These past few weeks have offered investors some painful reminders of how careful they need to be when picking stocks. It’s especially true when those investments are supposed to help save for retirement.
Stocks are supposed to be good, long-term investments. That’s why it can be frustrating to see such sudden declines after years of growth. However, some investments are safer than others. Below are three stocks that long-term investors should consider holding in their portfolios as they save for retirement.
Fortis (TSX:FTS)(NYSE:FTS) is a very low-volatility stock that normally doesn’t see large movements in price. When it fell more than 10% earlier this month, it was a shock, but it did end up bouncing back. It’s normally a stable buy, and one that investors can count on for both its dividend as well its steady long-term returns. In 2019, the stock climbed 20% in value, which is about as well as the TSX did.
And as an added benefit, investors can also tap into the company’s dividend, which pays around 4% per year. Shares of Fortis are also likely to rise in value over the years as well. The company has recorded more than $1 billion in profit in each of the past three years, where it’s also averaged a profit margin of more than 10%. For investors who don’t already own shares of Fortis, now could be a terrific time to buy the stock, especially if you’re saving for retirement.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is another generally safe stock to hold for retirement. The stock was a strong buy when it was at around $100 a share, and it became a downright bargain when it fell below $80 earlier this month. It provides the highest dividend yield of the top-five banks, and so any decline is a great opportunity to get a great payout. Its dividend normally yields 5%. Getting it at 6% or 7% could be a downright steal of a deal.
There is a risk that a recession could pull the stock down in the near term. However, if you plan to hold the stock for at least five years, you’ll likely earn a good return from buying shares of CIBC today. Its beta is close to one, and it’ll generally move in unison with the TSX. But with such a great dividend, odds are you’ll earn a better return overall. In 2019, CIBC stock posted a modest 6.5% return.
Thomson Reuters (TSX:TRI)(NYSE:TRI) can help add some diversification for your retirement portfolio. It’s a low-volatility stock with a beta of around 0.5. And at a time when trust and reliable information can be in short supply, its trusted brand helps set the company apart from social media and other sources of news.
Its dividend is more modest than the other two stocks on this list. The company recently raised its payouts, and investors can now earn around 2.5% per year just from holding its shares.
Last year, shares of Thomson Reuters soared more than 40%. Although that’s not a typical year for the company, investors can expect the stock to offer a good mix of modest returns and dividend income.
Thomson Reuters recently released its year-end financials which showed another strong year for the company with an operating profit of US$1.2 billion. That’s up from US$780 million in the previous year. If you’re saving for retirement, this stock could be another great long-term hold.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned.