Yahoo Finance 7 Stocks to Buy for the Baby Boomer Retirement Wave
Buying into baby boomers.
Some baby boomers are already retiring, but in 15 years, the vast majority will have left the workforce. With people living longer than ever, building a proper retirement nest egg has never been more important. With bonds offering virtually no yield nowadays, boomers need to scour the market for the best stocks to buy to build their retirement accounts. And why shouldn't boomers bet on some of the very companies they'll be giving more and more money to as they age? Read on to see seven companies benefiting from the graying of America, each of which boomers should consider adding to their stock portfolios.
Johnson & Johnson (JNJ)
Johnson & Johnson may seem like a boring stock pick, but sexy selections don't pay dividends in retirement. JNJ does -- its yield is currently around 2.7 percent -- and you'd be hard-pressed to find a stock more tailor-made for a baby boomer's retirement portfolio. Johnson & Johnson is the single largest health care company in the world, and it's a formidable player in pharmaceuticals, medical devices and consumer products -- three categories baby boomers will undoubtedly be devoting huge gobs of money to as they age. One of the most diversified companies in the world, JNJ still invests heavily in research and development, spending more than $9 billion on that in 2015.
Pfizer (PFE)
One of Johnson & Johnson's fiercest competitors, Pfizer, is also one of the best stocks to buy for baby boomers entering their golden years. Always looking to improve its vast portfolio and enviable pipeline, Pfizer recently announced plans to buy the biotech company Medivation for $14 billion. Medivation makes a drug -- already on the market and approved by the Food and Drug Administration -- that treats prostate cancer. Roughly 14 percent of men will be diagnosed with prostate cancer at some point in their lives, according to the National Cancer Institute. Pfizer will likely begin selling a biosimilar to JNJ's Remicade arthritis drug later this year, which could reap major rewards.
AbbVie (ABBV)
Another health care stock baby boomers should go long on is AbbVie, the company behind one of the biggest blockbuster drugs on the market, Humira. In 2015, Humira posted net sales of $14 billion, up 19 percent from 2014. Although its patent technically expires this year, CEO Richard Gonzalez thinks its extensive patent portfolio can keep imitators at bay until 2022. Humira treats various forms of arthritis and Crohn's disease, and AbbVie is constantly researching new indications for the drug. ABBV currently pays a 3.4 percent dividend, and analysts expect revenue to grow by double digits for at least the next two years.
HCP (HCP)
HCP is a sprawling health care real estate investment trust with a variety of property types that will no doubt be frequented by retirees at one point or another. Its portfolio spans senior housing buildings, skilled nursing facilities, medical offices and hospitals, to name a few. REITs are companies that own income-producing real estate investments and are required by the Securities and Exchange Commission to distribute 90 percent of their taxable income to shareholders. For that reason, HCP boasts a healthy 5.8 percent dividend. While investors should be wary of higher rates, which tend to hurt REITs, no meaningful rate hikes appear imminent at the moment.
UnitedHealth Group (UNH)
UNH's UnitedHealthcare is America's single biggest health insurer, and as such there's no doubt many boomers are paying monthly premiums to the company. As insurance premiums go up with their age, why shouldn't retirees hedge those expenses by owning a piece of the very company that's charging them? The graying of America, as well as the deluge of newly insured individuals resulting from the Affordable Care Act, drove UNH's revenue up from less than $102 billion in 2011 to more than $157 billion in 2015. Revenue should keep rising for years to come, and if interest rates do end up rising, UNH will benefit, earning more on its vast cash reserves.
Brookdale Senior Living (BKD)
After merging with its biggest competitor Emeritus Corp. in 2014, Brookdale is far and away the largest operator of senior living communities in the U.S. Through the end of last year, BKD operated over 1,100 communities in 47 states, and it should only get bigger over time as it continues to acquire other communities. As Brookdale says itself in its 2015 annual report, the company is positioned to "take advantage of favorable demographic trends and future supply-demand dynamics in the senior living industry." From assisted living to independent living to memory care and skilled nursing, it's a safe bet Brookdale's services will always be in demand.
Medtronic PLC (MDT)
Another health care company that's been bolstered by a major acquisition in recent years, medical supplies manufacturer Medtronic bought Dublin-based Covidien in fiscal 2015. Not only did it instantly give MDT a strong presence in hospital supplies overnight, it also brought significant tax advantages that let Medtronic more efficiently reinvest over $10 billion the company had stored overseas. As with many acquisitions, the Covidien purchase also allowed for significant synergies that continue to be realized. Medtronic's products have no doubt saved many a boomer's life; coronary stents, cardiac monitors and other tools used during open heart surgery are just a few of the vitally important medical products in Medtronic's portfolio.
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