3 cheap stocks that could help you retire early
Eeven with the S&P500 down 22% since the start of the year, there is still no better vehicle to create wealth than investing in stocks. Gold, bonds, real estate, and certainly cryptocurrencies all fall short in comparison.
While over short periods one asset class or another may outperform stocks, long-term results prove that if you want to accumulate large amounts of wealth and have a chance of retiring early, invest in stocks. is the way to go.
German Bank studied various asset classes over the past 100 years and found that stocks beat gold by 5.6% a year, house prices by 6.6%, Treasuries by 6 .8% and oil 8.4% per year.
There have only been two decades when stocks have had negative returns: the Great Depression of the 1930s, as well as the 2000s, when the combined impact of the Tech Wreck, 9/11, and the stock market crash financials conspired to sink the market, generating negative returns of 0.5% and 0.9%, respectively.
Yet the decades that followed saw steep increases. The 1940s produced compound annual returns of 10.2% per year, including dividends, while the 2010s produced a compound annual growth rate of 14%.
Clearly, for investors who want the best chance of retiring comfortably and early, investing in stocks and staying invested in the market for the long term is the right strategy. That’s why the nugget of investing wisdom that “it’s not about timing the market, it’s about your time in the market” is so true. By the time American workers are ready for their gold watch – or before, if you’re savvy enough – the following trio of winning stocks have the potential to make those who have invested rich.
Shares of the tobacco giant Altria (NYSE: MO) was smoked recently after an analyst downgraded the stock due to inflation and rising gasoline prices. Since most cigarettes are sold at gas station convenience stores, the idea was that consumers would not buy as many cigarettes if they reduced their driving time to save fuel.
This ignores the addictive quality of nicotine, which has driven consumers to purchase cigarettes through all sorts of turmoil and price hikes. Smoking may be in secular decline, but there are still tens of millions of smokers, and while they may not buy as many cigarettes at gas stations, they probably will buy them elsewhere.
Altria’s business is one of strong, recurring earnings, and it remains committed to sharing those earnings with investors. The tobacco stock is targeting a payout ratio of 80% of adjusted earnings per share and has increased its dividend every year for the past 52 years, firmly establishing it as a dividend king.
Yielding 7.9% per year, Altria’s dividend can help investors reach their retirement goals, perhaps even sooner.
There were a handful of stocks in just about every industry that benefited from the pandemic. Clorox (NYSE: CLX) was able to capitalize on the fear of a virus and the need to sanitize everything. The bleach maker’s profits easily doubled during the COVID outbreak, but as consumers increasingly see the health crisis in the rear view mirror, cleaning every solid surface with a disinfectant wipe has dwindled.
Where Clorox once had 24-hour shifts to keep up with demand for its wipes — and even hired third-party contractors to produce them — it has since reverted to a more standardized schedule and freed up those outside manufacturers. . Sales are now down and earnings are shrinking, sending Clorox shares down a third from recent highs.
It just means that its business is returning to a more normalized trajectory, and it remains strong, with products generally ranking in first or second place wherever they are sold. Clorox also has a dividend-paying history that dates back more than 50 years and a consecutive series of dividend increases that began in 1977, making it a dividend aristocrat and an investor investors can rely on for years to come. profitable and revenue-generating growth.
3. Polaris Industries
A more recent addition to the Dividend Aristocrats is the ATV maker Polaris Industries (NYSE:PII), an underrated and underrated member of the roster. He joined just before the pandemic hit when it raised its dividend for the 25th consecutive time in January 2020. It has added two more increases since then, and investors should consider taking a spin on the vehicle maker while -field (ORV). Stock.
ORVs and snowmobiles account for nearly two-thirds of Polaris’ revenue and are one of its most profitable segments. The company made a name for itself and owned the niche when it developed the trail-width-compliant RZR side-by-side product that would propel Polaris to the forefront of the powersports vehicle industry.
Polaris also owns the iconic Indian Motorcycles brand which it bought out following bankruptcy. It is also a manufacturer of pontoon boats used for fishing and partying, as well as utility vehicles and aftermarket retail stores for Jeeps and trucks.
Because it is the undisputed leader in motorsports — and its track record dates back to its founding in 1954 — it has a proven ability to navigate through and out of many economic difficulties, and can complement the portfolio of an investor seeking to exit.
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Rich Duprey has positions in Altria Group and Clorox. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.