We recently compiled a list of the 15 Best Stocks To Invest In For Retirement. In this article, we are going to take a look at where Aflac Incorporated (NYSE:AFL) stands against the other stocks.
It is common knowledge that retirees with private sources of income, pension, or alternate employment are faring better than those relying only on social security. According to the Federal Reserve, Americans in the workforce were rather confident about their retirement savings in 2023. That year, 27% of adults had already retired in the United States, with 15% of them still working in some capacity. Retirees were working part-time rather than full-time. However, those with disabilities or low education were less prone to finding employment after retirement. 51% of adults retired to pursue passion projects or spend time with family, and 46% attributed their decision to retire to health issues, caregiving roles, or downsizing at work.
While social security remained the primary source of income for retirees, 80% of them had private sources of income as per the Fed’s 2023 report. 56% of them had pensions, 48% relied on investment income – which includes interest, dividends, or rental income, and 33% had labor income to fall back on. 92% of retirees in this 12-month survey were in the age bracket of 65 or above.
Over the last few decades, private companies have largely eliminated pension plans, shifting the onus of retirement savings to employees via 401(k)s. In 2022, only 15% of private industry workers had access to a pension. Retirement satisfaction has also dropped, with only 48% of retirees aged 62-75 commenting that they are very satisfied in 2023, down from 62% in 2020. Rising inflation has cut into retirees’ spending power, and 68% of them are burdened with credit card debt, up from 43% in 2020.
Sam Dogen, a millionaire who retired early and founded Financial Samurai, told CNBC that dividends are a source of reliable income. He commented:
“Stock dividends are my favorite passive income strategy because it is 100% passive.”
While young investors tend to reinvest dividend payouts, retirees can very well use it as a source of steady income. Dogen pointed out the consistent stock market growth over time and stated that dividend stocks are thus a dependable source of income over the long run. Given this, we will now take a look at some of the best stocks to buy for retirement.
Our Methodology
For this article, we used the Finviz stock screener to filter out stocks with dividend yields over 2% and dividend payout ratios under 30% as of February 19. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth over the years, and being financially stable to steer clear of yield traps. The list below is ranked in ascending order of the hedge fund sentiment as of Q4 2024.
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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A nurse talking on the phone with a client while assisting them in filling out paperwork for a medical insurance policy, demonstrating the company’s dedication to customer service.
Aflac Incorporated (NYSE:AFL)
Dividend Yield as of February 19: 2.23%
Number of Hedge Fund Holders: 31
Founded in 1955, Aflac Incorporated (NYSE:AFL) is headquartered in Columbus, Georgia. The company provides supplemental health and life insurance. In Japan, it offers coverage for cancer, medical expenses, nursing care, and life insurance. In the United States, Aflac provides insurance for cancer, accidents, disability, critical illness, hospital stays, dental, vision, and life. The stock has climbed nearly 32% in the last 12 months and offers a dividend yield of 2.23% as of February 19. It is one of the best stocks to buy for retirement.
Aflac Incorporated (NYSE:AFL) had a strong Q4 2024, with revenue jumping to $5.4 billion from $3.8 billion last year. Net earnings came in at $1.9 billion, or $3.42 per share, a huge leap from $268 million, or $0.46 per share, in Q4 2023, driven largely by $1 billion in investment gains. The board announced a $0.58 quarterly dividend per share, payable on March 3, 2025. The company bought back $750 million in shares and still has authorization for repurchases of 47.3 million more shares.
Among the hedge funds tracked by Insider Monkey in Q4, 31 funds were long Aflac Incorporated (NYSE:AFL), compared to 32 funds in Q3.
Overall AFL ranks 12th on our list of the best stocks to invest in for retirement. While we acknowledge the potential of AFL as an investment, 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 AFL 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.