We recently published a list of Retirement Stock Portfolio: 12 Safe Tech Stocks To Consider. In this article, we are going to take a look at where Leidos Holdings, Inc. (NYSE:LDOS) stands against other safe tech stocks in retirement portfolio.
In the past, retirees could rely on bonds to provide steady income, with 10-year Treasury yields around 6.50% in the late 1990s. However, current rates are significantly lower, resulting in a major impact over time. For instance, a $1 million investment in 10-year Treasuries now yields over $1 million less than it would have 20 years ago. Adding to this concern, today’s retirees are increasingly uncertain about the future of Social Security. According to a survey by investment manager Schroders, Americans with employer-provided retirement plans estimate they’ll need $1.2 million to retire comfortably. However, nearly half expect to have less than $500,000 saved. Another study by Transamerica Institute shows that only 1 in 5 middle-class individuals feel confident in their ability to retire or maintain a comfortable lifestyle during retirement. Many of these anxious pre-retirees plan to start Social Security benefits before age 67, even though waiting until at least age 70 would maximize their monthly payments for life. Overall, pre-retirement anxiety appears to be widespread.
That said, the retirement realm may not be as bleak as it appears at first. According to this year’s survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research, nearly 80% of retirees feel they can spend money as they wish, and an even higher percentage believe they are living the retirement lifestyle they envisioned. In addition to managing their current expenses, over half of retirees are still saving for the future. Key factors contributing to this success include planning—such as deciding when to claim Social Security, preparing for emergencies, estimating retirement duration, and periodically reviewing and rebalancing asset allocations to stay on track during market fluctuations.
Additionally, inflation slowed down to its weakest pace in over three years last month, as price increases continued to ease from their generational highs. With concerns about the rising cost of living playing a central role in the presidential election campaign, the Bureau of Labor Statistics released its final inflation report before voters head to the polls. The consumer price index rose 2.4% year-over-year in September, slightly above economists’ expectations of 2.3% but down from 2.5% in August. The “core” index, excluding volatile food and energy prices, climbed 3.3% annually. On a monthly basis, prices increased by 0.2%. Meanwhile, the broader U.S. economy remains strong, with employers adding 254,000 jobs in September, countering fears of a labor market slowdown.
That said, during economic challenges, investors—especially those focused on securing their retirement—often gravitate toward low-risk stocks that offer steady returns amidst uncertainty. Healthcare and consumer stocks are typically favored in such conditions, but tech stocks can also be a smart investment if chosen wisely. Tech stocks have consistently outperformed the broader market for several years and now make up over 30% of the market’s total holdings.
Our Methodology
For our list of the 12 best safe stocks for a retirement portfolio, we used stock screeners, ETFs, and online rankings to identify mega-cap tech stocks with low beta values, a track record of consistent dividend payments, and well-established businesses. These stocks were then ranked based on hedge fund sentiment, as reported in Insider Monkey’s Q2 2024 database.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of an engineer working on the development of a new air navigation system.
Leidos Holdings, Inc. (NYSE:LDOS)
Beta Value: 0.70
Dividend Yield: 0.91%
Number of Hedge Fund Holders: 38
Leidos Holdings, Inc. (NYSE:LDOS) is a U.S.-based company specializing in defense, aviation, information technology, and biomedical research, with its headquarters in Reston, Virginia. The company provides a range of services, including scientific research, engineering, systems integration, and technical support.
Leidos Holdings, Inc. (NYSE:LDOS) recently experienced strong financial growth, reporting a 7.7% year-over-year revenue increase to $4.13 billion and a significant 33% rise in adjusted EBITDA, reaching $559 million. The company also secured several major contracts, including a $51 million deal with the Centers for Disease Control and Prevention to enhance the National Healthcare Safety Network.
Additionally, Truist Securities recently raised its price target for Leidos Holdings, Inc. (NYSE:LDOS), highlighting potential gains from the company’s existing portfolio and improved profit margins driven by cost optimization strategies.
By the end of June 2024, 38 of the 912 hedge funds tracked by Insider Monkey held positions in Leidos. The largest hedge fund shareholder was Israel Englander’s Millennium Management, with a $165.3 million stake in the company.
Overall, LDOS ranks 8th on our list of safe tech stocks to consider in retirement portfolio. While we acknowledge the potential of LDOS, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LDOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.