If your investment goal is to build a strong portfolio that will provide a steady stream of income through retirement, then buying high-quality dividend stocks should be part of your strategy.
The model portfolio – which typically consists of 60% stocks and 40% bonds – has not lost its usefulness to long-term investors. Such a portfolio is up 13% year-to-date, according to data from Bloomberg, a performance that is in line with the rally in and greater than the 3.5% gain in the HFRX Global Hedge Fund Index.
To get you started on this journey, we've shortlisted three quality names that investors looking to build a retirement should consider. They come from different sectors, but they have one thing in common: they can generate constant income even in rough seas. Let's take a closer look.
1. Microsoft
When choosing a quality stock for your retirement portfolio, one of the most important factors is the stability of dividend income in both good and bad times. Microsoft (NASDAQ 🙂 is such a stock that perfectly meets this requirement.
Many investors confuse Microsoft with just a pure technology game in a great growth mode. But if you dig a little deeper, the business has great income appeal too. Microsoft has an excellent track record of rewarding investors.
Microsoft 1-Year Review.
Over the past five years, Microsoft has achieved approximately 10.5% growth in its payouts per year, supported by a low payout ratio and strong underlying business. With an annual dividend yield of just over 1%, Microsoft pays a quarterly dividend of $ 0.56 per share.
That return may look meager to many investors, but remember that Microsoft is still growing, while also offering great upside potential. Including dividend payments, Microsoft has achieved a total return of 290% over the past five years.
Going forward, there is a good chance that this Washington-based company will continue to increase its payout as the growth momentum continues. During the pandemic, demand for cloud computing services, video games and computers increased, allowing the company to grow enormously.
When you retire, find companies like Microsoft to keep in your wallet. These are the giants who have the power to defend their business and pay you for the rest of your life.
2. Home Depot
Home Depot (NYSE 🙂 is one of those stocks best positioned to continue to send dividend checks to retirees. This home improvement giant's quarterly dividend has risen roughly 23% annually for the past five years, and with a healthy 50% payout ratio, it has much more room to grow. With an annual dividend yield of 2.17%, the company pays a quarterly distribution of $ 1.50 per share.
Graph of 1 year from Home Depot.
Since the outbreak of a pandemic, the Atlanta-based retailer has posted strong profit growth as the stay-at-home environment fuels demand for home improvement products. In the most recent, which ended Nov. 2, HD generated $ 33.54 billion in sales, up 23% from a year earlier. Sales in the same store grew 24% year over year and 25% in the US
Analysts expect this trend to continue as people move to suburbs and the real estate market is likely to remain strong.
Home Depot is one of those retailers best positioned to survive the ongoing onslaught of e-commerce disruptors, such as Amazon.com (NASDAQ :). With 90% of Americans already living within 9 miles of a Home Depot store, instead of opening new locations, the company is focusing on upgrading its existing in-store customer base with better technology and e-commerce capabilities. -commerce.
The HD stock is trading at about $ 277.41 as of Monday's close and is not cheap. But the low payout ratio and accelerated sales have created a lot of room for future dividend increases.
3. Coca-Cola
The companies that generally generate a steady income for retirees are those who hold dominant positions in their field, have a strong brand and an enormous size that is difficult for competitors to achieve. Coca-Cola (NYSE 🙂 from Atlanta meets all of these requirements.
The largest beverage company in the world owns or licenses over 500 non-alcoholic soft drink brands, including both sparkling and still drinks. It sells its products in more than 200 countries and has 21 individual brands generating $ 1 billion or more in them.
Backed by this strong portfolio that generates strong cash flows, Coca-Cola has been very consistent in paying out dividends to retirees. The company has been raising its dividends for at least 50 consecutive years. History is of course no guarantee of future performance, but it can certainly tell us a lot about the company and its strengths.
That Coca-Cola has been able to increase its dividend for 57 years in a row is more than enough evidence of the strength of the brand and the company's ability to perform at a variety of economic and cultural events – recessions, recessions and changing consumer preferences.
With an annual dividend yield of 3.1%, KO pays out $ 0.41 quarterly dividend. The stock is great for long-term investors who need regular income to fund their golden years.
