Are you about to retire and you are worried to lose money in this crazy market? The best retirement stocks often rhyme with a good yield and price stability. Unfortunately, the stock market is highly volatile and could crush even the best retirement stocks. You shouldn’t be losing money at retirement. You should be receiving income from the best retirement companies.
When looking at building a solid retirement portfolio, retirees or soon to be retirees are concerned with achieving a combination of steady income and value stability. Some retirees will balance the scale more towards income and will tend to pick high yielding stocks, which might bring some inherent risk. At Dividend Stocks Rock (DSR) we tend to favor companies with a 4-5% dividend yield along with decent dividend growth that at least beats inflation. It some rare instances, you will find retirement stocks with more than 6% dividend growth rate that will not only keep up with inflation but increase your paycheck every year.
In this section, we want to give you a sneak peek of some of the companies we analyze at DSR and how they fit our retirement model portfolios. These companies are some of the best quality players in their markets, and show not only a strong dividend growth track record, but a great potential of maintaining that generosity with shareholders.
- Market Cap: $344B
- Yield: 4.05%
- Revenue growth (5yr, annualized): 17%
- EPS growth rate (5yr, annualized): 16.5%
- Dividend growth rate (5yr, annualized): 17.95%
AbbVie is a research-based biopharmaceutical company. As core to their research-based business model, they are really good at developing new drugs, something that is key in order to be successful in the healthcare sector. The company sells products for immunology, oncology, aesthetics, neuroscience, eye care, women’s care, among others. As you can tell from the categories it is also a very well-diversified company.
A few years it was criticized for its dependency on Humira, but they have successfully diversified away from it. Humira represented about 58% of profits in 2019, down to 36% in 2021. New drugs in the company’s immunology portfolio such as Skyrizi and Rinvoq are accelerating more aggressive growth and are expected to produce over $15B in sales by 2025. Finally, the company is betting on psoriasis and rheumatoid arthritis drug which are in high demand. It is worth mentioning that the company recently acquired Allergan as a strategy to further diversify the company’s offerings and extend its patents.
AbbVie is a company worth any retirement account. It checks all the boxes, and we love the commitment management has to shareholders. The dividend growth does not only beat inflation, it is enough to give you a fatter paycheck each year (even in today’s inflationary environment). The cash payout ratio is around 82% which is a good balance of commitment to shareholders while leaving room for growth even if the company must face some headwinds. Your retirement plan is safe with stellar dividend growers such as AbbVie.
STAG Industrial (STAG)
- Market Cap: $5.4B
- Yield: 4.80%
- Revenue growth (5yr, annualized): 17.55%
- EPS growth rate (5yr, annualized): 48.55%
- Dividend growth rate (5yr, annualized): 0.85%
STAG Industrial is one of those REITs that was ignored for a long time to be a contender for a retirement portfolio due to its short track record. The company focuses on the acquisition, ownership, and operation of industrial properties in the United States. The company owns 544 buildings in 40 states, with approximately 108 million rentable square feet.
The industrial asset class within real estate investment-grade options was the ugly duckling for several years. It was always just not as sexy as big fancy office buildings, or modern shopping centers. Everything changed with the growth of e-commerce and even more with the pandemic. Today the industrial asset class is one of the hottest in the industry, companies just need more warehouse space to fulfill online orders, or even just for their logistics. In the case of STAG, 40% of its customers operate around the e-commerce industry. Finally, most of its tenants are publicly traded companies with strong credit ratings, further decreasing the risk of default.
STAG’s growth in the past few years has been amazing. The company has taken all the right steps to grow strategically. Stag’s growth success propelled the stock price to new highs, bringing the dividend yield from 7% to 5%. We believe demand for warehouses will continue in the future, as e-commerce continues to grow, and STAG is in the perfect spot to take advantage of this trend. With a 5% yield and steady dividend growth policy in place, STAG will enhance your retirement budget.
- Market Cap: $74B
- Yield: 4.55%
- Revenue growth (5yr, annualized): 3.25%
- EPS growth rate (5yr, annualized): 2.50%
- Dividend growth rate (5yr, annualized): 5.90%
3M is one of those classic retirement portfolios holding that might not be the most exciting. We selected 3M for its quality, but also because the market has been beating its stock price as of late. We believe it is a good entry level if you would like to add this top-quality company to your portfolio.
Diversification is the name of the game with 3M. The company is a global manufacturer, technology innovator, and marketer of several products and services. Even with the broad diversification, the company was able to label its revenue under the next segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. 3M is a top-quality company and enjoys some brand loyalty. We believe that 3M possesses one of the strongest business models among dividend kings and dividend growth will continue.
The latest selloff has offered a good entry point if you want to add 3M to your portfolio. Not only that, but the yield looks very appetizing now. If you already hold 3M, forget about the stock price and focus on your dividend payments. The longevity of its dividend history makes it a perfect fit for your retirement portfolio.
Avoid market crashes with these Retirement Stocks
Three companies won’t be enough to support your budget at retirement. The stock market will continue to create noise and put your portfolio in jeopardy. You can invest with confidence in dividend growth stocks that will provide a sustainable source of income at retirement. With that in mind, we created the Dividend Rockstar list. This list includes the strongest and safest dividend picks for a retirement portfolio.
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