3 Top-Quality Stocks Every Retirement Investor Needs to Own
A retirement portfolio isn’t the place to bet on startups and penny stocks. Investing for your Golden Years means seeking out quality stocks that offer a combination of growth, income and safety. Instead of betting the farm on making a killing overnight, you’re better off taking the slow and steady approach.
But don’t mistake consistency for boring. Retirement stocks that offer capital appreciation and rising revenue streams all the while protecting your bottom line over the long haul seem pretty exciting to me. That’s why these three quality stocks should be in every investor’s portfolio.
Realty Income (O)
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Commercial real estate investment trust Realty Income (NYSE:O) tops the list of retirement stock stars. Billed as the Monthly Dividend Company, the REIT recently made the 644th consecutive monthly dividend payment in its 55-year history. Since going public in 1994, Realty Income has increased its payout 123 times. There is arguably no more dependable dividend stock than this commercial REIT.
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Although the commercial market remains at risk due to high interest rates raising costs and dampening investments in the segment, it’s not a problem for Realty Income. The REIT’s tenants are top-tier businesses such as Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Walgreens (NASDAQ:WBA), and 7-Eleven (OTCMKTS:SVNDY). Standalone grocery and convenience stores make up over 20% of its tenant portfolio. These aren’t businesses at risk of shutting down.
The annual dividend of $3.07 per share yields 5.9%. Wall Street has a one-year consensus price target of around $62 per share suggesting a 20% upside from its current price level. Analysts consider the stock a buy. With revenue and earnings forecast to grow more than 22% in the next year, O stock is one to begin building out your retirement portfolio.
Coca-Cola (KO)
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Beverage giant Coca-Cola (NYSE:KO) is the second quality retirement stock an investor should consider. A favorite of Warren Buffett, the soda king is also a model of consistency and stability.
Because of consumer loyalty through good times and bad, Coca-Cola is deemed “the world’s most valuable non-alcoholic drink” brand. It generated $45.7 billion in sales last year as it figured out how to pivot away solely from soda to healthier beverage options. Changing consumer tastes put soda consumption on a secular decline but Coke now has a portfolio of drinks spanning water, juice, tea, dairy and plant-based beverages. And yes, it still does soda for all of us recalcitrants who refuse to give up our guilty pleasures.
KO stock also pays a dividend that was just hiked 5.4% to 48.5 cents for an annual rate of $1.94 per share. Coke solidified its position as a Dividend King as this is the 62nd consecutive annual increase of a payout that now yields 3.3%. It’s a defensive stock that offers investors long-term growth, income and safety.
Visa (V)
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Payments processor Visa (NYSE:V) rounds out our trio of top-notch retirement stocks for your portfolio. It is also the most exciting of the three because it provides investors with a history of robust share price appreciation and dividend growth.
The payout yields just 0.8% annually but the company routinely increases the dividend by double-digit rates. It has a 10-year compounded annual growth rate over 18%. Because companies pay their dividends out of free cash flow (FCF), Visa’s cash flow payout ratio of less than 20% shows just how safe the dividend is. It’s why there is plenty of room for future growth.
The company itself is also solid. Visa is the largest payments processor with 4.3 billion Visa cards in circulation. The company generated $14.5 trillion in total payments and cash volume for the full fiscal year. By sticking to just processing credit card transactions and not extending credit to consumers, the company carries little recession risk. Late payments or even defaults do not impact its operations.
Visa is yet another retirement stock that possesses all three values investors should seek in a company for their portfolios.
On the date of publication, Rich Duprey held a LONG position in O and KO stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.
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