- 28 марта 2018, 15:43
- Zacks Investment Research
With the oldest members being 37 years old and the youngest just 18, millennials believe that they have a long way to go before they reach retirement. But time flies faster than one thinks and when their retirement age arrives, these millennials may not have sufficient savings.
Some experts believe that given their current lack of savings, the majority of this generation won’t be able to retire even in their 70s. This has also been supported by a recent study from National Institute on Retirement Security, which states that two-thirds of the working millennials have saved nothing for their retirement.
Some experts believe that the generation’s interest on holidaying rather than saving is the main reason for their failure to save. Others believe that millennials are overburdened with their monthly payments like education loan and credit card bills. Apart from these, one-fifth of the generation supports aging parents by paying for their medical bills and other expenses.
All these circumstances have made it tougher for the generation to set aside money for their sunset years.
Likely Challenges for Millennials
The generation is expected to have a longer life span — thanks to the continuous advancements in medical science and healthier lifestyles — which means they will need more funds. Escalating healthcare costs also pose a challenge.
Although U.S. citizens will have social security but it is difficult to say whether it will be adequate to maintain their lifestyle. Their woes will mount if the U.S. government closes this facility after 25-30 years. It already costs the federal government more than $1 trillion, which will increase exponentially as the majority of the citizens will fall under the senior category by that time.
It’s Never Too Late to Start Saving
Whatever small amount you save today, if invested wisely, it can give you a healthy return in the long run. There are plenty of investment options available but given the young age of millennials and their risk taking capabilities, we suggest investing in equities as these offer maximum returns.
The improving domestic as well as global economic scenario is likely to have a positive impact on the market. Additionally, with Donald Trump’s ‘America First’ policies, the manufacturing sector is poised to witness huge investment in the next few years, thereby generating employment and increasing wage rate opportunities. All this is likely to further strengthen the U.S. economy, which will tend to reflect in the stock market.
Considering an annual return of 8%, a monthly investment of just $100 in equities by a 25-year old till his 65th birthday will save him or her approximately $341,120.
However, investing in equities has its own share of risks. Not every stock will have a remarkable run. Also, the risk of a market crash remains.
Therefore, investing in stocks that generate solid regular returns with minimum associated risks is prudent. Also, the return should cover the investment and inflation costs.
Blue Chip Dividend Stocks are the Best Choice
Blue chip dividend stocks boast solid financial structure and healthy underlying fundamentals, and are less affected by market turbulence. Such stocks are believed to be safer and more durable than an average stock. Most of these companies consistently raise dividends and are typically large in size.
The companies’ dominating market position, large customer base, sustainable business model, long track of profitability and strong liquidity help them offer outsized payouts or sizable yields on a regular basis, irrespective of the market direction. As a result, these stocks provide greater stability and offer continued income for investors, as well as more scope for capital appreciation.
Choosing the Stocks
It is difficult to pick the right stocks from a wide range of available investment opportunities.
This is where the Zacks Stock Screener comes in handy. With the help of this screener, we have filtered in Buy-rated stocks that have a market value of $10 billion or more, a decent dividend paying history along with an annualized yield of over 2%.
The Boeing Company BA, sporting a Zacks Rank #1 (Strong Buy), is one of the world’s largest aerospace company. With an annualized yield of 2.1%, its dividend has increased at a CAGR of 27.8% in the last five years. The stock has gained more than 1,700% in the last 25 years. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our next pick is one of the world’s leading semiconductor companies, KLA-Tencor Corporation KLAC, which carries a Zacks Rank #2 (Buy). With an annualized yield of 2.2%, its dividend has risen at a CAGR of 7.2% in the last five years. The stock has gained more than 2,900% in the last 25 years.
Cisco Systems Inc. CSCO is an IP-based networking company. It also offers other products and services to service providers, companies, commercial users and individuals. The stock carries a Zacks Rank #2. With an annualized yield of 2.7%, its dividend has increased at a CAGR of 15.2% in the last five years. The stock has gained over 3,300% in the last 25 years.
Our next selection is one of the biggest retailers in the United States -- Kohl’s Corporation KSS. The stock has a Zacks Rank #2. With an annualized yield of 3.9%, its dividend has risen at a CAGR of 12.3% in the last five years. The stock has gained over 1,200% in the last 25 years.
The next stock that makes it to our list is Fastenal Company FAST, which together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. With an annualized yield of 2.8%, its dividend has increased at a CAGR of 13.8% in the last five years. The Zacks Rank #2 stock has gained over 3,200% in the last 25 years.
Texas Instruments Incorporated TXN, a global semiconductor design and manufacturing company, is our next pick. With an annualized yield of 2.4%, its dividend has risen at a CAGR of 18.4% in the last five years. This Zacks Rank #2 stock has gained over 2,700% in the last 25 years.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
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Cisco Systems, Inc. (CSCO): Free Stock Analysis Report
The Boeing Company (BA): Free Stock Analysis Report
Fastenal Company (FAST): Free Stock Analysis Report
Kohl's Corporation (KSS): Free Stock Analysis Report
Texas Instruments Incorporated (TXN): Free Stock Analysis Report
KLA-Tencor Corporation (KLAC): Free Stock Analysis Report
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