7 Best Buy-and-Hold Retirement Stocks
Buy-and-Hold Retirement Stocks
Have you searched for stocks for your retirement portfolio and had no luck?
This article will go through a list of the potential seven (7) best buy-and-hold stocks to own forever in your retirement account. These companies have been operating for more than century and own a large market share in their respective sectors. Also, they all pay out a dividend to investors via their revenue and are known for raising their payment as they grow.
Below is the list of dividend stocks you may be able to buy and hold forever.
7 Best Buy and Hold Retirement Stocks
|Sr.No||Company Name||Ticker Symbol||Sector of Operations|
|1||Medical Properties Trust, Inc.||MPW||Real Estate|
|3||Kraft Heinz Co||KHC||Food & Beverage|
|4||Wells Fargo & Co||WFC||Finance|
|5||Southern Co||SO||Electric Utiltiy|
|7||PepsiCo, Inc.||PEP||Food & Beverage|
#1 Medical Properties Trust, Inc.
One particularly great asset class to get exposure to in a retirement investment portfolio is the real estate sector. That’s because land is limited and real estate companies tend do have an easy business model to understand, steady cash flow, and inflation-protected earnings. One such company is Medical Properties Trust, Inc. (NYSE:MPW).
Medical Properties invests in and owns healthcare facilities across the world, though mainly in the U.S. There is a part of the portfolio that will lend money to other companies in a form of a mortgage. In total, there are more than 225 properties that contribute to the top and bottom line of the company’s financial statements and over 25 diverse tenants which lease the properties.
When it comes to investing, the most important thing to know about Medical Properties is that it is a real estate investment trust. The major advantage of this business structure are that the company pays no federal taxes, in exchange for putting 90% of its income towards the dividend, with a requirement to increase the payout in step with income.
From 2013 to 2017, the dividend grew by 20%. Given the growth and consistency of earnings, it is likely for this pattern to continue well in the future.
#2 AT&T Inc.
AT&T Inc. (NYSE:T) provides communication and digital entertainment services in the United States and around the world through its four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International.
One of the long-term stocks to buy and hold forever, AT&T is notable for its treatment of shareholders. Since its first year as a public company in 1984, the company has always offered a dividend, never missing or cutting it even once.
A matter of a fact, the dividend has also consistently grown since its inception, seeing an increase every year for the past 32 years. Further growth comes down to the average and very modest industry payout of 66%, or $0.66 paid for every $1.00 of earnings. In addition, the growing dividend should help to support a higher stock price in the future, since there are higher earnings being accounted for.
#3 Kraft Heinz Co
Kraft Heinz Co.’s (NASDAQ:KHC) operations include the manufacturing and marketing of food and beverages. Brands include “Heinz,” “Kraft,” “Oscar Mayer,” “Planters,” “Philadelphia,” “Lunchables,” “Maxwell House,” and “Capri Sun,” just to name a few. Kraft Heinz also sells condiments, sauces, cheese, dairy, and meats.
Formed in July 2015 through a merger of Kraft Foods Group and Heinz to strategically reduce operating costs and run a more efficient business, Kraft Heinz is one of the largest food and beverage companies in the world, with facilities and disturbed centers located around the world. This level of global presence is very apparent in the company’s income statements and diversifies risks faced from exchange rates, political climates, and overall business dangers.
Since Kraft Heinz is such a large company, it is able to reward investors through its growing dividend, with the company always looking to grow earnings further. There is a possibility of seeing larger dividend hikes once more costs are reduced, which would be reflected in higher business margins.
#4 Wells Fargo & Co
Wells Fargo & Co. (NYSE:WFC) is a diversified financial services company. It has three operating segments: Community Banking, Wholesale Banking, and Wealth and Investment Management. The business has a presence in all 50 states and more than 40 countries and currently serves the financial needs of one in every three households and is ranked the third largest institution based on assets in the U.S. And since Wells Fargo is already operating in all 50 states, there could be more growth seen in the global markets in locations that it does not have a presence in yet.
WFC stock should be considered because of the the two methods used to reward shareholders. The first is the quarterly dividend, which is traditionally in the range of 40% to 50% of earnings. Second is the company’s repurchasing of its own share. The long-term benefit of buybacks is that the fewer outstanding shares makes the remaining ones held by investors worth a greater portion of the company. A share repurchase program also provides support to the stock price, protecting it from volatility and the price falling.
#5 Southern Co
When looking for a stock to buy and hold for retirement, it is important that the company has consistent, predictable earnings. Such businesses tend to be recession-proof and offer an essential service that would be needed regardless of how the economy is performing. One stock that meets these criteria is Southern Co (NYSE:SO) stock.
A producer of electricity and provider of gas utilities to homes and businesses, Southern Co offers preservation of capital and very little daily volatility in the price movement. This is based on its beta of 0.08; this simply means that if the market fall by one percentage point, SO stock would only be down by 0.08% on average.
SO stock also features high margins and protected revenue. There is not a lot of money currently being reinvested back into the business, since only general maintenance and operating costs are required; most of the company’s major costs took place during the creation of its infrastructure. The protected revenue is due to the fact that there are only a few other companies that offer the same services, with minimal to no new competitors due to the high barriers of entry.
Lastly, Southern Co features a growing dividend payout. Over the past 15 years, the dividend has seen one dividend hike per year and the yield has traditionally been roughly double that of the S&P 500 Index. What’s more, more than half of earnings are disturbed to investors each year. The dividend could continue to grow because of the high margins and reliability of revenue.
#6 3M Co
3M Co (NYSE:MMM) is a manufacturer operating as a broad diversified business. The company is divided into five reported segments: Industrial, Health Care, Safety and Graphics, Consumer, and Electronics and Energy. To add further to the company’s diversification, 3M operates in more than 200 countries around the world.
Why is 3M a dividend stock to buy and hold forever? To put it simply, it is a very shareholder-friendly company. Let’s take a more in depth look as to why.
3M pays out a quarterly dividend, and has done so for an impressive 100 years. This is evidence that the company is very focused on its financials and smart when it comes to the handling of the company’s funds.
Even more appealing is the annual dividend, which has been increased following every annual review for 59 consecutive years. This gives 3M the distinction of being a “dividend king,” a company that has increased its dividend for at least 50 straight years.
MMM stock could be an ideal investment for a retirement income portfolio because of the higher amount of income paid as time goes on. This also results in a higher personal dividend yield based on the average purchase price and a higher and faster return of capital.
#7 PepsiCo, Inc.
Headquartered in New York, PepsiCo, Inc. (NYSE:PEP) has a presence in more than 200 countries. Primarily involved in the food and beverage industry, the company’s portfolio includes “Frito-Lay,” “Pepsi-Cola,” “Gatorade,” “Tropicana,” and “Quaker.”
All of the brands under Pepsi have two major boons: a very powerful brand and protection from inflation. A strong brand means the products can sell themselves based on their name or logo alone, with a premium earned when compared to similar brands that aren’t as powerful.
The protection from inflation is seen in the products’ selling prices. How it works: when the costs to make the prices are found to be rising, the company protects its revenue and keeps margins strong by passing these additional costs onto its end users. These customers, while aware of the price hikes, continues to buy the goods anyway out of brand loyalty and preference for the products’ quality. This is great for the business and, more importantly, shareholders.
Even though Pepsi’s management is running a great business with healthy margins, they have looked to cut unnecessary costs to increase margins even further. An annual cost-cutting program was implemented in 2012 to reduce annual business costs by $1.0 billion. In 2016, margins increased by 80 basis points compared to 2015. This may not seem like much of an improvement, but with billions in sales, it adds greatly to the bottom line. (Source: “2016 Annual Report,” PepsiCo, Inc., February 15, 2017.)
One of the main reasons that PEP stock should be considered is its long history of rewarding investors. PEP stock pays out roughly two-thirds of its earnings to investors via the dividend. The reason why PEP stock is one of the best dividend stocks for retirement income in particular is its long tradition of annual dividend growth. The current streak is 44 years and could continue because of the growing margins and protection from inflation.
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