Long term goals for retirement investing haven't changed despite gyrations in the stock market in recent years and they won't change in 2012. The main objective for retirement investing is to grow investment value and a related income stream, preferably from increasing dividends. But in the last 12 years, it has been very difficult to earn what were once considered satisfactory rates of return.
At the end of 1999, the popular stock averages were near peak values. Then they sold off sharply, recovered with the Dow reaching a new record by 2007 followed by the market crash with the financial meltdown. Markets have recovered in the last three years. The beginning and ending values for three popular averages are shown below:
12/31/99 - 11,497
12/31/11 - 12,291, up 7%
12/31/99 - 4,069
12/31/11 - 2,625, down 36%
12/31/99 - 1,469
12/31/11 - 1,265, down 14%
Capital gains for many famous stocks have had spotty records of capital gains. Dividends are the other major component of investment gains and generally have provided reliable income. Some of the better companies kept raising dividends and the best dividend payers are the Dividend Aristocrats, S&P 500 companies which have increased annual dividends for a minimum of the prior 25 years. Many have streaks of 30-40 years, some are over 50 years, with increased dividends even through recessions. S&P just revised its standards used to determine which companies qualify as Dividend Aristocrats and the S&P 500 list in 2012 includes 52 stocks.
Below are 11 stocks for retirement accounts in 2012. Their stocks at least doubled over the last 10 years (while popular averages were struggling). They also increased dividends and have attractive yields in a low yield environment. Dividend growth is expected to continue next year and for some time to come.
1) Air Products (APD) serves industrial, energy, technology and healthcare markets worldwide. Products include atmospheric gases, process and specialty gases, performance materials, and equipment and services. The annual dividend provides a 2.7% yield and has been increased for 29 consecutive years.
2) Archer Daniels Midland (ADM) merchandises agricultural commodities and products in the U.S. and internationally. It operates in three segments: Oilseeds Processing, Corn Processing and Agricultural Services. The annual dividend provides a 2.4% yield and has been increased for 36 consecutive years.
3) Exxon Mobil (XOM), a Dow stock and the largest energy company (descended from Rockefeller's Standard Oil Company), has the largest market cap in the world. It operates 36,000 wells around the world. The annual dividend provides a 2.2% yield and has been increased for 29 consecutive years.
4) McCormick (MKC) sells flavor products and other specialty food products to the food industry worldwide, operating in two segments: Consumer (spices, herbs, extracts, seasoning blends, etc.) and Industrial (provides seasoning blends, natural spices and herbs). The annual dividend provides a 2.4% yield and has been increased for 26 consecutive years.
5) VF Corporation (VFC) is the world's largest apparel company. a global leader in branded lifestyle apparel with more than 30 brands that include Wrangler, North Face, Lee, Vans and Nautica. The annual dividend provides a 2.2% yield and has been increased for 39 consecutive years.
6) Hormel Foods (HRL) produces and markets meat and food products throughout the U.S. and internationally in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS), Specialty Foods and all other. Internationally, HRL markets its products through Hormel Foods International Corp. The annual dividend provides a 2.0% yield and has been increased for 46 consecutive years.
7) Sherwin-Williams (SHW) manufactures and sells paint, coatings and related products to professional, industrial and retail customers primarily in North and South America, with additional operations overseas. Its 3 segments are: Paint Stores Group with 3400 specialty paint stores, Consumer Group and Global Finishes Group. The annual dividend provides a 1.6% yield and has been increased for 33 consecutive years.
8) WW Grainger (GWW) distributes facilities maintenance products including material handling equipment, safety and security supplies, electrical products, pumps and maintenance supplies to businesses, large corporations and government entities. The stock has more than quadrupled in the last 10 years. The annual dividend provides a 1.4% yield and has been increased for 40 consecutive years.
9) Sigma-Aldrich (SIAL) produces chemicals, biochemicals and equipment used in scientific research and high technology manufacturing (doctors and medical researchers are primary users) worldwide. The stock has tripled in the last 10 years. The annual dividend provides a 1.1% yield and has been increased for 35 consecutive years.
10) CR Bard (BCR) manufactures and sells a wide range of medical, surgical, diagnostic and patient care devices worldwide. The stock has tripled in the last 10 years. The annual dividend provides a 0.9% yield and has been increased for 40 consecutive years.
11) Chevron (CVX), another Dow stock, is a major energy company that also descends from the breakup of Standard Oil 100 years ago. It has two segments: Upstream involves exploration and production of crude oil along with natural gas and Downstream refines crude oil into petroleum products marketed under the Chevron, Texaco and Caltex brands. CVX has a joint venture agreement with China National Petroleum. The rules were bent for CVX because its streak will reach 25 years in 2013 to qualify as a Dividend Aristocrat. The stock provides a 3.0% yield.
The three with the lowest yields have outstanding records of stock growth. All these companies share a commitment to reward stockholders with increased annual earnings and dividends to bring higher stock prices. Reinvested dividends add to investment growth.
Capital growth is important, even during retirement years. Greater investment value increases funds in later years to bring higher income at a time when expenses can rise dramatically. Each person will decide what balance of income and growth is appropriate, but growing investment worth should be considered essential. More retirees are living longer and have more active lives than in the past. These stocks can grow and generate rising income in 2012.