Dividend shares have generally had a major rally in the first half of this year. Investors went on a massive search for high-quality income names when they sought shelter under widespread warnings of impending recession or economic slowdown.
Although that danger is still lurking, the profits of the first half have made many popular dividend shares expensive to buy when you start building up your retirement portfolio. These are the two top names to consider when buying the next dip:
1. Procter & Gamble
Procter & Gamble Company (NYSE 🙂 is one of those dividend stocks that retirees love. & # 39; The world's largest consumer products company is also one of the largest dividend payers in the industry.
The maker of Dawn dishwashing detergent and Pampers has increased his dividend for 62 consecutive years. In the past 128 years, it has never stopped paying dividends, even during recessions, wars and droughts.
But if you want to add this inventory to your portfolio now, the timing might not be right. After an increase of more than 22% based on the total return since January, P & G's valuations do not look that attractive. The dividend yield of the consumer staple giant of 2.7% is much lower than the four-year average of 3.4%, while the price-to-profit multiple of 26.52 in five years is close to the highest.
That said, some analysts still see a lot of value in PG stocks. Goldman Sachs, last week, has upgraded the giant with the statement that the shares still offer a "potential double-digit return."
"We believe there is a role in investor portfolios for a large, liquid, global staple company, and that PG is still the most underweight US-listed mega-cap global consumer packaging company among investment funds , "Goldman said in a customer note.
The investment bank raised the "buy" from "neutral" rating and also raised the 12-month target price to $ 125 per share. P & G closed around $ 111.49 yesterday after an increase of 0.9%
2. Starbucks
The enthusiasm of investors about Starbucks Corporation (NASDAQ 🙂 does not look like it will decrease soon. The maker of popular Frappuccino's and pumpkin-spiced lattes again reached a record high yesterday after jumping over 70% in the past year and achieved around 1.1% during the session to close at $ 85.51.
This powerful momentum is fueled by the optimistic expectation of the company for 2019 in combination with visible signs that the recovery efforts are effective. For the quarter ending in March, & # 39; the world's largest coffee chain figures that were much stronger than market expectations.
This performance is extraordinary for a mature restaurant business in an environment where costs are escalating, competition is rising and consumers are looking for healthier options than sugary Frappuccino's.
The powerful comeback of Starbucks this year shows that the chain of coffee drinkers is recovering – not only in its home markets, but also in China, a country at the center of the company's growth strategy. In fact, its further expansion is highly dependent on international success and home restructuring, which is crucial to meet the changing needs of customers.
If you don't already have Starbucks, this may not be the right time to build a position. But if these shares go through a pullback for whatever reason, don't hesitate to buy it. Starbucks is an attractive buy-and-hold candidate for retirees, especially with its strong dividend growth, currently yielding only 1.72%, and a share buy-back plan.
Bottom Line
Both P & G and Starbucks are reliable consumer components that fit perfectly into any pension portfolio that aims to generate passive income during the golden years. Retired people can trust in both good and bad times. Both companies have a broad canal, recurring cash flows and a history of rewarding their investors.
If you have bought these shares, there is no reason to panic and sell. If you are a new investor, it would be better to wait on the sidelines after their huge jump this year. They must be on your shopping list when the next opportunity presents itself.
