8 Stable Stocks for Every 401(k) Investor

Wayne Duggan

Retirement investors are seeking stability.

The past few weeks have been a wake-up call for retirement investors. With the trade war ramping up and S&P 500 earnings on track for their second consecutive quarter of declines, long-term investors are on edge. When it comes to 401(K) retirement investments, most Americans would prefer the peace of mind of owning high-quality stocks rather than gamble on high-risk stocks that could put their futures at risk. Here are eight 401(K) stocks to buy that have stable businesses, at least 3% dividend yields and a steady track record of long-term gains, according to CFRA.

Broadcom (ticker: AVGO)

Semiconductor giant and iPhone supplier Broadcom has had an eventful couple of years. A 2018 buyout of Qualcomm (QCOM) was blocked on national security grounds, but a takeover of CA Technologies closed in November. Earlier this month, Broadcom followed up with a $10.7 billion acquisition of the Symantec Corp. (SYMC) enterprise security business. Through all the merger chaos, analyst Angelo Zino says Broadcom is diversifying its business, gaining more content per wireless device and positioning itself well for secular data center growth. CFRA has a "strong buy" rating and $333 price target for AVGO stock.

BB&T Corp. (BBT)

BB&T is one of the 10 largest U.S. banks by deposit base. Despite falling interest rates, analyst Stewart Glickman is projecting expanding net interest margins, steady loan growth and rising fee income as capital markets activity grows. In addition, stock buybacks and a 3.8% dividend yield will help support the stock and boost earnings per share, Glickman says. CFRA is projecting its SunTrust merger will close by the end of the year and boost earnings by 13% in 2021. CFRA has a "buy" rating and $56 price target for BBT stock.

Exelon Corp. (EXC)

Exelon is a U.S. East Coast electric and gas utility company. Analyst Christopher Muir says zero emission credit revenues will help offset relatively low wholesale electricity prices. CFRA is projecting revenue declines will ease from 11.2% in 2019 to 1.7% in 2020. At the same time, $200 million in cost cuts combined with higher rates should help boost earnings before interest and taxes margins from 14.8% in 2017 to 16.5% in 2020, Muir says. CFRA has a "strong buy" rating and $52 price target for EXC stock.

J.P. Morgan Chase & Co. (JPM)

J.P. Morgan has been the best-performing bank stock among the U.S. "big four" global banks since the 2008 financial crisis. Analyst Kenneth Leon says JPC has several long-term catalysts ahead, including fee and loan revenue growth, investment bank share gains and an uptick in underwriting in Europe, the Middle East and Africa. In the most recent quarter, loan growth was 2%, and credit quality remained strong. Leon is projecting at least 4% revenue growth in 2019. CFRA has a "buy" rating and $130 price target for JPM stock.

Realty Income Corp. (O)

Realty Income is a real estate investment trust, or REIT, with about 80% of its revenue derived from single-tenant retail properties. Analyst Chris Kuiper recently upgraded O stock and says a 98.3% occupancy rate and 1.4% same-store rent growth last quarter demonstrate the resiliency and consistency of the REIT's properties. Kuiper says Realty Income has a pristine balance sheet, and the average remaining duration of its current property leases is 10 years, providing stability for long-term retirement investors. CFRA has a "buy" rating and $75 price target for O stock.

Regency Centers Corp. (REG)

Regency Centers is REIT that has ownership stakes in roughly 330 shopping centers and other single-tenant properties throughout the U.S. Despite a drag from the Sears bankruptcy, Regency reported a 95.1% occupancy rate last quarter, down just 0.6% from a year ago. Kuiper says a 7% increase in rents and 1.4% growth in net operating income were positive signs. He also says Regency's defensive, grocery-anchored properties should provide a solid source of long-term cash flow. CFRA has a "buy" rating and $70 price target for REG stock.

Southern Company (SO)

Southern is the parent company of electric utilities Alabama Power, Georgia Power, Gulf Power and Mississippi Power. Muir says Southern's stock is trading at roughly a 13% valuation discount to its peer group. The company pays an impressive 4.2% dividend yield and has a modest payout ratio of around 81%. Muir is projecting a 6.1% decline in revenue in 2019, but a return to 3.2% growth in 2020 following several small asset sales this year. CFRA has a "buy" rating and $60 price target for SO stock.

Valero Energy Corp. (VLO)

The trade war has once again sent crude oil prices tumbling. However, for refiners like Valero, lower oil prices simply mean cheaper input costs. Glickman says long-term investors should appreciate Valero's exposure to the U.S. Gulf Coast, which is a key region for exports to Europe and South America. In the near term, Valero's exposure to Venezuela has created risk and weighed on the stock, but Glickman says new International Maritime Organization sulphur regulations in 2020 should be a positive catalyst for Valero. CFRA has a "buy" rating and $95 price target for VLO stock.

Great stable income stocks for retirement investors:

-- Broadcom (AVGO)

-- BB&T Corp. (BBT)

-- Exelon Corp. (EXC)

-- J.P. Morgan Chase & Co. (JPM)

-- Realty Income Corp. (O)

-- Regency Centers Corp. (REG)

-- Southern Company (SO)

-- Valero Energy Corp. (VLO)