This article was updated on Jan. 13, 2016.
The stock market can produce huge profits over time, and therefore many see stocks as an investment from which young people can reap the biggest rewards. Yet those in their 50s tend to have the most disposable income to invest, often because their children move out and expenses like college tuition fall by the wayside. As a result, many 50-somethings have a unique opportunity to put their money to work in stocks, and it's important that they make the most of the growth opportunities available to them while also starting to think about investments that will generate the income they need once they retire. With that in mind, let's look at three stocks you should consider if you're in your 50s and starting to approach retirement.
Microsoft continues to evolve
For many years, investors believed that Microsoft's(MSFT -2.10%) growth days were over. Despite a lucrative dividend yield approaching 3%, Microsoft seemed to be stuck in an endless cycle of being an also-ran in key areas like cloud computing and the mobile industry.
Yet the appointment of CEO Satya Nadella in early 2014 led to a revolution within Microsoft, as the company started to change its corporate culture and evolve into a more promising company. After years of resistance, Microsoft finally made some of its most successful software offerings, such as Office 365, available to users on competing operating systems like iOS and Android. That tapped into huge demand from users who weren't willing to stick with the Windows ecosystem but who still wanted the power and functionality that popular products like Word and Excel offer. At the same time, the new Windows 10 release has gone quite well, and the long-lagging hardware area has seen great progress with the Surface line of tablets and other products.
It's too early to declare total victory, but Microsoft has posted impressive gains in 2015 and looks poised to keep advancing. For long-term investors, the tech giant offers a good combination of potential growth and current income.
Carnival keeps cruising
As retirement approaches, many people start thinking about vacations, and cruise-ship operator Carnival (CCL -2.18%) has cashed in on the demographic advantages of appealing to a growing group of retiring baby boomers. As the largest cruise operator in the world, Carnival has about 100 ships in its fleet, and it's still looking to grow through more efficient ship designs that can accommodate more passengers and cut operating costs.
Well-established markets in the U.S. remain healthy, but Carnival is also jumping at new growth opportunities in China, which it sees as the fastest-growing market in the world. With initiatives designed to target Chinese travelers, Carnival hopes that it can keep getting bigger around the world while still generating the results it needs to keep paying its current dividend, which yields between 2% and 2.5% right now.
NextEra offers the utility of growth and income
Utility stocks offer a good mix of conservative growth and current income, and NextEra Energy (NEE -0.32%) is a good example of how investors can earn a yield of nearly 3% while not giving up on the possibility of business expansion down the road.
NextEra has done a better job than many of its peers in jumping on the opportunity in renewable energy, with extensive holdings in wind and solar power. When you add in extensive nuclear power-generation capabilities, NextEra doesn't have nearly the carbon footprint that most electricity generating utilities have, and that means it won't necessarily face the same challenges of current and future regulation on carbon emissions that some other utilities will. The utility industry isn't likely to produce blockbuster returns, but steady and reliable results can help even those in their 50s grow their wealth considerably over time.
Some financial advisors tell clients in their 50s to start reducing their exposure to the stock market. Yet if you have ambitious plans for a prosperous retirement, then stocks like these three can help you reach your goals and achieve the financial security you crave.