- Buying quality retirement stocks can offer both security and growth to keep savings goals on track
- AbbVie (ABBV): With earnings concerns easing, it’s time to take a fresh look at this dividend king.
- Amgen (AMGN): This biotech giant has an ideal combination of products in the market and products in its pipeline.
- Apple (AAPL): Get this tech giant to prove the bears right before they drop their stock.
- General dollar (CEO): Inflation and a weaker economy will help maintain incomes.
- Western Union (Wu): In tough times, the company’s reliability helps keep investors afloat.
- Schwab US Dividend Equity ETF (SCHD): An ETF that tracks the Dow Jones US Dividend 100 Index.
- ProShares S&P 500 Dividend Aristocrats ETF (NOBL): This ETF invests exclusively in the elite group of companies known as the Dividend Aristocrats.
For many years, the pattern for finding retirement stocks to buy clouded with FOMO (fear of missing out) and YOLO (you only live once). Investors were conditioned to years where a return of 20% or more was the norm.
However, to borrow an axiom from golf, 2022 turns out to be a stark reminder to investors that “sometimes par is a really good score.” Whatever happens over the next few years (and I will always remain a cautious optimist), the new reality is that investors who achieve high single-digit growth will do well.
One way to increase your portfolio’s total return is to use quality dividend-paying stocks. Reinvesting these regular dividends is a simple way to increase your portfolio’s total return. This makes it the ideal choice for long-term retirement portfolios where safety and security should be the top priority.
So let’s go. Here are seven retirement stocks to buy that combine modest growth with secure dividends.
|SCHD||Schwab US Dividend Equity ETF||$76.11|
|NOBL||ProShares S&P 500 Dividend Aristocrats ETF||$89.67|
The first of the retirement stocks to buy is AbbVie (NYSE:ABBV). Concerns over the patent expiration of its flagship drug, Humira, have given analysts reasonable worries about the company’s revenue outlook. However, the company’s latest earnings report should allay those concerns.
First, the company shows that sales of Humira in Europe (where Humira lost patent protection) are not declining as quickly as expected. Second, AbbVie has replacements in the market for Humira that are delivering strong year-over-year revenue growth.
My InvestorPlace His colleague Josh Enomoto also reminded investors that AbbVie would likely benefit from its acquisition of Allergan, which has incorporated Botox into the company’s product portfolio.
Investors are also getting a stock that remains up 11% for the year and recently joined the ranks of dividend kings. This means that it has increased its dividend every year for 50 consecutive years. And ABBV stock has a dividend yield which is currently 3.73%.
Staying in the biotech space, Amgen (NASDAQ:AMGN) is another company up 10% year-on-year. One reason is that investors are no longer chasing the speculative biotechs that were competing in the race for the Covid-19 vaccine.
This brings the focus back to businesses that are generating revenue and profit today and will continue to do so tomorrow. It’s Amgen. The company’s portfolio is heavily focused on treatments for heart disease and cancer, which means demand will remain high.
And, as Tezcan Gecgil points out, the company is building a new manufacturing facility in North Carolina. With supply chains likely to get shorter in the coming years, this should help business efficiency as well as reduce costs.
Amgen has increased its dividend in each of the past 11 years and currently has a dividend yield of 3.14%.
When you are considering buying retirement stock, you can challenge my decision to put Apple (NASDAQ:AAPL) on this list. There are bearish views on “FAANG” stock. And AAPL stock is down 22% so far in 2022.
However, much of the worry about Apple’s growth is based on its iPhone. But the company has shown in recent years that its Services division is responsible for much of the company’s growth in recent years.
And while Apple doesn’t offer a particularly impressive dividend yield, it has increased its dividend in each of the past 11 years. Additionally, the company has a history of share buybacks.
That’s why you should get Apple to prove it’s not a great long-term growth stock before you dump it.
General Dollar (DG)
Inflation is eating away at consumers’ take home pay and this is reflected in the results of many retailers. And that includes discount stores such as General dollar (NYSE:CEO). I am writing this a few days before the company releases its results. If the trend continues, Dollar General is likely to provide guidance that reflects the effect that inflation has and will continue to have on its business.
However, the company has a business model that places its stores in areas not easily served by large chains. This is likely to give the company a distinct advantage as consumers will look to find ways to save money on gas as well as groceries. And Dollar General is placing more emphasis on allowing customers to use their stores as a one-stop-shop, which should be an additional catalyst.
Western Union (WU)
Many economists predict a recession in the United States if not in 2022, then in 2023. If you share this view, then Western Union (NYSE:Wu) may be worth the detour. The company remains a reliable option for the underbanked or unbanked. This group can rely on the company’s ability to facilitate peer-to-peer money transfers as well as provide bill payment services. The company is also embarking on an internal strategic review, which could lead to greater efficiency in company operations.
WU stock is down 6% this year and currently has a consensus holding rating. However, the stock remains a favorite among institutional investors. And it currently has a dividend yield of over 5% with a seven-year streak of increasing its dividend.
Schwab US Dividend Equity ETF (SCHD)
An alternative approach to finding retirement stocks to buy is to look at dividend-oriented exchange-traded funds (ETFs). I have two on this list. The first is the Schwab US Dividend Equity ETF (NYSEARC:SCHD).
This ETF replicates the performance of the Dow Jones US Dividend 100 Index. This means that the fund invests in high-yielding US stocks that are financially sound and have a history of paying regular dividends. In fact, one of the fund’s largest holdings is Amgen, which is also on this list of retirement stocks.
This is reflected in the fund’s dividend yield which is over 3% (3.04%) at the time of this writing. The fund also has a surprisingly low expense ratio of just 0.06%. This means that for a $10,000 investment, investors only pay $6.
The fund is down about 7.5% for the year. However, much of that loss occurred with the mid-May selloff.
ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
The final security on this list of retirement stocks to buy is the ProShares S&P 500 Dividend Aristocrats ETF (NYSEARC:NOBL). As its name suggests, the advantage of this fund is that it invests exclusively in companies that are part of the club of dividend aristocrats. This means that the companies have increased their dividends for at least 25 consecutive years. Companies that prioritize a dividend in this way are much more likely to prioritize the dividend.
Another feature of the fund is that it does not allow any sector to carry more than 30% of the fund’s weighting. The fund’s three main weighted sectors are consumer staples, industrials and materials.
The fund has an expense ratio of 0.35%, which is considered a bit expensive. And he was not spared by the market clearance sale. The fund is down 10% in 2022.
As of the date of publication, Chris Markoch has held a long position in the AAPL. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.