As people reach the age of retirement, investors want less risk and more of a guaranteed return. The 5 stocks below have been identified as possible investments. Depending on the investor's willingness to take risk, some of these companies may appear to be more attractive than others.
iShares MSCI Brazil Index (NYSEARCA:EWZ) – For any investor diversification is key. Without it, one will be subject to the volatility of the handful of stocks owned in that portfolio. Owning an index will give investors just that. In addition, because EWZ is based on the Brazilian market, there is more room for it to grow as well as hedge against the risk in U.S. equities. Over the last 3 years, EWZ has simply crushed the market index with a return of 24.35% compared with the market index of only 8.90%. However, EWZ has had some problems with volatility over the past year. Recently EWZ has been down 20.6% while its competitor MSCI Brazil Currency Hedged Equity Fund (DBBR) was up 1.3% during that time. While the gain does not seem like a lot, it is much better than losing nearly a fifth of its total value as EWZ did. The index is currently closer to its 52-week low of $49.25 than it is to the high of $81.77, but as economies begin to stabilize the index will slowly creep back up towards the high. However, until that happens, this index will have a rating to Hold.
MFA Financial Inc. (NYSE:MFA) – Many dividend investors look at REITs as a good investment. As part of their business REITs are required to distribute 90% of the company’s taxable income to investors as a dividend. The company currently issues a dividend annually of $1.00, which gives it a hefty yield of 15.46%. One concern based on these numbers is that the current earnings per share is only $0.95 meaning that company will either need to make up the difference in future earnings or the dividend, and stock price, will both take a hit. The company’s biggest competitor is REIT leader Annaly Capital Management Inc. (NYSE:NLY). NLY’s yield is slightly less at 15.15% but the higher annual dividend of $2.40 and lower beta of 0.34 definitely make it a safer investment. Choosing between the two companies one would suggest to purchase the more stable NLY over MFA. However, if a portfolio does have MFA in it, it would be a good idea to Hold those shares and continue to collect the dividend. The biggest reason MFA is a hold and not a sell is the fact that its price to book ratio is currently at 0.81, meaning that the company is worth more than its total market capitalization.
GlaxoSmithKline PLC (NYSE:GSK) – This company, while having one of the higher dividends of $2.17, has one of the lower dividend yields on this list of 4.96%. The beta for this stock is also at a stable 0.61, so anyone looking for a stock with less volatility can find what they need in GSK. However, even though this stock is less volatile than the market, it may be seen as one that could be over priced. The current price to earnings ratio is on the higher side at 22.2 while the industry and S&P 500 (NYSEARCA:SPY) both trail at 16.7 and 17.4. The price to book value is also fairly high at 8.22 which is almost double the industry and is more than double the S&P 500. One of its biggest competitors is Novartis AG (NYSE:NVS) not only has a smaller price to earnings ratio of 13.58 but also has a much higher earnings per share of $4.24 compared to that of GSK’s at $1.96. Depending on at what price an investor purchased GSK, the stock rating could be Hold. However, if the company falls back in line with the industry, now may be a good time to sell with the possible intent of repurchasing shares at a lower price.
Nokia Corporation (NYSE:NOK) – Even though NOK has an annual dividend of $0.57, the yield itself is a handsome 9.23%. With the stock price under $10 at $6.18, this could be an attractive investment for many individuals. The stock does look like it has some room to grow as well. NOK’s current price to earnings ratio is 13.5 which is less the industry average of 17.3 and also has a book value almost half the industry at 1.38. Compared to its direct competitors, the stock is by no means leading the market. LM Ericsson Telephone Co. (NASDAQ:ERIC) has a higher gross margin, net income, and earnings per share than NOK. Based on the company’s figures, if shares are already owned, they are good to Hold, but it may not be recommended to add any more to one’s current position.
Altria Group Inc. (NYSE:MO) – Many people may not have heard of Altria Group, but they most likely have used its products. Dealing with tobacco, MO may be viewed as a negative investment, but based on the numbers; this stock is one that can help out any portfolio. The company has a great dividend yield of 5.94% that translates into $1.64 annually. With this, the stock delivers one of the more attractive dividends in its sector. Another added benefit to the stock is its low volatility with a beta of only 0.47, making this an attractive investment for retirees who are looking for something with less of a risk. The company’s sales are impressive as well at $3.42 billion dollars, which is about 3 times that of its direct competitors Lorillard, Inc. (NYSE:LO) and Reynolds American Inc. (NYSE:RAI). The year-to-date return on MO has very profitable at 16.53%. Based on the market, the stock’s attractive dividend, and where the company is at, MO looks to be a good investment at its current price. This stock is recommended as a buy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.