Finding a “good” retirement stock suitable for all investors’ portfolios is nearly impossible. Variables depend on your retirement account’s tax structure, age, risk tolerance, and personal investment preferences. Still, a solid retirement plan is diversified across multiple industries and offers exposure to various investments.
Investors optimizing their retirement stock picks should look for companies with solid historical performance, future potential, and investor-friendly financials. Dividends are critical for late-stage retirement investors to generate income for their accounts. For younger investors, they’re also helpful in growing their allocation for “free” through dividend reinvestment.
Many investors tweak and modify their retirement portfolios over time, reducing risk as they age. Still, these three stocks are perfect for a buy-and-hold strategy today. If you invest $1,000 in any of these stocks, you may not need to touch them until you retire.
The Home Depot (HD)
Home Depot (NYSE:HD) felt a rough patch this year caused by overall market shakiness and a particularly hard hit to housing caused by rate hikes. This drop in stock price and its undeniable longevity make the stock perfect for investing $1,000 today.
Home Depot has a wide moat, meaning it faces little threat from new entrants or current competitors. While Home Depot remains the go-to option for home improvement hobbyists and weekend warriors, its recent initiatives target other groups. Higher sales to the larger-scale renovation teams, contractors, and builders improve its outlook for the homebuilding industry once the sector begins rebounding.
Reinforcing this outlook, Home Depot plans to build 80 new stores over the next five years. The move indicates that management sees demand rising throughout the 2020s. Home Depot’s expansion also positions the company to capture an imminent surge in renovations and new builds as home prices level.
Home Depot remains committed to dividend distribution and growth, having reliably increased its annual dividend over the past ten years and doubled the quarterly payout since 2018. Its 0.465 payout ratio indicates that, while management sees benefit in returning value to shareholders, they aren’t overextending. Instead, they also retain sufficient cash to grow the enterprise. Slightly undervalued today, Home Depot is a perfect pick among retirement stocks if you want to invest $1,000 today.
Occidental Petroleum (OXY)
Warren Buffett is still pumping cash into Occidental Petroleum (NYSE:OXY), which should make any retirement-focused investor pause and consider the stock for their portfolio. Owning more than 25%, Buffett’s long-term strategy indicates that OXY may be the perfect buy-and-hold stock for investors interested in company longevity and reliability. In fact, Buffett praised the current company management’s executive prowess and foresight this Spring. He assured shareholders the firm was on the correct track when he said OXY had “the right management running it” in a May shareholder meeting.
Oil and gas investors often push for dividend stability and sustainable growth over breakneck advancements. Occidental Petroleum easily jumps that hurdle. The company offers a 7.89% total yield, calculated by combining dividend distributions and share buybacks. Both these corporate actions return value to shareholders. This ratio makes OXY ideal for investors seeking returns beyond the risk-free rate while capturing upside as energy markets recover.
Although fossil fuels may have a limited outlook over a long period, OXY recognizes the need to adapt. The company’s long affirmed its commitment to net-zero initiatives and remains an industry leader in developing innovative sustainable solutions. The firm plans to operationalize the world’s largest direct air capture plant in 2024. These facilities reduce and remove carbon emissions, setting them apart from lagging peers.
Between Buffett’s endorsement, commitment to shareholder value, and forward-thinking initiatives, OXY is an ideal investment for retirement-focused portfolios.
Merck & Co., Inc.
Merck & Co., INC. (NYSE:MRK), a global pharmaceutical stock, is well-positioned to capture an aging population and take advantage of a worldwide healthcare market expected to grow 22% by 2030. Merck has a long drug pipeline, nearly half near regulatory approval and market sale. The company’s approach to patent management also means that it faces reduced competition from generic providers over time and may be able to retain its wide moat.
Merck’s financials are also beyond reproach, as the company boasts a growing free cash flow ratio to fund pricy drug discovery and market existing options. Merck also offers investors a 53% payout ratio, demonstrating it can manage top-line growth and value return to shareholders in a challenging environment.
Merck offers industry diversification, healthy financial management, and a global resilience factor for retirement portfolios. This makes it a perfect retirement stock for the long haul if you have $1,000 today.
On the date of publication, Jeremy Flint held a long position in OXY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.