We recently published the Best Retirement Portfolio for a 65-Year-Old. In this article, we are going to take a look at where Analog Devices, Inc. (NASDAQ:ADI) stands against other stocks in the best retirement portfolio.
The American retirement system is feeling the strain, with challenges like shrinking fees, underfunded plans, and an aging population slowing down industry growth. Over the last decade, 401(k) expense ratios have declined by a third, according to a PwC report, and recordkeeping fees dropped 8% between 2015 and 2019, making it harder for retirement firms to stay profitable. Some companies have had to merge or shut down, but there is still a big opportunity. Businesses that offer better retirement benefits, financial advice, and affordable plans for small companies could attract more people and unlock an extra $5 trillion in retirement savings.
The urgency is real. A quarter of US adults have no retirement savings at all, and only 36% feel on track. Even those who are saving may not have enough. For people nearing retirement, between the ages of 55 to 64, the median savings of $120,000 might provide less than $1,000 a month for 15 years. This is hardly enough, especially with longer life expectancies and rising healthcare costs.
For most Americans, retirement means either living off of savings or finding ways to generate passive income. While some can count on Social Security or a pension, many have to plan their own financial future. Savings usually involve withdrawing money over time, while passive income could mean anything from rental properties to online businesses. Brian Bollinger, founder of Simply Safe Dividends, believes dividend-paying stocks can be a game-changer. Instead of selling stocks to make money, retirees can rely on regular dividend payments, helping stretch their savings.
Dividends have been a huge part of stock market returns, making up about 45% of the broader market's total gains since 1900. But despite their importance, they are often overlooked when planning for retirement, especially as baby boomers look for reliable income sources. According to Thornburg Investment Management, retirees typically fund expenses through either a total return approach, investing for growth and selling assets as needed, or a high-income approach, relying on high-yield investments for steady income. The first risks selling in down markets, while the second limits portfolio growth. A better strategy combines both; investing in stocks that not only pay dividends but also increase them over time can provide a steady income while allowing retirees to grow their wealth. Unlike bonds with fixed returns, dividend stocks can grow income, offering both stability and long-term financial growth. Over 30 years, dividend income has outpaced bond payouts, making it a strong option for retirees.
Analog Devices (ADI): A Top Pick For The Best Retirement Portfolio
A technician working on power management in a semiconductor factory.
Our Methodology
For this article, we searched the internet for widely recommended retirement stocks and selected those with at least a decade of consistent dividend growth and an average 5-year return of 50% or more as of March 24. We also selected stocks from different industries to make a well-rounded portfolio. Additionally, we have mentioned the hedge fund sentiment for each stock, as per Insider Monkey's database of Q4 2024, and ranked the list based on that data.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Number of Consecutive Years of Dividend Growth: 21
Average 5-Year Share Price Returns: 140.24%
Analog Devices, Inc. (NASDAQ:ADI) designs and sells integrated circuits, software, and subsystems for industries like automotive, healthcare, and consumer electronics. Its products include data converters, power management solutions, and MEMS technology. On March 10, ADI launched new tools to simplify development and enhance data security. The CodeFusion Studio System Planner streamlines project setup, while the Data Provenance solution ensures data integrity with secure metadata. These innovations pave the way for AI and machine learning in embedded systems.
Analog Devices, Inc. (NASDAQ:ADI) commenced fiscal 2025 with over $2.4 billion in revenue, seeing growth across Industrial, Automotive, and Communications, plus solid demand in the Consumer segment. Over the past year, the company pulled in $3.8 billion in operating cash flow and $3.2 billion in free cash flow. CEO Vincent Roche noted that despite economic and geopolitical challenges, ADI outperformed expectations because of cyclical recovery and new customer wins. CFO Richard Puccio added that bookings are steadily improving, especially in the Industrial and Automotive segments, setting the stage for continued growth in fiscal year 2025.
On February 18, Analog Devices, Inc. (NASDAQ:ADI) boosted its quarterly dividend by 8% to $0.99 per share, marking 21 straight years of increases. The dividend was paid on March 17 to shareholders on record as of March 4, 2025. The company also added $10 billion to its stock buyback program, bringing the total available for repurchases to $11.5 billion. Over the years, ADI has paid out more than $13 billion in dividends and bought back around $16 billion in stock. It is among the top stocks for the best retirement portfolio.
According to Insider Monkey’s Q4 data, 64 hedge funds reported owning stakes in Analog Devices, Inc. (NASDAQ:ADI), compared to 63 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management was the largest position holder in the company, with 2.85 million shares worth $607 million.
Overall, ADI ranks 7th on our list of the best retirement portfolio for a 65-year old. While we acknowledge the potential of ADI to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
