We recently published the Best Retirement Portfolio for a 65-Year-Old. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other stocks in the best retirement portfolio.
The American retirement system is feeling the strain, with challenges like shrinking fees, underfunded plans, and an aging population slowing down industry growth. Over the last decade, 401(k) expense ratios have declined by a third, according to a PwC report, and recordkeeping fees dropped 8% between 2015 and 2019, making it harder for retirement firms to stay profitable. Some companies have had to merge or shut down, but there is still a big opportunity. Businesses that offer better retirement benefits, financial advice, and affordable plans for small companies could attract more people and unlock an extra $5 trillion in retirement savings.
The urgency is real. A quarter of US adults have no retirement savings at all, and only 36% feel on track. Even those who are saving may not have enough. For people nearing retirement, between the ages of 55 to 64, the median savings of $120,000 might provide less than $1,000 a month for 15 years. This is hardly enough, especially with longer life expectancies and rising healthcare costs.
For most Americans, retirement means either living off of savings or finding ways to generate passive income. While some can count on Social Security or a pension, many have to plan their own financial future. Savings usually involve withdrawing money over time, while passive income could mean anything from rental properties to online businesses. Brian Bollinger, founder of Simply Safe Dividends, believes dividend-paying stocks can be a game-changer. Instead of selling stocks to make money, retirees can rely on regular dividend payments, helping stretch their savings.
Dividends have been a huge part of stock market returns, making up about 45% of the broader market’s total gains since 1900. But despite their importance, they are often overlooked when planning for retirement, especially as baby boomers look for reliable income sources. According to Thornburg Investment Management, retirees typically fund expenses through either a total return approach, investing for growth and selling assets as needed, or a high-income approach, relying on high-yield investments for steady income. The first risks selling in down markets, while the second limits portfolio growth. A better strategy combines both; investing in stocks that not only pay dividends but also increase them over time can provide a steady income while allowing retirees to grow their wealth. Unlike bonds with fixed returns, dividend stocks can grow income, offering both stability and long-term financial growth. Over 30 years, dividend income has outpaced bond payouts, making it a strong option for retirees.
A busy sidewalk filled with people using Apple devices like iPhones, iPads and Apple Watches.
Our Methodology
For this article, we searched the internet for widely recommended retirement stocks and selected those with at least a decade of consistent dividend growth and an average 5-year return of 50% or more as of March 24. We also selected stocks from different industries to make a well-rounded portfolio. Additionally, we have mentioned the hedge fund sentiment for each stock, as per Insider Monkey’s database of Q4 2024, and ranked the list based on that data.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Number of Consecutive Years of Dividend Growth: 13
Average 5-Year Share Price Returns: 280.86%
Apple Inc. (NASDAQ:AAPL) is one of the top dividend stocks for the best retirement portfolio. On February 24, the company announced its biggest investment yet in the United States, amounting to more than $500 billion, spread out over the next four years. This massive push will support AI development, silicon engineering, manufacturing, and job training. As part of the plan, the company is opening a new manufacturing facility in Houston, doubling its Advanced Manufacturing Fund, and expanding research and development. It will also invest in its suppliers across all 50 states and boost infrastructure for Apple Intelligence.
For the first quarter of fiscal 2025, Apple Inc. (NASDAQ:AAPL) reported $124.3 billion in revenue, a 4% increase from last year, and earnings per share of $2.40, up 10% year-over-year. CEO Tim Cook credited the record-breaking quarter to Apple’s best-ever lineup of products and services, along with advancements in Apple Intelligence, which will roll out in more languages this April. The company recorded an all-time high of 2.35 billion active devices. Apple also returned over $30 billion to shareholders, including $23.3 billion in stock buybacks, while generating $29.9 billion in operating cash flow.
AAPL’s last quarterly dividend payment of $0.25 per share was made on February 13. The company has consistently increased its dividend for 13 years. Over the past five years, its stock has delivered an impressive 280% return on average.
Among the hedge funds tracked by Insider Monkey, 166 funds were bullish on Apple Inc. (NASDAQ:AAPL) at the end of Q4 2024, compared to 158 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway was the leading stakeholder of the company, with 300 million shares valued at over $75 billion.
Overall, AAPL ranks 2nd on our list of the best retirement portfolio for a 65-year old. While we acknowledge the potential of AAPL to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
