6 Types of Stocks Retirees Should Consider Investing In
Written by
Sean Bryant
Edited by
Amen Oyiboke
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Many retirees worry about running out of money. After decades of saving, the last thing you want is to see your retirement account shrink because of bad investments.
The challenge that most people face is that retirement changes the way you need to think about investing. Most of your life was about growth. Now, it’s more about income and inflation protection.
The good news? Certain types of stocks can help you find the perfect balance. From dependable dividend stocks to defensive sectors that hold up in tough times, the right mix can provide the steady future most retirees are hoping for.
Keep reading as we look at six types of stocks retirees should consider adding to their portfolios.
Dividend-Paying Stocks
Dividend-paying stocks are ideal for retirees because these companies are returning a portion of their profits to shareholders in the form of dividends. This means a steady income each quarter. Additionally, many of the big dividend payers, known as Dividend Aristocrats, have a history of increasing their dividend payout amounts to keep up with inflation.
Blue-Chip Stocks
When you’re in retirement, safety is important. While you might have been willing to take a risk by investing in an early-stage company early in your career, now you should be focusing on companies and stocks that have a history of positive returns. These are known as blue chip stocks.
Blue-chip companies have been around for decades and tend to be the best of the best in their industry. Think names like Johnson & Johnson, Coca-Cola or Procter and Gamble. Many blue-chip companies are also dividend payers, making them a great option for conservative investors.
Utility Stocks
Utility companies provide customers with things like electricity, water and heat. All things that people need, even when the economy is in a recession. That makes utility stocks a great defensive option. Most of these companies offer a higher-than-average dividend, making them a great source of income and protection.
Healthcare Stocks
Healthcare companies range from large pharmaceutical names like Merck and Pfizer to medical device manufacturers such as Medtronic. These companies typically don’t follow economic cycles. That means even when the economy is struggling, they can still grow and provide their shareholders with solid returns.
Consumer Staples Stocks
Consumer Staples companies make the items we use daily. Think things like food, drinks, toiletries and cleaning supplies. Consumer Staples stocks provide investors with stability because we will always need food and we’ll still brush our teeth, even when the stock market is in a recession.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) provide investors access to real estate without the hassle of owning physical properties. One of the nice things about REITs is that they’re required to return 90% of their taxable income to shareholders as dividends.
However, even though REITs can provide retirees with steady income and diversification, they can be impacted by interest rate changes. That means they should only be a portion of your diversification strategy and not the majority.
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