Day: September 22, 2024

A new survey from a global investment firm recently uncovered a rare point on which Republicans and Democrats seem to agree: America faces a retirement savings crisis.

Only about half of American households have retirement savings accounts. The Social Security program may soon run short of funds, and those benefits were never meant to cover the full costs of retirement.

In an August survey, BlackRock asked 1,000 registered voters for their thoughts on retirement security in America. The responses transcended party lines.

When the survey asked voters if they think there is a retirement savings crisis in this country, 93% of Republicans answered yes, joined by 86% of Democrats and 94% of independents.

Three-quarters of Republicans said they are concerned about “not being able to maintain their standard of living” in retirement, joined by three-quarters of Democrats and a slightly smaller share of independents.

On questions of retirement security, Republicans and Democrats agree

The survey found broad bipartisan agreement on several other metrics of retirement security:

• Republicans said they expect to need $2.1 million in savings to get through retirement, on average, compared with $2 million for Democrats and $3 million for independents.

• Despite those lofty savings targets, roughly two-thirds of Democrats, Republicans and Independents in the survey report having less than $150,000 saved for retirement.

• One quarter of Democrats and Republicans who responded to the survey said they have no emergency savings, along with 29% of independents.

• The average Democrat and independent expects to retire at 64, the average Republican at 63.

BlackRock officials provided a detailed breakdown of survey responses by party affiliation in response to a request from USA TODAY.  They said 45% of respondents were Democrats, 42% Republicans and 13% independents.

Retirement fears cut across party lines, even in fractious times

Retirement experts say retirement security is a universal concern, one that cuts across party lines, even in politically fractious times.

“Aging and preparing for a financially secure retirement is an ‘everybody’ issue and an ‘everybody’ opportunity. We’re all in this together,” said Catherine Collinson, CEO of the nonpartisan Transamerica Center for Retirement Studies.

Legislation on retirement security has also enjoyed “a long history of collaboration on both sides of the aisle,” Collinson said. She cited Secure Act 2.0 of 2022, which reaped bipartisan support. That measure rewrote many rules for retirement saving, with a goal of boosting retirement security.

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The BlackRock survey provides fresh evidence of two major quandaries that face Americans who are in retirement or approaching it.

The first is a yawning gap between how much Americans save for retirement and how much they think they will need.

The second problem is a gap between when Americans expect to retire and when they actually retire. The average American retires at 62, according to two major retirement surveys. But the average over-50 worker expects to retire closer to 67.

From Harris and Trump, markedly different plans for Social Security

Former President Donald Trump and Vice President Kamala Harris have markedly different platforms on Social Security, a fund that is projected to run short in about a decade.

Harris pledges to “strengthen Social Security and Medicare for the long haul by making millionaires and billionaires pay their fair share in taxes.”

She would presumably follow the lead of President Joe Biden, who has vowed to raise new revenue by going after wealthy tax cheats and by raising tax rates on wealthy individuals and corporations.

Harris may also be alluding to the idea of extending the Social Security payroll tax to higher incomes, according to an analysis by Bankrate, the personal finance site. Workers don’t pay Social Security taxes on earnings above $168,600 in 2024.

Trump has “taken a more ambiguous stance” on Social Security, Bankrate reports, pledging to protect the benefits but not offering details on exactly how. Trump has made a case that economic growth and job creation would naturally boost payroll tax revenues, shoring up Social Security.

The Republican Party platform for 2024 includes a pledge to “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.” Trump has previously supported raising the American retirement age to 70.

When the candidates talk Social Security, older voters listen

Election-year surveys consistently suggest older voters are paying attention to what the candidates say about Social Security.

In a series of polls this summer, AARP has found that voters over age 50 in battleground states are more likely to vote for candidates who “commit to protecting Social Security,” among other issues.

“What they’re looking for is an acknowledgement” from the candidates “that they’re going to do what they can do to preserve Social Security for future generations,” said John Hishta, senior vice president of AARP. “That is one unifying issue that cuts across party lines.”

An annual retirement survey from Transamerica suggests the threat to Social Security ranks among the top five retirement fears of middle-class Americans in 2024.

“Our research finds that millions of Americans – tens of millions of Americans – are at risk of not being able to finance a secure retirement,” Collinson said. “And Social Security is the No. 1 issue on people’s minds.”

According to Transamerica research, the top priorities listed by middle-class Americans for the president and Congress are to fix Social Security’s funding shortfalls, to make health care and prescription drugs more affordable, and to ensure that all workers can save for retirement at work.

More: What if every worker in America were auto-enrolled in retirement savings?

Wealthy Americans share many of the same fears about retirement. In a 2023 report, Transamerica found that retirement security rises with income – but only to a point. Even among Americans with more than $200,000 in household income, the report found, only 42% said they are “very confident” they can maintain a comfortable lifestyle in retirement.

“Even with objectively high net-worth individuals, the idea of retiring and starting to spend your own assets and the threat of running out of money is scary,” said Peter Lazaroff, a certified financial planner in St. Louis. “And it doesn’t matter what your politics are.”

This article originally appeared on USA TODAY: Republicans and Democrats agree: America faces a retirement crisis

With a market capitalization of over $800 billion, Eli Lilly (NYSE: LLY) is the largest pharmaceutical company in the world. Much that is thanks to the rise of glucagon-like peptide-1 (GLP-1) agonists such as Mounjaro and Zepbound, which are fueling a new wave of growth for the company.

Over the past 12 months, its shares have soared 58% — nearly double the gains generated from the S&P 500 and Nasdaq Composite. Given its soaring share price, some investors might think a stock split could be on the horizon. While this is possible, I see it as unlikely. Lilly hasn’t split its stock since October 1997.

Instead, I think the company is going to raise its dividend. Let’s dig into Lilly’s dividend history, and explore why I think a raise could come before year-end.

Eli Lilly’s dividend history

On its corporate website, Eli Lilly’s financial records date back to 1972. Back then, Lilly paid a modest quarterly dividend of just $0.01 per share. Today, investors receive quarterly dividend payments of $1.30 (or $5.20 per year) for each share they own.

While it’s nice to see that Lilly has raised its dividend throughout its history, that hasn’t always been the case. Note in the graph below how between 2009 and 2014 Lilly’s dividend stayed flat. However, the company began to steadily raise its dividend starting in 2015, and this is a theme that has remained to today.

One of the reasons behind the dividend hike in 2015 could have been the approval of Lilly’s diabetes medication Trulicity, which got the nod from the Food and Drug Administration (FDA) in late 2014.

While GLP-1 medicines such as Zepbound and Mounjaro are currently Lilly’s newest bellwethers, the company’s expanded indication for its cancer drug, Verzenio, plus its recent approval for its Alzheimer’s treatment signal further growth ahead.

For these reasons, I think Lilly is positioned for more than just maintaining its dividend, but raising it again.

When does Elil Lilly historically raise its dividend?

Although Lilly started consistently raising its dividend in 2015, investors should be aware of some details around the schedule of these payments. Every year since then, Lilly announced a hike to its dividend payment in December with an ex-dividend date slotted for mid-February.

The bottom line

While I can’t say for certain that Lilly will raise its dividend again this upcoming December, historical trends are on my side. If you do think Lilly is going to announce a dividend hike in December, then you may want to scoop up shares before the ex-dividend date (likely to be sometime in February).

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Lilly has enormous potential between GLP-1 treatments, treating Alzheimer’s disease, and even longer-term bets in artificial intelligence. But the bigger idea here is that there is more to investing in Lilly than just its blockbuster drugs. The company offers investors a unique value proposition in that you’re exposed to several cutting-edge areas in the healthcare realm, while also collecting a dividend.

I see Lilly as an under-the-radar passive income opportunity and think now is as good a time as ever to buy shares, whether a dividend hike occurs again in December or not.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, consider this:

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Adam Spatacco has positions in Eli Lilly. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Prediction: This Is What Eli Lilly Stock Will Do Next (Hint: It’s Not a Stock Split) was originally published by The Motley Fool

It wasn’t long ago that nearly every electric vehicle (EV) stock was soaring in value. In 2021, for example, industry hype was at a fever pitch. Several EV companies — including Rivian Automotive and Lucid Group — debuted on the public markets with great fanfare, while conventional automakers were boasting about plans to aggressively expand their EV lineups.

A lot has changed since then. And after a steep industry sell-off, it’s time to go bargain shopping. One iconic EV stock in particular should be capturing your attention right now.

Is this famous EV stock finally a bargain?

Tesla (NASDAQ: TSLA), the automaker led by the controversial Elon Musk, took the market by storm a decade ago. It’s taken for granted by some today, but it had to prove to a skeptical consumer base that EVs could be beautiful, reliable, and downright fun.

Its multibillion-dollar investments into its charging network, meanwhile, spurred global demand for a vehicle category that, at least at the time, still had a higher total ownership cost than conventional internal-combustion alternatives.

Tesla’s early mover advantage gave it a strong foothold in an industry that had structurally underinvested in its EV lineups. It had the personnel, capital, fan base, and manufacturing capabilities to scale up production rapidly just as EV demand started to take off. From 2018 to 2022, for instance, sales grew by an astounding 357%.

But then a curious thing happened. EV sales in the U.S. continued to climb, but slower than expected. This put a huge dent in the premium valuations the market had formerly assigned to EV stocks.

From 2022 to 2024, for example, Tesla’s valuation fell from nearly 30 times sales to under 10 times sales — a two-thirds reduction over 24 months. Other EV makers like Rivian and Lucid saw similar valuation declines.

More recently, Tesla’s revenue base has not only flattened, but has also declined in certain quarters. To be fair, the stock is still relatively expensive at 8.4 times sales. But if you have been waiting to buy into this iconic EV stock, this could be your chance. One statistic in particular should get you excited.

Tesla is still the king of EVs

While Tesla is involved in other business ventures, including solar energy and battery storage, more than 90% of its revenue base is still tied up in its automotive segment. Its future will be made or broken based on the success of this business, and most of its valuation is related to its fate.

It’s important to keep in mind that it still commands a dominant share of the U.S. EV market. Various estimates peg it with a 50% to 80% market share.

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And demand for EVs continues to grow despite a reduction in forecasts. Over the next five years, domestic EV sales are now expected to grow by more than 10% annually, with industry revenue for EVs in the U.S. surpassing $150 billion by 2029.

Globally, EV sales are expected to top $1 trillion by 2029. That’s good news considering Tesla has a projected 39.4% market share globally, greater than the next eight competitors combined.

Put simply, the EV market is still Tesla’s to lose. It has more capital, more brand-name recognition, and more manufacturing capacity than any other competitor. And right now, several conventional automakers are pulling back on their EV plans, potentially allowing the company to maintain its dominant industry position for years to come.

We might look back at 2024 as a clear outlier in Tesla’s long-term growth trajectory. Sales are expected to decline by 8.2% this year. But in 2025, analysts are expecting a rebound, with revenue jumping by 15.8%.

Is the stock still expensive at 8.4 times sales? Absolutely. But its long-term promise remains intact, and the current valuation is a relative bargain compared to years past.

If you believe in EVs long term, it’s hard not to bet on the current industry leader, even if there are some near-term challenges on the road ahead. It would be a speculative bet, but investors who have been eyeing Tesla for years while waiting for a pullback should consider a small investment. If shares continue to decline, it could be a prime opportunity for dollar-cost averaging.

Should you invest $1,000 in Tesla right now?

Before you buy stock in Tesla, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tesla wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $710,860!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 16, 2024

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

1 No-Brainer Electric Vehicle (EV) Stock to Buy With $200 Right Now was originally published by The Motley Fool

This story originally appeared in The Technology Letter and is republished here with permission.

Most Read from Fast Company

Shares of Intel jumped 3% Friday as The Wall Street Journal’s Lauren Thomas, Laura Cooper, and Asa Fitch reported that Qualcomm has approached Intel about acquiring it for perhaps as much as $90 billion, citing multiple unnamed sources.

The “massive” deal, as the authors put it, is financially daunting, as Qualcomm has just $13 billion in cash and equivalents on its balance sheet against $13 billion of long-term debt. Even a mostly stock exchange would require some large debt raise. Intel, moreover, already has $19 billion of net long-term debt.

The deal is much larger than Qualcomm’s attempted acquisition of NXP Semiconductor in 2016 for $38 billion. That was initiated at a time when Qualcomm had an enormous amount of cash trapped overseas prior to 2017’s Tax Cuts and Jobs Act that let Qualcomm bring it back to the U.S. (Qualcomm ultimately spent $22 billion of repatriated money on buybacks when the NXP deal was canceled.)

The profile of the combination, moreover, would be financially unattractive, as Intel has a 35% gross profit margin to Qualcomm’s 76%. And Qualcomm’s pretax operating margin is near 30%, whereas Intel’s is break-even on an adjusted basis, but actually negative by 15% when all costs are factored in. Intel would immediately dilute Qualcomm’s profit profile.

Assuming, however, Qualcomm could pull it off financially, what are the synergies— meaning, what is to be gained financially and strategically from such a move?

What Qualcomm needs most is diversification, as it is still considered by investors to be a cell phone chipmaker. It still gets about 70% of its chip revenue quarterly from mobile, even though Qualcomm has for several years been selling chips into the Internet of Things (IoT) market and the automotive market.

Buying Intel would immediately make the company the top PC microprocessor and server processor vendor, which would certainly change the profile of the company.

Intel needs to regain its manufacturing prowess. The positive announcements from the company earlier this week included references to the company having “momentum” in getting its newest chip technology, 18A, out the door next year. It’s hard to know what that momentum really means, and whether it’s going to restore Intel to greatness. It’s conceivable Intel needs a helping hand.

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Qualcomm, which has no factories of its own, offers, ostensibly, nothing to help Intel in that regard. While it is possible Qualcomm’s higher-margin products could give Intel a much needed financial lifeline that would advance that momentum, I’m not sure throwing money at the problem is the solution. More cooks in the kitchen is not going to streamline the intricate challenge of enhancing Intel’s factory operations.

Moreover, neither company has, individually or collectively, the solution to their mutual problem, Nvidia. While both Intel and Qualcomm have ample artificial intelligence resources, neither has been able to put a dent in Nvidia’s market dominance despite years of trying.

It’s possible that Qualcomm’s CEO, Cristiano Amon, sees something deeper. One possibility is that he sees a grand alliance, of sorts, of Intel’s server chips and Qualcomm’s mobile chips that might somehow box Nvidia out of the AI market as AI moves to mobile phones.

The phenomenon is called in the industry “AI at the edge,” where the server and the handset intelligently apportion the work between them to make the most efficient processing of AI where it makes sense for the available computing resources. One does stuff that’s private and low-resource on the handset, and the really heavy-lifting sorts of AI, in the cloud.

Nvidia doesn’t have a mobile chip offering, so that line of argument has a certain appeal. Moreover, Intel’s substantial assets in what’s called chip “packaging,” the ability to combine multiple chips into one giant chip, could allow for new kinds of mobile products beyond what Qualcomm currently builds with the help of Taiwan Semiconductor Manufacturing.

A grand alliance to defeat Nvidia still faces the problem that Intel’s x86 chip architecture, which dominates PCs and servers, is nowhere in the handset business. It’s not clear the combined efforts of the two companies could make it relevant in that regard, with or without lots of AI capabilities.

You can imagine lots of other, less-glamorous possibilities. Intel is going to spend billions of CHIPS Act funding to build U.S. factories, and perhaps Amon sees the possibility there of boosting Qualcomm’s profile by making it an American-made company.

It’s also possible that Amon simply sees a stock trading too cheaply. Intel shares fetch two times the revenue and 19 times next year’s expected earnings per share, among the lowest multiples in the industry.

For the moment, Qualcomm investors don’t see too much to cheer about. Qualcomm stock was down 3% on the news. Qualcomm has trailed the Nasdaq Composite this year, rising 17% versus 20% for the Index.

This story originally appeared in The Technology Letter and is republished here with permission.

This post originally appeared at fastcompany.com
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