserves income investors’ attention as well.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) is one of the most important firms globally. Most investors are aware that the company produces the majority of the world’s semiconductors and something on the order of 90% of the most advanced logic chips. Those impressive stats suggest TSMC, as it is better known, will continue to pay investors in the AI era.
It pays income in the traditional dividend bearing sense with a yield of 1.5% as I write this. That yield is up some following the recent tech/AI rout that has caused a market pivot away from tech. That’s an opportunity for investors.
TSMC’s earnings are growing rapidly in 2024 and are expected to continue to do so into the future. That will further bolster the safety of the dividend which was never really in doubt anyway.
The long and short of it is that TSMC provides chips to everyone that are currently in demand due to artificial intelligence. They’re in demand for everything tech/innovation related and make TSMC a great investment at almost any time. Yes, TSMC’s P/E ratio is higher now than it has been at most points historically. I don’t think it’s overpriced though. Instead, investors are realizing TSMC’s place in the world and paying accordingly. It’s still cheaper than 54% of the chip sector by that measure.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) has perfected the formula for success over the long run. It has become a cash generation machine and a stock noted to pay investors forever.
The value of the Coca-Cola brand cannot be overstated in this regard. Coca-Cola perfected a soft drink formula that has created strong internal economics that are admirable. I think those strong internal economics are most evident in gross margins. It costs Coca-Cola very little to produce and sell beverages. The company has perfected efficient operation in that sense. It’s much better than most beverage companies in that regard and can charge premium prices over the long term.
Remember, Coca-Cola does this at a massive scale that makes competition very difficult. Other firms can’t do much to shake up its empire. The result is a cash generating machine that provides income through rock-solid dividends. Coca-Cola is arguably the most reliable dividend income stock on the planet and that won’t change anytime soon.
Meta Platforms (META)
Meta Platforms (NASDAQ:META), like Microsoft above, is a stock most investors associate with growth rather than retirement.
That said, there’s a strong case for investing in META shares with a set-it-and-forget-it mentality. For one, Meta Platforms isn’t particularly expensive at the moment. The stock’s current P/E ratio of 26.6 is lower than the median level over the past 10 years.
Meanwhile, Meta Platforms is arguably as strong as it has ever been in relation to its social media presence. The company owns Facebook, Instagram, and WhatsApp.
The point I’m trying to make about valuation is that tech stock prices are known to be volatile. Yet, Meta Platforms isn’t particularly expensive at the moment. It benefits from a strong position in social media and the company is investing heavily in AI. Yes, the stock is up 35% in 2024 but it’s still not as richly valued as some may falsely believe.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is beginning to look like one of the best stocks for the current era. Investors already liked NextEra Energy for its balance of utilities-driven reliable income generation and strong clean energy positioning. That bargain has recently become that much more appealing as AI is driving clean energy demand higher.
That story is well worn by now: AI hyperscalers are gobbling up electricity while they build out data center infrastructure that has driven a lot of AI growth thus far. They’re also promising to reduce their carbon footprints. Clean energy demand is rising as a result.
NextEra Energy is a massive investor in wind and solar energy. The firm’s utilities business is well-positioned to thrive as a result. It is also set to continue rewarding investors through dividends that could reasonably be expected to grow quickly moving forward: The company’s earnings should increase if AI demand manifests as higher prices moving forward. That should drive earnings which could be used to justify higher dividend payouts.
Walmart (WMT)
Walmart (NYSE:WMT) is a great stock choice for retirement-minded investors. For one, it’s a stable investment boasting a beta of 0.50. It simply moves more predictably than the majority of other shares available. It’s also a growing firm with a very respectable earnings growth forecast into the future.
Walmart is generally expected to produce low double-digit earnings growth for the foreseeable future while revenues grow in the 3-5% range. That ability to consistently drive higher earnings growth than revenue growth is a big plus for investors. It’s indicative of the extremely well-run firm Walmart is.
Over time that creates strong returns in the form of stock price appreciation for investors. Walmart also includes a dividend yielding 1.2%. That dividend, if reinvested into WMT shares, creates powerful effects over time.
Walmart is also fast becoming a force in eCommerce and recently crossed the $100 million sales threshold. It has a lot in store for investors.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.