Balance.
That's what's required with investing if you're in your fifties. You don't want to be too aggressive. On the other hand, you don't want to be too cautious. After all, you still have several years to go before you retire.
With this goal of balance in mind, three stocks appear to be smart picks right now for investors in their fifties: Pfizer (PFE -1.05%), Chevron (CVX 0.08%), and Facebook (META -1.12%). Here's why.
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Pfizer: A big drugmaker that's roaring back
The first decade of the 21st century wasn't pretty for Pfizer. Shares of the big drugmaker sank more than 60%. Since 2010, though, Pfizer has made a huge comeback -- and should have plenty of room to move higher.
Pfizer claims eight products with annual direct sales of at least $1 billion. More importantly, the company has more new drugs and pipeline candidates that could add to that number.
Eucrisa won U.S. Food and Drug Administration (FDA) approval in December 2016 for treating atopic dermatitis. Bavencia received a green light from the FDA last month as the first approved treatment for metastatic Merkel cell carcinoma (MCC), a rare and aggressive form of skin cancer. Both drugs are expected to achieve blockbuster sales. Pfizer also expects three additional potential FDA approvals by the end of 2017.
While Pfizer should roll out several new big winners in the next couple of years, investors will also be winners thanks to the company's dividend. Pfizer's yield currently stands at 3.78%. The stock looks relatively inexpensive as well, with shares currently trading at 12 times expected earnings.
Chevron: One of the best big oil stocks
Oil and gas stocks took a big beating throughout much of 2014 and 2015. The situation improved last year, but 2017 hasn't been as great. Chevron's share price is down around 10% so far this year. However, that should present a solid buying opportunity for investors in their fifties.
Chevron has beaten other major oil stocks in total shareholder return over the past year, the past five years, the past 10 years, and the past 20 years. That's an impressive track record. One way that the company has been able to accomplish this is by squeezing high margins relative to competitors out of each barrel of oil sold.
Can Chevron keep up its winning ways? It seems likely. The company has cut its costs and focused investments on projects that should generate returns within two years. Chevron has also sold off some assets and expects to sell even more to improve its balance sheet.
Like Pfizer, Chevron boasts a dividend that investors of any age would like. Its yield currently stands at 4.07%. Chevron has increased its dividend payout for 29 years in a row.
Facebook: No dividend but lots of growth
Facebook might seem to be an odd choice for investors in their fifties to buy. The social media giant doesn't pay a dividend currently like Pfizer and Chevron do. However, fifty-something investors don't need to be exclusively focused on income-producing assets.
The primary reason to buy Facebook stock is its tremendous growth prospects. Even though its share price has more than doubled over the last three years, Facebook should be able to go even higher. Wall Street analysts project the company will grow earnings by an average annual rate of 23.5% over the next several years.
There are two keys to achieving that growth. Facebook continues to increase its numbers of active users, with nearly 17% more active users in the fourth quarter of 2016 than in the prior year period. The company is also significantly increasing its advertising revenue, with a staggering 53% year-over-year jump in the fourth quarter.
Facebook made $10.2 billion in profit last year. The company has nearly $29.5 billion in cash (including cash, cash equivalents, and marketable securities) and has no long-term debt. Facebook's board of directors authorized a $6 billion share buyback program in November 2016 -- a kind of "back-door dividend." The company also poured nearly $4.5 billion into capital investments that could pay off for investors over the long run.
