Are you about to retire and you are worried about losing 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 building a solid retirement portfolio, retirees or soon-to-be are concerned with achieving 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 and decent dividend growth that at least beats inflation. In 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 will 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. They show not only a strong dividend growth track record but a great potential to maintain that generosity with shareholders.
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Royal Bank (RY)
- Market Cap: $131B
- Yield: 4.10%
- Revenue growth (5yr, annualized): 4.30%
- EPS growth rate (5yr, annualized): 7.65%
- Dividend growth rate (5yr, annualized): 7.70%
Royal Bank of Canada is a diversified financial services company. The Company provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services globally. The Company’s business segments include Personal & Commercial Banking, Wealth Management, Insurance, Investor and Treasury Services, Capital Markets, and Corporate Support. Personal & Commercial Banking segment comprises its personal banking operations and certain retail investment businesses in Canada, the Caribbean and United States, as well as its commercial and corporate banking operations in Canada and the Caribbean. Wealth Management segment includes a suite of investment, trust, banking, credit and other advice-based solutions. Its Insurance segment offers a range of life, health, home, auto, travel, wealth, annuities, reinsurance advice and solutions, as well as business insurance solutions, to individual, business and group clients.
Royal Bank counts on many growth vectors: its insurance, wealth management, and capital markets divisions. These sectors combined now represent over 50% of its revenue. These are also the same segments that helped Royal Bank to stay the course during the pandemic. The company has made significant efforts to diversify its activities outside of Canada and has a highly diversified revenue stream to offset interest rate headwinds. Federal regulations protect Canadian banks, but this also limits their growth. Having some operations outside of the country helps RY to reduce risk and improve its growth potential. The bank posted impressive results for the latest quarters driven by strong volume growth and market share gains which offset the impact of low-interest rates. Royal Bank exhibits a perfect balance between revenue growth.
Realty Income (O)
- Market Cap: $40B
- Yield: 4.65%
- Revenue growth (5yr, annualized): 13.55%
- EPS growth rate (5yr, annualized): -5.80%
- Dividend growth rate (5yr, annualized): 3.45%
Realty Income Corporation is a real estate investment trust. The Company is acquiring and managing single-unit freestanding commercial properties under a long-term net lease agreement with its commercial clients. The Company owns and operates a diversified portfolio of over 11,400 commercial properties. The Company’s properties are leased to over 1,100 clients who operate in approximately 72 separate industries throughout all 50 states, as well as Puerto Rico, the United Kingdom and Spain. Its properties are leased to retail and industrial clients with a service, non-discretionary and/or low-price-point component to their business. The Company’s property types include retail, industrial, and agriculture.
O is the largest net lease REIT in the US. It is highly diversified and enjoys a regular stream of cash flow (about 50%) from investment-grade customers. As most of its leases are for terms of 15 years, O enjoys predictable, recurring income year after year. The company deserves to stay in a dividend income investor’s portfolio, not only because it has paid dividends for almost five decades, but also because it has a steady cash flow stream from diversified properties and quality tenants, maintaining high occupancy levels that have never dropped below 96% (98.9% at the end of Q3 2022). O should be insulated from retail/brick-and-mortar concerns as most of their tenants are non-discretionary or service oriented. We also think O’s resiliency to a slowdown in consumer spending (possible given current high inflation, rising interest rates, and geopolitical risks) is underestimated by investors.
Avoid market crashes with these Retirement Stocks
I compile a list of stocks expected to do better than the market for Dividend Stocks Rock members each year. This year, I’ve reviewed the 11 sectors for them and included top picks for each. I’ve decided to share three of them with you: Financials, Information Technology, and Utilities.
You can download 6 of my top 23 for 2023 right here: