Barron’s recently named 10 stocks for the recently retired, or anyone thinking about retiring soon. No surprise, health care featured heavily in the top 10, but the focus is on high-quality, dividend-paying stocks.
“Over 20 years — the period most retirees are concerned with — high-quality, large-cap dividend stocks often outpace the market on a risk-adjusted basis. They don’t rise as much in whiplash rallies, like the one we’re in, but they go down less when the market buckles,” the magazine writes.
So, without further ado, here are 10 stocks your clients need to look into to protect their retirements.
- Banco Santander – This Madrid-based bank posted a 9 percent increase in profits last year, and is expected to be one of the world’s most profitable banks in 2009. The dividend on American depository receipts is 4.2 percent.
- Chevron – Despite crude oil prices being down since 2008, this company is still profitable, and offers clients exposure to oil and natural gas, two important commodities. It’s expected to earn $7.65 per share next year.
- Intel – Dividends have grown an average 28 percent annually since 2004, according to Barron’s, and the company recently raised its dividend to over 3 percent.
- Johnson & Johnson – The stock currently yields 3.1 percent, and dividend growth over the past five years averaged 12 percent. As a bonus, the company’s been trading at less than 13 times what analysts say the price will be in 2010, which is lower than the company’s historical average and the overall market.
- McDonald’s – The ubiquitous restaurant franchise has been the best-performing Dow industrial stock since 2002, according to Barron’s, rising about 300 percent since then. Stock yields 3.5 percent and dividends have grown almost 30 percent over the past five years. One thing to keep in mind, though, is that 41 percent of the company’s earnings come from Europe; if the dollar strengthens, it could hurt profits.
- Nestl? – The stock yields 2.6 percent and dividend growth over the past five years has topped 11 percent annually.
- Novartis – American depositary receipts yield over 3 percent and dividends have grown an average 15 percent annually over the past five years. Like Johnson & Johnson, the stock is cheap, trading at less than 12 times consensus 2010 earnings.
- PepsiCo. – Pepsi offers more sales growth than Coca-Cola, according to Barron’s. The dividend has risen over 17 percent annually over the past five years, and the stock yields nearly 3 percent.
- Proctor & Gamble – Falling sales for this jack of all trades in the fiscal year ended in June 2009 had some people worried, but the company has boosted earnings and is gaining share in growth markets. The stock yields 2.8 percent and dividend growth is an average 12 percent annually over the past five years.
- Verizon Communications – The future looks bright for this company. It already has the highest yield on the list, 6.2 percent. Plus, a reputation for being the most reliable service provider in the United States, the potential expiration date on AT&T’s exclusive iPhone deal, and new business from the Droid mobile phone could be a boost for the company.