3 Stocks Retirees Should Add to Their Portfolios
Retirees often shy away from stocks, but the right picks can grow your portfolio well into old age. These three stocks in particular are ideal for retirees.
1. Cisco Systems (CSCO)
Cisco may not be at the top of your stock list, but this technology company is trading at less than 12 times its expected earnings over the last 12 months. And its earnings are expected to grow by 10% annually over the next five years.
Cisco also boasts a solid balance sheet, with $63+ billion in short-term, liquid assets and $56 billion in liabilities.
If that’s not enough to entice you, the company’s dividend might be. Cisco’s shares offer a 3.6% yield, and the company has raised its dividend every year since 2011 (when it first initiated the payment). Cisco boasts a payout ratio of about 45% of its earnings.
2. Realty Income (O)
Experts often recommend that retirees invest in REITs, and Realty Income is the preferred pick for many retirees.
The REIT invests primarily in detached retail properties. These properties have high-quality tenants that run recession-resistant businesses and have little competition, like movie theaters, fitness centers and drugstores.
Realty Income also use long-term net leases that require the tenants to pay property taxes, building insurance and maintenance. Essentially, the company finds quality tenants and collects rent checks. Most leases also have built-in annual increases.
Realty Income’s portfolio occupancy has never fallen below the 96% mark, and it has also boosted its dividend each of the last 75 quarters. Realty Income boasts an impressive 18.2% annualized return.
3. Spectra Energy (SE)
Energy prices bottomed out earlier in the year, and have been steadily rebounding ever since. Spectra Energy has risen sharply since falling to a low in January. The company’s share price is now up 50% year-to-date.
Spectra operates one of the country’s biggest natural gas pipeline networks. Long-term contracts protect the company’s fee-based profits and revenue.
Even when energy prices are volatile, Spectra’s business model still allows for financial predictability.
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