“The labor market has cooled off a lot from the overheated state of two years ago and is now essentially in balance. It continues to cool, albeit at a modest rate, and we don’t need additional cooling.”

These developments have raised concerns at the Federal Reserve as cracks appear in the labor market even as year-over-year inflation moderates. Higher interest rates, implemented to combat inflation, could pose risks to the labor market and broader economic growth. In response to these challenges, the Fed took the unusual step in September of cutting its benchmark short-term interest rate by half a percentage point — twice the typical quarter-point adjustments that policymakers prefer — despite the economy continues to expand.

READ ALSO: Retirement stock poreportfolio: 12 Saddlefe Tech stocks to consider.

While worker and retiree confidence in achieving a financially secure retirement has not fully recovered from the sharp decline in 2023, there are encouraging signs of recovery, according to the Employee Benefits Research Institute (EBRI). The EBRI 2024 Retirement Confidence Survey found that 68% of workers and 74% of retirees feel confident that they have enough funds to live comfortably in retirement. These figures show a modest improvement from 2023, when 64% of workers and 73% of retirees expressed similar confidence. However, inflation remains a significant concern, with 31% of workers and 40% of retirees citing it as a key reason for their lack of confidence. On a positive note, about 80 percent of workers see the SECURE 2.0 Act of 2022’s provision for employer-sponsored emergency savings accounts as a valuable benefit. Recent guidance from the Department of Labor and the IRS has also provided clarity on how plan sponsors can integrate these emergency savings accounts into their offerings.

During economic turmoil, investors often turn to low-risk stocks that offer stable returns in the face of increased uncertainty. In this regard, consumer staples stocks usually emerge as the favored option during such times given their ability to withstand macroeconomic challenges. Demand for essential goods remains constant regardless of economic conditions because consumers maintain consistent purchasing habits in good times and bad.

A customer in the aisles of a warehouse, browsing the wide range of branded and private label products.

To compile our list of the 10 best consumer stocks for a retirement portfolio, we focused on companies within the Consumer Staples Select Sector SPDR Fund. These companies were chosen for their historical resilience during economic downturns and well-established operations. In addition, we prioritized consumer stocks that offer stable dividend yields, supported by sustainable payout ratios (less than 70%) and a proven track record of dividend payments. The selected stocks were ranked based on their hedge fund sentiment as of Q3 2024.

Why do we care about the stocks in which hedge funds gather? The reason is simple: our research has shown that we can beat the market by mimicking the top picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (see more details here).

Dividend yield: 0.50%

Number of hedge fund holders: 75

Costco Wholesale Corporation ( NASDAQ:COST ) operates a chain of membership-based warehouse clubs that offer bulk pricing on products ranging from groceries and electronics to household goods.

The company demonstrated a strong financial performance in Q4 2024, with revenue increasing 1% year-over-year to $79.7 billion and net income increasing 9% to $2.354 billion. Comparable e-commerce sales rose 18.9%, and after adjustments, growth was even stronger at 19.5%. Costco Wholesale Corporation (NASDAQ:COST) continues to expand its digital footprint through initiatives such as its partnership with Uber, now available in 17 US states and Canada, increasing customer convenience and reach.

Tigress Financial Partners reiterated a buy rating on shares of Costco Wholesale Corporation (NASDAQ:COST) and raised their target price to $1,065. The firm pointed to Costco’s ability to deliver above-average return on capital and economic profit growth as drivers of long-term shareholder value. With a 12-month price target of $1,065, Tigress projects total return potential, including dividends, in excess of 20% from current levels.

Parnassus Core Equity Fund stated the following about Costco Wholesale Corporation (NASDAQ:COST) in Q2 2024 letter to the investor:

“Costco Wholesale Corporation (NASDAQ:COST) posted strong results for the third quarter of fiscal 2024, with robust net sales growth and strength in both the US and international markets. Bucking the trend of weakening demand for discretionary items that has weighed on many other retailers, Costco reported an increase in non-grocery sales.”

In total, COST ranks 2nd on our list of consumer stocks to buy for a retirement stock portfolio. While we recognize the potential for COST, our belief is that certain AI actions hold more promise for delivering higher returns and doing so in a shorter timeframe. If you’re looking for an AI stock that has more promise than COST but is trading at less than 5x its earnings, check out our report on cheapest AI stock.

READ THE FOLLOWING: 8 Best Wide Moat Stocks to Buy Now and Top 30 AI stocks according to BlackRock.

Disclosure: None. This article is originally published at Monkey inside.