Baby Boomers Retiring and Spending Big: 5 Companies May Benefit Huge

Investing

Published: October 27, 2016 8:20 am

Last Updated: January 13, 2020 1:52 am

The baby boomer generation was between 1946 and 1964 and turned into a huge influence on our society. Now with many retiring and others right behind them, they are also a very powerful force in the economy, as many wealthy boomers have a ton of time on their hands and plenty of money to spend.

A recent UBS research report notes that various segments of the economy may be set to disproportionately benefit, as all that money that was stashed away in savings, pensions, IRAs and 401(k) plans starts to gush out and be spent. They have put together a baby boomers stock list, of 16 companies they think will benefit from this cash tidal wave. These five also pay solid dividends

Ameriprise Financial

This top company offers investors solid upside potential and a very nice dividend. Ameriprise Financial Inc. (NYSE: AMP) provides a range of financial products and services in the United States and internationally. The Advice & Wealth Management segment offers financial planning and advice, as well as brokerage services primarily to retail clients through its advisors.

Its Asset Management segment provides investment advice and investment products to retail, high net worth, and institutional clients through unaffiliated third-party financial institutions and institutional sales force. In recent years Ameriprise has recruited heavily from the top Wall Street firms’ ranks.

Ameriprise returned $568 million to investors in the first quarter via buybacks and dividends, as well as raised its quarterly payout by 12%. Trading at a forward price-to-earnings number of just over 9 and PEG of 1.11, the stock makes sense for investors looking to add a top financial.

Investors receive a 3.33% dividend. The Wall Street consensus price target for the stock is $109.89. Shares closed Wednesday at $90.13.

Carnival

Boomers love to cruise, and this is one of the sector leaders. Carnival Corp. (NYSE: CCL) operates as a leisure travel and cruise company in North America, Europe, Australia and Asia. It offers cruises under the Carnival Cruise Line, Princess Cruises, Holland America Line and Seabourn brands in North America, as well as the Costa, AIDA, P&O Cruises (UK), Cunard and P&O Cruises (Australia) brands in Europe, Australia and Asia.

The company operates 99 cruise ships. It also owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon, which owns and operates 11 hotels or lodges, approximately 300 motor coaches and 20 glass-domed railcars. In addition, the company is involved in the leasing of cruise ships. It sells its cruises primarily through travel agents and tour operators.

Shareholders are paid a 2.97% dividend. The UBS price target is set at $58, and the consensus target is $55.02. The shares closed most recently at $47.15.

CVS Health

This top stock has been hit hard this year, down over 15% since May, and it also resides in the UBS dividend ruler portfolio. CVS Health Corp. (NYSE: CVS) provides integrated pharmacy health care services. Its Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management.

The Retail/LTC segment sells prescription and over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise and greeting cards, as well as provides photo finishing services.

The company operates 9,655 retail stores in 49 states, the District of Columbia, Puerto Rico and Brazil, primarily under the CVS Pharmacy, CVS, Longs Drugs, Navarro Discount Pharmacy and Drogaria Onofre names; online retail pharmacy websites; and 32 on-site pharmacy stores, long-term care pharmacy operations and retail health care clinics.

Some think that Warren Buffett may have his eye on the company.

CVS investors receive a 1.94% dividend. The UBS price target is $107, and the consensus target is $107.70. Shares closed Wednesday at $87.57.

Eli Lilly

This is another stock with substantial upside potential. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

The company posted third-quarter results well below Wall Street’s expectations, prompting shares to plummet to a four-month low, before rebounding. The stock is down almost 10% on the year and is offering investors an outstanding entry point. Top Wall Street analysts are still very focused on the company’s outstanding late-stage product pipeline, which they and others view as very undervalued.

Shareholders receive a 2.66% dividend. The consensus price target is $97.40. Shares closed Wednesday at $76.76.

Medtronic

This company is now based in Ireland after the gigantic merger with Covidien in 2015. Medtronic PLC (NYSE: MDT) is a medical devices giant, and many on Wall Street saw this historical merger, probably one of the largest in the medtech industry, as a momentous event, leading to the creation of a unique company that combines the extensive and innovative abilities of both Medtronic and Covidien. The combined company officially has joint forces of over 85,000 employees present in more than 160 countries.

Top analysts feel that the contributions from Medtronic’s three growth drivers, which they cite as therapy innovation, globalization and services/solutions, should support a 5% or greater constant currency top-line growth this year and beyond. Some also feel that the Covidien earnings potential is underappreciated, and the change in domicile is also a positive.

Medtronic investors are paid a 2.12% dividend. The $96 UBS price target compares to the consensus target of $94.63. The shares closed on Wednesday at $81.12.

Obviously health care companies benefit from an aging demographic, which is also living longer, but the baby boomers will be cruising and spending money in a big way. It is expected that the boomers will inherit a stunning $11.6 trillion, most of it in later middle-age years. Add that to their savings and investments from long careers, and their will be a ton of cash to be spent.

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