Which stocks are best to buy when building up your retirement portfolio? The answer to this question depends a lot on your risk appetite and your retirement goals.
But if you are like many retirees whose goal is to preserve capital and generate a stable return to fund a comfortable lifestyle during your golden years, we generally recommend buying low-income stocks. risk buying steadily growing dividends.
If you apply these screening criteria, you will generally find blue chip companies with healthy balance sheets, strong cash flows and a long history of dividend payments. Let's take a look at three such stocks that tick these boxes, and why they are a solid long-term investment for most retirees.
1. Lockheed Martin
Lockheed Martin (NYSE 🙂 is not the kind of stock that generates daily headlines. But it is certainly one of those names that fits well in a long-term retirement portfolio.
The aviation and security company pays a quarterly dividend of $ 2.6 a share, which translates to an annual dividend yield of 3.06%, supported by the company's strong cash flow and recession-proof operations.
Lockheed Martin Weekly Chart.
During the pandemic, Lockheed posted revenues, sales and cash flow, aided in part by accelerated progress payments from the Department of Defense, which were then passed on to suppliers.
At a time when most companies are reluctant to provide earnings advice, LMT reported a record $ 147 billion order book, proving that its investors are earning long-term stability and income. Lockheed is still trading at about 14 times the trailing price-earnings ratio, indicating that this stock is inexpensive and could be a solid addition to your retirement portfolio. Lockheed Martin stock closed at $ 346.41 yesterday
2. Merck & Company
Healthcare providers offer services that remain necessary even in a recession. Moreover, economic fluctuations do not usually hinder the introduction of new medicines and devices for pharmaceutical companies.
Stocks such as Merck (NYSE 🙂 are well positioned to not only beat the market during a recession, but also to deliver good sustainable returns. The company is currently on the success of its best-selling cancer drug Keytruda. Analysts expect Keytruda's annual revenue to reach $ 20 billion by 2023, according to FactSet, generating more than a third of the company's total revenue.
Merck Weekly Chart.
Merck is also one of the leading drug manufacturers developing therapies to combat COVID-19. Although its candidate vaccine did not yield positive results, the company is aggressively pursuing therapies to cure infected individuals.
A COVID-19 pill, currently in development with Ridgeback Biotherapeutics, significantly reduced viral infections in subjects after five days of treatment, a mid-stage study reported last week by the Wall Street Journal found.
Merck recently agreed to purchase VelosBio Inc. for $ 2.75 billion to bolster its cancer therapy offering, and private biopharmaceutical company OncoImmune for an initial $ 425 million to get a potential therapy for severe COVID.
With a growing dividend and share buybacks, Merck is a good long-term bet for those looking for increasing payouts. The stock, which closed at $ 76.26 yesterday, is currently yielding 3.49%, which translates to a quarterly dividend of $ 0.65 a share after a 7% rise in November.
3. Procter & Gamble
Consumer giant Procter & Gamble (NYSE 🙂 is another low-risk stock that is ideal for a long-term retirement portfolio. P&G has an extensive track record of rewarding its investors through steadily growing payouts and capital gains.
The Ohio-based company has increased its dividend for 64 consecutive years. With yields of 2.47% per year, P&G is paying a quarterly dividend of $ 0.79 per share, after growing 6% in 2020. Over the past decade, its stocks have more than doubled, including dividends, giving its investors a nice overall return.
Procter & Gamble Weekly Chart.
At 21, P & G & # 39; s forward price / earnings multiple is close to its highest level in the past five years. But the company's growth momentum suggests that the maker's stock of such household pillars as Bounty paper towels, Gillette razors and Tide laundry detergent are a safe bet for long-term investors.
In January, P&G raised its sales and earnings outlook, stating it will grow by as much as 6% in fiscal 2021, up from its previous outlook of no more than 5%. P&G also sees core earnings per share increasing by as much as 10%. Shares closed at $ 128.56 yesterday.
Bottom Line
By adding solid dividend stocks to your income portfolio, you can create a sustainable income stream that you can rely on during retirement. Start building your income portfolio slowly when stock prices are attractive and yields are high. By following this strategy, you will continue to earn steadily growing payouts even when the economy is in bad shape.
