The U.S.-China trade war, the COVID-19 pandemic, and unrest across America are likely causing retirees to wonder if their retirement portfolios can withstand all the macro headwinds. However, three resilient stocks -- Johnson & Johnson (JNJ +0.90%), Broadcom (AVGO +0.17%), and Target (TGT +1.40%) -- should generate consistent returns in this volatile market.
Let's find out a bit more about them and how they can help you build weath and fund your retirement.
1. Johnson & Johnson
Johnson & Johnson is one of the largest makers of pharmaceuticals, medical devices, and consumer healthcare products in the world. It pays a forward dividend yield of 2.8%, it's raised its dividend annually for over half a century, and it generated a total return of nearly 500% over the past 20 years -- making it a great stock to buy, hold, and forget for most retirees.
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J&J's business is so well-diversified that occasional challenges -- like generic competition for its top drugs, product recalls, and lawsuits -- can't meaningfully curb its long-term growth. J&J expects its revenue and earnings to decline this year due to COVID-19 headwinds, but it still raised its dividend 6.3% in April as other blue-chip stocks slashed or suspended their payouts.
Looking ahead, J&J is developing a lead vaccine candidate for COVID-19, and it signed a $1 billion deal with the U.S. government to expand its manufacturing capacity to produce future vaccines. J&J's stock currently trades at a reasonable 19 times forward earnings, and should remain a solid safe haven stock if macro headwinds slam the market.
2. Broadcom
Broadcom, the chipmaker formerly known as Avago, produces chips for a wide range of industries. It expanded aggressively via acquisitions over the past few years, and its top customer is currently Apple.
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Broadcom generates most of its revenue from wireless, analog, and optical chips, but its recent acquisitions of CA Technologies and Symantec's security unit expanded its reach into infrastructure and security software.
Broadcom currently pays a forward dividend yield of 4.2%, and it's raised its dividend annually for a decade. Analysts expect its revenue and earnings to rise just 4% and 1%, respectively, this year, but the stock trades at just 14 times forward earnings.
COVID-19 is curbing demand for Broadcom's chips in the industrial and enterprise markets, but sales of its data center chips could accelerate as stay-at-home measures boost the use of cloud and streaming services. New 5G phones in the second half of the year should also boost sales of its smartphone chips.
In short, Broadcom's well-diversified portfolio and generous dividend make it a safe long-term play on the growing semiconductor and infrastructure software markets.
3. Target
Target, one of the largest retailers in the U.S., operates nearly 1,900 stores across all 50 states and the District of Columbia. Roughly three-quarters of Americans live within 10 miles of a Target store, and it owns the sixth-most-visited e-commerce website in the U.S., according to SimilarWeb.
Target has raised its dividend annually for over 50 years, and it currently pays a forward yield of 2.2%. Target weathered the retail apocalypse and competition from Amazon by aggressively expanding its e-commerce platform, fulfilling orders with its network of existing stores, investing in new pick-up and delivery options, and renovating its stores.
Target's comparable-store sales rose 3.4% last year, as its digital comps surged 29% -- marking the sixth straight year of over 25% growth. Its comps surged 10.8% in the first quarter, due to COVID-induced purchases of essential goods, but that tailwind is likely temporary.
Target's resilience arguably justifies its slightly higher forward price-to-earnings ratio of 27. Wall Street expects its revenue to rise 6% this year, but higher fulfillment and supply chain costs -- along with sales of lower-margin essentials -- could cause its earnings to decline 22%. But looking further ahead, those growth rates should stabilize and make Target a sound long-term stock for retirees.
