Retirees: 5 Safe Stocks For Your Portfolio
Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Many people consider the stock market to be a tool for young investors. While heavy speculating is best left to those who have the most time to recoup any big losses, Wall Street is a great tool for more seasoned traders to supplement pensions or Social Security payments. Older investors typically choose stable, growth-oriented stocks or dividend payers to limit their liability while still making gains. Among this kind of stock, five safe companies for retirees to consider are Diageo Plc (NYSE: DEO), Pfizer Inc (NYSE: PFE), Intel Corporation (NASDAQ: INTC), Alcoa Inc (NYSE: AA) and McDonald's Corporation (NYSE: MCD).
The alcoholic beverage market is one of the strongest around for finding stable investments. Of the major players in the market, Diageo Plc is the biggest and offers excellent returns for people holding the stock. The company spends in excess of $2.4 billion in marketing annually, helping it to claim some of the top brands in the business. This has helped to create a $55.5 billion company that offers rising share prices and consistent dividends.
Diageo looks like an excellent stock for retirees in 2012. Trading at $89 per share, the stock is expected to blow past the top of its 52-week range ($71.25 - $89.65) on the way to more than $95 per share. That climb, combined with its annual dividend of $3.17 (yield of 3.6%) makes it a great stock to hold. In addition, the stock has a low beta of 0.77 and a strong price to earnings ratio of 18.64, making it appear to be a holding that can maintain its strength.
Pharmaceutical companies have long been attractive investments for big gains and steady growth. Pfizer is one of those businesses that take it a step further by paying solid dividends as well. With its strong reputation and impressive earning power, this is another stock that retirees and other older investors should consider.
Currently trading around $21.50 per share, the company is near the upper end of its 52-week range; ($16.63 - $22.17) the one-year target of $24.26 reflects an expected growth of nearly 15% in share price this year. Pfizer is considered one of the “dogs of the Dow”, and it is reasonable to expect companies like this to rebound soon. If it can maintain its quarterly earnings increase of 331%, this has the potential to be an outstanding holding for both younger and older investors.
Another dividend producing stock with enticing growth is Intel. This key supplier of integrated circuits and microprocessors for the consumer electronics industry has maintained a good dividend at $0.84, (yield 3.1%) while pushing its current stock price of $26.75 near the top of its 52-week range. ($19.16 - $27.00) Expected to break through its top, Intel is helping to make tech stocks a safe investment.
Intel is showing signs of being an ideal acquisition target. It has a solid price to earnings ratio of 11.18, a low beta of 0.95 and a quarterly revenue growth of 21.2%, giving it both good current numbers and favorable metrics going forward. Much like Apple (AAPL) and Microsoft, (MSFT) Intel continues to position itself to profit as the economy makes its slow recovery. This has likely led many older investors to add the stock to their portfolios in order to capitalize on both its growth and stability features.
Although not as aggressively as Intel, Alcoa is growing and offering investors many of the same benefits that they see from Intel. This Pittsburg, PA-based manufacturer of aluminum and aluminum-based products has been a dividend stock that also brings in nice returns. This combination appears to hold true for 2012, and investors should look at it for their portfolios.
A steady performer, Alcoa is trading at less than $10.50 per share and is nearly 20% below its 200-day moving average. Sitting near the bottom of its 52-week range of $8.45 to $18.47 and having a solid price to earnings ratio of 19, the company looks ready for a climb. If its January 27th climb is any indication, the Federal Reserve’s pledge to keep interest rates low seems to be boosting Alcoa and other stocks, making it very appealing going forward.
Year in, and year out, McDonald’s stock is one of the most attractive on Wall Street for building consistent gains for nearly any portfolio. The home of the Golden Arches is also home to raising a share price and dividends that make it one of the “Aristocrats of the Dow.” This year appears to be no exception, as the company is poised to make solid gains to go along with a $2.44 dividend that creates an impressive 2.7% yield.
Currently trading at almost $99 per share, McDonald’s rode cost reductions and new market expansion to post a 10.8% gain quarterly earning for 2011. Sitting on a price to earnings ratio of 18.73 and a surprisingly low beta of 0.36, the company looks to be capable of continuing its expansion into the future. With an affordable 48% payout ratio, growing interest in the McCafe line and a 10% gain in same-store sales, this is a perfect stock for more seasoned investors.
Finding the Best Stocks for Retirees
Stable, growing companies that offer stock price gains and dividends are a perfect combination for any portfolio. For older investors, this is a crucial element in limiting their risk while maximizing the gain. Retirees and other risk averse investors should look at stocks like Diageo Plc, Pfizer Inc, Intel Corporation, Alcoa Inc and McDonald's Corporation in order to get the most out of a safe portfolio.
Motley Fool newsletter services recommend McDonald's and Pfizer. The Motley Fool has no positions in the stocks mentioned above. IUMFool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.