Retirement Portfolio: Buy American

Includes: AAPL, DIS, F, KO, MCD
by: Scott MacDonald

By Scott MacDonald

Growing up my father always told me to work with my mind instead of my back because my mind will last a whole lot longer. My mother always said that I need to go to college, get a degree and find a job with a big company and if I stay with them for 30 years they will take care of me when I retire. Well, as far as advice goes I am going to give the edge to my father on this one. It is not that my mother was wrong, at least not when she said it, through the late 1980s and early 1990s. The world changed and that advice became obsolete. Employers have retired traditional retirement plans. Now we are left to fend for ourselves with 401Ks and what is left of Social Security.

If you have a self-directed 401K or IRA or perhaps you simply have a long investment horizon (5 years +) I have a bit of sage wisdom for you. Buy American! I am a veteran of the U.S. Army and I definitely consider myself a patriot but that is not why I believe in investing in American companies. I believe in investing in companies you know and businesses you understand. You should own companies that you don't need to subscribe to the Wall Street Journal (great publication by the way) to hear about. You should see their advertisements on the television and in magazines you read. If they stumble or succeed it should be something that won't escape your notice. I am not suggesting you invest in just any American companies but in American Icons.

I have assembled a list of 5 companies that represent the innovation, resilience and hard work that makes America great. Not-so-coincidently they also make up a heck of a low-maintenance retirement portfolio.

Ford Motor Company (NYSE:F)

Ford is the only one of the Big Three U.S. automakers [General Motors (NYSE:GM), Ford, Chrysler] that didn't accept a bailout during the Great Recession. To survive the recession Ford accrued severe amounts of debt but gained the respect of consumers. Ford has been working hard to improve its credit rating by aggressively paying down debt, has started offering a dividend again for the first time since 2006 and currently sports a rock-bottom 2.2 price-to-earnings ratio (TTM). This has more than one analyst (here and here) thinking that Ford's stock price could double over the next 12 months. I feel comfortable agreeing with them. Former Boeing (NYSE:BA) CEO, Alan Mulally, has masterfully captained Ford during uncertain times and as long as he is at the helm I am long Ford.

Walt Disney Company (NYSE:DIS)

Right now might not be the best entry point since Disney has been on a tear since October 2011, gaining approximately 25% over the last 6 months and appears to be fair valued. However, if you're a long-term investor Disney should have a place in your portfolio. Disney still has a P/E of 16, which coincidentally is also the expected earnings growth (16%) for 2012. Walt Disney Company, its theme parks, characters, TV Networks and resorts represent arguably the strongest brand in the world. A couple key acquisitions, Pixar and Marvel, have greatly enhanced the earning potential of the major motion picture portion of Disney's portfolio as evidence by the record smashing blockbuster release of The Avengers.


I am not going to spend a whole lot of words convincing you to buy Apple. There is a reason over 44,000 stock watchers on Seeking Alpha receive email notification every time an article is written about the stock. Apple is sitting on a mountain of cash and has had staggering earnings growth year after year and still only has a trailing twelve month P/E of 14. Buy it, own it, be happy.

Coca Cola Company (NYSE:KO)

Coca Cola is number one in the global beverage market and consistently delivers in both revenue and earnings. While Coke is one of the most recognizable brands in the world it is far from fully penetrated in emerging markets. Todd Johnson recommends Coca Cola as a core stock for retirees' dividend income portfolios in a well thought out article published on June 13th, 2012.

McDonald's Corporation (NYSE:MCD)

Bargain Bin calls McDonald's stock a dividend investor's dream. If you have stuck with me this long you have probably noticed the theme of this article. All of the stocks I have listed above have a strong brand, commitment to increasing dividend yield (with the exception of Apple), low beta and consistent earnings growth. McDonald's is no different. All of these American Icons fit well in a low maintenance, long-term investment portfolio. You will not need to subscribe to obscure financial publications to know if these companies are in trouble. It will be front page news. The dividends and low beta will provide stability and consistency. These are all mature companies and industry leaders that have seen their share of ups and downs and are still standing as will be your 401K/IRA if you make these five stocks the bedrock of your retirement portfolio.

Disclosure: I am long F, DIS.