3 Retirement Picks for This Season
Tanya is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Value stocks with a relatively high dividend yield and a moderate growth rate can be classified as retirement stocks. These stocks ensure a steady flow of income for senior citizens. That is extremely important during times of uncertainty and high inflation.
Here is a list of three retirement stock picks that comes to my mind right now. They are a must have in your portfolio if you are thinking about stable returns. Let us have a look at each of them.
Ryman Hospitality Properties (NYSE: RHP) operates in the real estate industry and specializes in group oriented, destination hotel assets in both resort and urban markets. With a market capitalization of $1.8 billion, the company has a high dividend yield of 5.7% which is far better than the industry average of 1.36%. Being a real estate investment trust (REIT), Ryman enjoys a preferential tax status and hence distributes a significant portion of its taxable income to shareholders. This suggests that the high dividend yield of Ryman will continue in the future. The company's quarterly gross profit margin is at 39%. If you are an income investor and wish to have a steady cash flow after retirement, look at this fact. The returns of Ryman to investors from both price appreciation and dividend exceeds the S&P 500 index by a huge margin. Putting the same in figures, it is at 72% vis-à-vis the S&P’s 14%. One more favorable fact for Ryman is that it has a low beta and is less volatile to the external market conditions. REIT funds are hot picks now which will propel Ryman’s growth prospects. All these factors make Ryman a strong buy.
Cablevision Systems (NYSE: CVC) is the fifth largest cable company in the US and operates as a media and telecommunication company. It has more than 3 million video customers and Internet subscribers. The company has been increasing its dividends since 2008 and currently has a yield of 4%. The earnings-per-share growth rate for the next two years is estimated at 22%, which is quite impressive if I compare it to the entertainment industry’s 13%. Despite the company's fourth quarter 2012 revenue growth being low due to cable lines affected by hurricane Sandy, Cablevision has been successful in adding more net subscribers. Cablevision increased the price of its high-speed Internet service by $5 a month in early 2013 which will improve its margins. Data usage is set for a huge growth in the future, providing a thrust to Cablevision’s growth. The stock can be bought cheaply at $15 and provides a great opportunity for retirees.
Duke Energy (NYSE: DUK) is one of my retirement stock picks in the electric utilities sector. The company operates in the United States and Latin America. It also has a history of increasing dividends like Cablevision, with its current yield standing at 4.7%. Revenue growth in the last quarter beat the industry average of 13%, and the company's stock has gained momentum in the last year. The utilities sector is highly capital-intensive, though Duke Energy has a relatively low debt to equity (D/E) ratio. After a merger with Progress Energy, it became the largest regulated utility in the United States. Duke Energy has been able to increase its dividends year-over-year despite incurring huge capital expenditures. This suggests that it is expecting consistently good cash flows and earnings growth from its previous investments, including the Progress Energy merger. Altogether, the stock is one of the best retirement picks owing to its impressive operating cash flows, rock solid financial position and high dividend yield.
To summarize, all the above stocks are highly defensive and have some common characteristics. They are less risky, have high dividend yields and will generate a steady flow of income in the coming years which is essential from a retiree’s point of view. I believe that these three retirement stocks are the safest bets as of now.
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Tanya Kanodia has no position in any stocks mentioned. The Motley Fool owns shares of Ryman Hospitality Properties . 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!