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So far, we have covered many penny stocks, tech and pharma stocks, and S&P 500 stocks. But what about stocks you can treat as a savings account, right up until your retirement? Agile short-selling as a day trader may give you dopamine hits, but it would be prudent to set aside a portion of your funds to stocks that persevere, the so-called blue-chip stocks.
Best Blue-Chip Stocks for Retirement
Unlike penny stocks, blue-chip stocks are a paragon of stability and reliability. These stocks represent deeply entrenched companies that show vitality across the board when it comes to fundamental stock analysis: cash flow, fluctuation-resistance, robust financials, and proven management.
More importantly, blue-chip stocks represent resilience even against black swan events such as the coronavirus pandemic and its impact on Wall Street. The cost for their blue-chip status is simple – reduced growth potential. Instead, they offer greater dividend income and predictability.
You may have already guessed which stocks fit the description for hold-until-retirement stocks. One could always add more, but for the time being, it would suffice to diversify such long-term investment into Alibaba, Amazon, and Apple.
The Chinese equivalent of Amazon, Alibaba may not have Amazon’s reach and the U.S. government’s backing, but it does serve the most populated nation. More than that, Alibaba’s future is tethered to China’s, world’s 2nd economy and rapidly outpacing the U.S.’ growth. In 15 to 20 years, we may be looking at China as the world’s economic powerhouse, while America continues to destabilize due to its lack of homogeneity.
As America’s middle class shrinks, China’s middle class expands and solidifies. Just like in the American post-WWII era, this transition signifies a new kind of economy geared more towards consumption. Alibaba, in Chinese state-run capitalism, is poised to take advantage of this transition like no other company is able.
Like Amazon, Alibaba has its tentacles stretched into the entire Chinese e-commerce ecosystem. Alibaba’s current operating income rose by 42% to $4.9 billion. In Q2 2020, Alibaba’s revenue rose by 34% to $21.8 billion.
It currently boasts over 743 million users, which is almost double the population of the EU and the US. Moreover, Alibaba’s cloud ventures have achieved even greater growth at 59% to $1.7 billion. Barring major geopolitical/military clash, Alibaba’s future is all but insuppressible.
Needing little introduction, Amazon dominates the world’s e-commerce corralling over 40% of domestic US sales. Always outward-looking, Amazon not only broke the $2 trillion valuation threshold, but it keeps acquiring companies and expanding services to cement its global dominance.
Accordingly, cloud computing supplanted e-commerce as Amazon’s core income source. Its Amazon Web Services yielded $6.4 billion operating income in Q1 and Q2 2020, with revenue growth of 32%. Amazon Care, Amazon Go, Alexa, Amazon Prime, Amazon Kindle, Whole Foods and more. In total, more than 128 acquired startups and companies over 20 years keep bolstering Amazon as a lean, money-generating machine.
Some would say Amazon is overvalued, but outside severe government antitrust intervention, Amazon’s stock keeps surprising investors as it breaks through new thresholds.
If you approach Apple with a detached perspective, you would quickly see that it offers nothing that other companies don’t offer at better prices. From its smartphones, tablets, laptops, computers, to its online stores, some argue the competition does it better for a lower cost for the end-user.
However, such a perspective would miss Apple’s market positioning entirely. Over the decades, Apple has accrued a staunchly loyal user base, thanks in large part to Apple’s charismatic Steve Jobs.
He established and cultivate a particular subculture that surpasses the mere selling of tech products. Today, its mobile ecosystem alone holds 1.5 billion active devices.
Once you are locked into Apple’s ecosystem of watches, iPhones, iMacs, Airpods, software, and streaming, it is difficult to get out of its closed circle. Apple provides all of your work and entertainment needs at a premium cost and premium branding. The ongoing 5G upgrade will give it an additional boost, on top of Apple’s status as the world’s most profitable company at $60 billion.
All of this tells us the story of Apple providing a stable dividend income alongside the practice of frequent share buybacks. Its stock fluctuations will occur, but one would have trouble finding sources that would endanger Apple’s powerful brand and bottomless pockets.
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Are there any stocks that you plan to hold until retirement? If so, which stocks? Let us know in the comments section below.