Retirement for most Americans is a giant and often scary jump into the unknown. In your working years, you can generally take the occasional investing mistake in stride. Retirement portfolio losses can be offset by simply saving more or working a little longer.
But once you've retired, you no longer have that luxury. You need your nest egg to last throughout your life and possibly that of your spouse as well. So, as you choose your investments, choose wisely.
A good retirement stock will ideally pay a healthy dividend. Sonia Joao, President of Robertson Wealth Management, a Houston-based RIA, explains, "Eighty percent of our clients are in or near retirement, and virtually all of them tell us the same thing. They're looking for safe, secure streams of income to meet their living expenses and replace their paychecks."
A safe dividend is arguably the most important characteristic to look for. But with inflation likely to be higher over the next decade than it was over the previous one, retirees also need growth to maintain their purchasing power. So, a good retirement portfolio will be laden with income stocks - but also a few growth plays for balance.
Just remember: Not all "income stocks" belong in a retirement portfolio. For example, troubled industries like tobacco and telecom might have juicy yields, but they offer virtually no possibility for growth.
Now, let's dig in. Here are 25 stocks every retiree should own.
Market value: $118.2 billion
Dividend yield: 2.6%
3M (MMM, $196.58) is not interesting by any stretch of the imagination. This is a company whose claim to fame is tape and sticky notes, for crying out loud.
But 3M's lack of pizazz is exactly what makes it an attractive retirement stock. Demand for its products tends to be stable, and its brands - boring as they might be - do have name recognition. Everyone knocks Scotch tape, Post-it Notes and Scotch-Brite scrubbers.
3M likely will not make you wealthy, but it should be a consistent and reliable producer throughout your retirement. The stock yields about 2.6%, which is modest, but the company has boosted its dividend every year since 1959 - there aren't too many companies out there that can boast that kind of consistency. And if the dividend continues to grow, you'll be enjoying higher yields on your original cost basis year in and year out.
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Copyright 2018 The Kiplinger Washington Editors