Top Retirement Stocks to Buy in 2016

Source: Google.

Brian Stoffel (Alphabet): It might seem odd to suggest that Alphabet -- the company formerly known as Google -- would make a top pick as a retirement stock to buy. Currently, the company is already the second most valuable in the world, worth for over $500 billion. It also trades for roughly 28 times non-GAAP trailing earnings, which isn't cheap. And most importantly, for retirees, it offers no dividend.

But hear me out.

If you buy shares in Alphabet, you're getting a two-for-one deal. On one hand, you own shares in a company with one of the widest moats in the world -- Google owns 71% of the global search market share. You also get a piece of the world's most popular mobile operating system (Android) and the world's third most popular website (

You also get exposure to Google's semi-top-secret moonshot business, dubbed Google[x]. Run by co-founder Sergey Brin, the projects aims to develop life-altering technologies. Some that we know about are self-driving cars, and contact lenses that can measure certain health metrics seamlessly. If any one of Google[x]'s projects become a hit, it'd be a boon for investors.

But perhaps most importantly, Google is sitting on a pile of cash -- roughly $71 billion, to be exact. Eventually, I believe that Google, like other more mature technology companies, will begin to pay out a dividend. Over the past 12 months, the company has generated $14.6 billion. If it chose to use just 35% of that cash flow to pay out dividends, it would amount to a respectable 1% dividend yield, but with plenty of opportunity for growth in the future.

BIP Dividend Chart

BIP Dividend data by YCharts

If you bought shares today, you'd get more than a 5.5% yield on your investment, and management's stated target is to increase payouts between 5% and 9% annually. If steady, growing retirement income is your goal, Brookfield Infrastructure Partners deserves a close look.

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The article Top Retirement Stocks to Buy in 2016 originally appeared on

Brian Stoffel owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. Dan Caplinger owns shares of Alphabet (C shares), Apple, and Berkshire Hathaway. Jason Hall owns shares of Alphabet (A shares), Apple, Berkshire Hathaway, and Brookfield Infrastructure Partners. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Berkshire Hathaway. The Motley Fool recommends Brookfield Infrastructure Partners. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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