We recently published the Best Retirement Portfolio for a 65-Year-Old. In this article, we are going to take a look at where Visa Inc. (NYSE:V) 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.
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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).
Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 181
Number of Consecutive Years of Dividend Growth: 17
Average 5-Year Share Price Returns: 107.76%
A global payment technology company, Visa Inc. (NYSE:V) ranks 1st on our list of stocks for the best retirement portfolio. The company’s Tap to Phone technology is taking off nicely, with usage exceeding 200% in the past year, especially in the US, UK, and Brazil. This innovation lets businesses turn their smartphones into payment terminals, making it easier for small businesses to accept contactless payments. Nearly 30% of users are new small businesses. Visa expects even more growth as people and businesses continue to embrace the convenience of tap payments.
Visa Inc. (NYSE:V) announced $9.5 billion in revenue for the first quarter of fiscal year 2025, up 10% year-over-year. The growth came from higher payments volume, more cross-border transactions, and an increase in processed transactions. Net income was recorded at $5.1 billion or $2.58 per share on a GAAP basis, while adjusted earnings reached $5.5 billion or $2.75 per share, growing 11% from the last year. Visa Inc. (NYSE:V) also processed 63.8 billion transactions, marking an 11% year-over-year increase. By the end of the quarter, the company had $16.1 billion in cash and investments.
On January 30, Visa Inc. (NYSE:V) declared a $0.59 per share quarterly dividend. The dividend was distributed on March 3, to shareholders on record as of February 11. The company has maintained a 17-year streak of growing dividends.
According to Insider Monkey’s fourth quarter database, Visa Inc. (NYSE:V) was part of 181 hedge fund portfolios, compared to 165 in the earlier quarter. Chris Hohn’s TCI Fund Management was the biggest position holder in the company, with 16.8 million shares worth $5.3 billion.
Overall, Visa Inc. (NYSE:V) ranks 1st on our list of the best retirement portfolio for a 65-year old. While we acknowledge the potential of V 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 V 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.
