I have been getting some questions recently about how to go about building a retirement portfolio while the market is heading higher. Human nature I suppose, forces us to want to be in at the lowest prices, even though we are building this portfolio for our retirement years, as we now enter them.
To me, the process is precisely the same. As a dividend growth investor we are more focused on income received than on capital appreciation. That being said, we do need to monitor the stocks we select so we do not run into an unexpected buzzsaw and lose our income to a significantly reduced portfolio value.
When we select the best stocks on the planet, with strong dividends now, as well as a history of dividend growth that is unmatched by the "newcomer" dividend stocks, we can insulate ourselves from many risks. Not all of them of course, but many of them.
The Stocks I Would Build A Retirement Portfolio With Now
Johnson & Johnson (JNJ): Price: $68.40/share (as of 7/26): Dividend Yield: 3.70%, ESS Rating: Very Bullish
This stock has a 50 year history of dividend growth. The company is a part of everyone's life in some shape or form and has a huge impact on our everyday lives. JNJ should be an anchor stock right now.
Procter & Gamble (PG): Price: $64.93/share (as of 7/26): Dividend Yield: 3.60%, ESS Rating: Bullish
This stock has a 55 year history of dividend growth. A defensive play that has faced some internal headwinds of late. PG is also a part of everyone's life virtually everyday and should also be a top priority stock in your retirement portfolio.
Con Edison (ED): Price: $64.26/share (as of 7/26), Dividend Yield: 4.0%, ESS Rating: Bullish
The best of breed utility stock with the brand name to go along with it. It's roots are in the Northeast with the greatest density of population, and is relied upon by countless millions for daily living. They are the KINGS of the utilities and with a healthy dividend, and a 40 year history of growing those dividends, this stock offers diversity in the utility and energy sector. A must have for any retirement portfolio.
Coca Cola (KO): Price: $78.60/share (as of 7/26): Dividend Yield: 2.80%, ESS Rating: Bullish
Cocoa Cola has the most recognized brand on the planet as well as a 50 year history of dividend growth. Both a defensive stock as well as an offensive one, there is not a place on earth where people do not know KO. Another premium holding for any retirement portfolio.
Wal-Mart (WMT): Price: $73.26/share (as of 7/26), Dividend Yield: 2.30%, ESS Rating Bullish
The world's largest retailer shows absolutely no signs of slowing down. They continue their expansion mode in good and bad times and compete with any other retailer anywhere. With a 40 year history of dividend growth, this market sector is well served by WM within your retirement portfolio.
McDonald's (MCD): Price: $88.83/share (as of 7/26), Dividend Yield: 3.30%, ESS Rating: Very Bullish
McDonald's is everywhere and the are the best of breed in the restaurant sector. A 35 year track record of dividend growth gives the retired an income flow that is hard to beat. Another premium stock for any retirement portfolio.
Exxon Mobil (XOM): Price: $85.57/share (as of 7/26), Dividend Yield: 2.80%, ESS Rating: Very Bullish
When you think of energy in all shapes and forms, the number one company in the sector has been Exxon Mobil. One of the worlds largest corporations, it has a track record of 30 years of dividend growth and is a "must own" for any retirement portfolio.
AT&T (T): Price: $35.99/share (as of 7/26), Dividend Yield: 5.10%, ESS Rating: Bullish
AT&T has a 28 year history of dividend growth and in my opinion will also offer great capital appreciation as it has morphed from a telecom company to a tech company and is playing well in both segments. As they continue to grow exponentially, the wonderful dividend T pays now will become ever more valuable. This stock should also be an anchor in any retirement portfolio.
Why These 8 Stocks
The stocks noted have been consistent dividend growers, consistent dividend payers, and are extraordinarily well capitalized. There is less risk owning shares of each of these stocks than 99% of all stocks available. They are not the high flyers that can gain 20% over night, but they are the SWAN stocks for those of us who want to enjoy a more secure, less risky retirement period.
In my opinion, these stocks can be held forever. If there is also a cash reserve in your portfolio of about 20% (or more) you are well prepared to take advantage of opportunities when these stocks dip, as well as taking a tad more risk in a growth stock like Apple (AAPL) to add spice.
One more thing is that you can start your portfolio right now, as a retired or soon to be retired investor, and know you have the best of the best to begin with.
An allocation ranging from 4-10% in each will give you balance and diversity, and you will begin your journey on solid ground with a portfolio of stocks that will work for you. Why wait? Now is a great time to begin.