7 Growth Stocks for Consistent Income in Retirement in 2019

7 Growth Stocks for Consistent Income in RetirementPosted on Monday, October 8th, 2018 by Chris Markoch

The retirement rules have changed. 30 years ago, being “in” retirement meant getting out of growth stocks, looking for income only – maybe even getting out of stocks altogether. The objective was to generate significant cash volume while minimizing risk. Those are still worthy goals, but the landscape for achieving them has changed. No longer can retirees count on fixed income staples like CDs or money market funds to generate the return they need to ensure they don’t outlive their money. Growth has become a necessity not just before retirement but into retirement. This is putting individual growth stocks back into play as part of an asset allocation strategy for a retirement portfolio. Fortunately, the landscape for growth stocks has changed as well.

When the words stocks and retirement are used, dividend stocks immediately come to mind, and with good reason. Dividend stocks have been a staple of many retirement portfolios. When considering a dividend stock, however, it’s wise not to simply chase the highest yield. Instead, investors should look for companies with a solid track record of delivering consistent dividends. These are the dividend aristocrats. They have issued a dividend in at least 25 consecutive years and, in many cases, have increased the amount of their dividend every year. As a retiree, that’s the kind of reliability you’re looking for. However, there are a number of dividend stocks that can also provide a healthy level of growth. This means that retirees can expect their portfolio to at least keep up with the cost of inflation in their golden years.

#1 - AbbVie (NYSE:ABBV)

AbbVie logo

AbbVie (NYSE: ABBV) - It stands to reason that a pharmaceutical stock would be a good dividend stock to consider in retirement. AbbVie is a name that may not be familiar to investors, but Abbott Labs probably is. AbbVie is a spin-off of Abbott Labs, allowing it to qualify as a dividend aristocrat even though it has only existed as a company for five years.

AbbVie has one of the more attractive dividend yields available at over 4%. In 2018, it increased its dividend by 50% from $2.56 per share to $3.89 per share. The stock also has a good valuation. It reached a high around $112 per share but has come down from that a bit. With a forward P/E ratio of around 11.8, it can be an attractive stock to add, particularly when investors consider the high dividend yield. Analysts are projecting a 40% increase in profits for the company in 2018 with future projections of 16% annual growth in the next five years.

But AbbVie is an attractive stock for another important reason. It owns the patent to Humira, the world’s best-selling drug. And even though that patent is set to expire which will bring in competition for Humira, the company has other drugs in its pipeline that should allow it to offset any losses from Humira’s patent expiration. And according to the research group, EvaluatePharma, AbbVie’s product pipeline was rated second-best in terms of value creation.

About AbbVie
AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products in the United States, Japan, Germany, Canada, Italy, Spain, the Netherlands, the United Kingdom, Brazil, and internationally. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet's diseases; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström's macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; VIEKIRA PAK, an interferon-free therapy to treat adults with genotype 1 chronic hepatitis C virus (HCV); TECHNIVIE to treat adults with genotype 4 HCV infection; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. It also provides KALETRA, an anti-human immunodeficiency virus (HIV)-1 medicine used with other anti-HIV-1 medications to maintain viral suppression in HIV-1 patients; NORVIR, a protease inhibitor indicated in combination with other antiretroviral agents to treat HIV-1; and SYNAGIS to prevent respiratory syncytial virus infection at-risk infants. In addition, the company offers AndroGel, a testosterone replacement therapy for males; CREON, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid to treat hypothyroidism; and Lupron to treat prostate cancer, endometriosis, and central precocious puberty, as well as anemia. Further, it provides Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson's disease; Sevoflurane, an anesthesia product; and ORILISSA, a non-peptide small molecule gonadotropin-releasing hormone antagonist for women with moderate to severe endometriosis pain. It has collaborations with Alector, Inc.; Janssen Biotech, Inc.; Galapagos; Bristol-Myers Squibb Company; and Calico Life Sciences LLC. The company was incorporated in 2012 and is headquartered in North Chicago, Illinois.

Current Price: $81.15
Consensus Rating: Hold
Ratings Breakdown: 5 Buy Ratings, 8 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $94.5871 (16.6% Upside)

#2 - Pfizer Inc. (NYSE:PFE)

Pfizer logo

Pfizer Inc. (NYSE: PFE) - Pfizer is another pharmaceutical stock that is a favorite of dividend investors. It offers an attractive dividend yield of around 3%, has a payout ratio of around 57%, and has paid out dividends for over 80 consecutive years. That’s consistency investors can count on. But does its past predict its future?

In the pharmaceutical business, first to market is the name of the game. Pfizer’s revenue has suffered a bit in recent years due to expiring patents that allowed competition, particularly with lower-priced generic equivalents. Those cost pressures are going away as new products are ready to hit the market. Their current pipeline includes 28 late-stage programs with several other drugs pending regulatory approval. Their cancer drug, Ibrance, is one of the fastest-growing drugs in the world and the company is also reporting strong sales from Eliquis, which is a drug they co-market with Bristol-Myers Squibb.

With new products on the horizon and our country’s continued reliance on prescription medication, there is a place for Big Pharma in a retirement portfolio. Pfizer’s stock has a P/E ratio just below 12 giving it a very attractive valuation relative to its stock price which, although it is right around its 52-week high is still very attractively priced in the mid-40’s.

About Pfizer
Pfizer Inc. discovers, develops, manufactures, and sells healthcare products worldwide. It offers medicines and vaccines in various therapeutic areas, including internal medicine, vaccines, oncology, inflammation and immunology, and rare diseases under the Lyrica, Chantix/Champix, Eliquis, Ibrance, Sutent, Xalkori, Inlyta, Xtandi, Enbrel, Xeljanz, Eucrisa, BeneFix, Genotropin, and Refacto AF/Xyntha brands. The company also provides consumer healthcare products that comprise over-the-counter medicines, including dietary supplement products under the Centrum, Caltrate, and Emergen-C names; pain management products under the Advil and ThermaCare names; gastrointestinal products under the Nexium 24HR/Nexium Control and Preparation H names; and respiratory and personal care products under the Robitussin, Advil Cold & Sinus, and ChapStick names. In addition, it offers products that would lose or have lost marketing patent protection; branded generic products; generic sterile injectable products; biosimilars; and anti-infectives under the Lipitor, Premarin family, Norvasc, Lyrica, Celebrex, Viagra, Inflectra/Remsima, Zyvox, Vfend, Revatio, Inspra, Medrol, Sulperazon, Fragmin, Tygacil, Nivestim, and Retacrit, Ixifi Infliximab BS names. Further, the company is also involved in the contract manufacturing business. It serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual provider offices, as well as disease control and prevention centers. The company has collaboration and/or co-promotion agreements with Bristol-Myers Squibb Company, Astellas Pharma US, Inc., and Merck KGaA; licensing agreement with BionTech AG; and collaboration agreements with Merck & Co., Inc. and Eli Lilly & Company, as well as with Merck KGaA and Nektar Therapeutics to develop a therapy for treating pancreatic cancer. Pfizer Inc. was founded in 1849 and is headquartered in New York, New York.

Current Price: $41.92
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 12 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $46.1176 (10.0% Upside)

#3 - AT&T (NYSE:T)

AT&T logo

AT&T (NYSE: T) - With a dividend yield of around 6 percent, it’s hard to argue with the logic of considering AT&T in a retirement portfolio. It is a dividend aristocrat that is currently showing signs of being severely undervalued. It has a forward P/E ratio in the single digits (around 6.6), but analysts are still projecting approximately 15% growth for the year.

The stock has faced some challenges for sure. They have ranged from infrastructure concerns centered around the company’s need to upgrade to 5G technology, competition not only from other wireless carriers but from a nation moving away from cable television providers, and existential concerns such as the company’s association with a former attorney of President Trump, Michael Cohen.

But the storm clouds are passing, and value investors are seeing rays of sunshine. For one, AT&T is one of only a handful of wireless providers that will be able to take advantage of 5G technology, so that is one path to profit. Their recent purchase of DirectTV gives them both satellite and streaming TV service options that can make their bundled services more appealing and the stock is attractively priced.

In the final analysis, while the company still faces some challenges, the stock should be well positioned for growth and continued income via its dividend offering.

About AT&T
AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through four segments: Communications, WarnerMedia, Latin America, and Xandr. The Communications segment provides wireless and wireline telecom, video, and broadband and Internet services; video entertainment services using satellite, IP-based, and streaming options; and audio programming services under the AT&T, Cricket, AT&T PREPAID, and DIRECTV brands to residential and business customers. This segment also sells handsets, wirelessly enabled computers, and wireless data cards manufactured by various suppliers for use with company's voice and data services, as well as various accessories, such as carrying cases and hands-free devices through the company-owned stores, agents, and third-party retail stores. The WarnerMedia segment primarily produces, distributes, and licenses television programming and feature films; distributes home entertainment products in physical and digital formats; and produces and distributes mobile and console games, and consumer products, as well as offers brand licensing services. It also operates cable networks, multichannel premium pay television, and over-the-top services; and digital media properties. The Latin America segment offers video entertainment and audio programming services under the DIRECTV and SKY brands primarily to residential customers; pay-TV services, including HD sports video content; and postpaid and prepaid wireless services under the AT&T and Unefon brands, as well as sells various handsets through company-owned stores, agents, and third-party retail stores. The Xandr segment provides digital advertising services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

Current Price: $32.14
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $36.3942 (13.2% Upside)

#4 - Target (NYSE:TGT)

Target logo

Target (NYSE: TGT) - The demise of traditional brick-and-mortar retailers such as Target may have been exaggerated. That’s good news for retirees who may be looking for a stock that has a little more value than a behemoth like Amazon. But is there a case to be made for Target? The answer is found in the words “omnichannel marketing”. Simply put, Target has found a way to compete with Amazon using their ability to reach their customers both online and with an in-store experience. This addition of a physical store footprint is giving well-managed retailers like Target an advantage over Amazon.

Now for the technical case. Target is currently trading well above its 52-week low and just below its recent 52-week high. It has a forward P/E ratio of just over 14 which is one-third of Wal-Mart and over ten times lower than Amazon. This suggests that even though the stock is approaching its record highs, there is still value to be found. Analysts seem to agree, forecasting nearly 15% profit growth for 2018, and five-year average annual growth of 7.5%.

And with a 47-year history of annual dividend increases, Target falls into the classification of a dividend aristocrat. Their current dividend yield is approximately 2.9% at $2.56 per share.

About Target
Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials; food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home décor products, electronics, toys, seasonal offerings, and other merchandise. The company also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com. As of February 2, 2019, the company operated 1,844 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

Current Price: $79.40
Consensus Rating: Buy
Ratings Breakdown: 14 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $90.1523 (13.5% Upside)

#5 - Brookfield Infrastructure Partners LP (NYSE:BIP)

Brookfield Infrastructure Partners logo

Brookfield Infrastructure Partners LP (NYSE: BIP) - A buzzword hovering over our economy for the past few years is infrastructure. From railroads and toll roads to modernizing utilities and wireless technology, the United States is getting a makeover. For investors that makes infrastructure stocks a valuable piece of their portfolio. Brookfield Infrastructure Partners LP has assets in all the areas we mentioned above and many more.

But beyond that, BIP gives retirees what the opportunity for an attractive dividend yield with low risk, and the opportunity for continuing growth. BIP’s current dividend yield is 4.76% and is considered extremely safe because the company uses approximately 66% of their funds from operations (FFO) to make distributions to its general partners and unitholders.

The company is forecasting over $3 trillion in municipal infrastructure by mid-2020 just in the United States. When investors factor in projects from all over the world, the opportunities are even better. Asia is looking at $26 trillion in infrastructure investments in the next decade and an additional $6.7 trillion in water supply and sanitation investments between now and 2050.

About Brookfield Infrastructure Partners
Brookfield Infrastructure Partners L.P. owns and operates utilities, transport, energy, and data infrastructure businesses. The Utilities segment operates approximately 2,000 kilometers (km) of natural gas transportation pipelines in the states of Rio de Janeiro, Sao Paulo, and Minas Gerais; approximately 2,200 km of electricity transmission lines in North and South America; and approximately 6.6 million electricity and natural gas connections and 1.1 million smart meters, as well as operates metallurgical coal export terminals. The Transport segment offers transportation, storage, and handling services for freight, bulk commodities, and passengers through a network of 5,500 km of track network in south of Western Australia; approximately 4,800 km of rail in South America; approximately 4,200 km of motorways in Brazil, Chile, Peru, and India; and 37 port terminals in North America, the United Kingdom, Australia, and Europe. The Energy segment offers natural gas midstream and storage services through approximately 15,000 km of natural gas transmission pipelines; and 600 billion cubic feet of natural gas storage in the United States and Canada. This segment also provides heating and cooling services to customers, and energy solutions, as well as serves approximately 24,900 natural gas, water, and wastewater connections. In addition, the Energy segment provides water heater rental; heating, ventilation, and air conditioner rental; and other home services in Canada and the United States, as well as 270,000 contracted sub-metering services with in Canada. The Data Infrastructure segment offers services and critical infrastructure to the media broadcasting and telecom sectors; and data storage services and infrastructure to enterprise customers. The company was founded in 2007 and is based in Hamilton, Bermuda. Brookfield Infrastructure Partners L.P. is a subsidiary of Brookfield Asset Management Inc.

Current Price: $41.92
Consensus Rating: Buy
Ratings Breakdown: 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $45.7857 (9.2% Upside)

#6 - EPR Properties (NYSE:EPR)

EPR Properties logo

EPR Properties (NYSE: EPR) - Real estate investment trusts (REITs) are another popular stock sector for retirees. The conventional wisdom is that baby boomers who are looking for senior housing can invest in REITs that specialize in that area. A contrarian play to that is to look at the generation that has become a larger generation than the baby boomers, the millennials. This generation is becoming known as the "experience" generation, and EPR Properties is well-positioned to take advantage of the buying power that comes from this demographic.

EPR Properties owns properties that focus on entertainment (such as megaplex theaters which are changing the experience of "going to the movies"), recreation (think ski resorts and golf complexes that are making a comeback) and education (public charter schools, private schools, and early education centers). Each of these areas is primed for growth particularly as the millennial generation now are having school-age children and they are looking to have experiences with them. To that point, the company is looking at expanding into other entertainment properties such as zoos, stadiums, live theaters, and race tracks.

EPR is a very attractive dividend stock, paying a yield of just below 6.5% with a dividend payout of less than 75% of its adjusted FFO. This means that the dividend should be very sustainable for the future.

About EPR Properties
EPR Properties is a specialty real estate investment trust (REIT) that invests in properties in select market segments which require unique industry knowledge, while offering the potential for stable and attractive returns. Our total investments exceed $6.7 billion and our primary investment segments are Entertainment, Recreation and Education. We adhere to rigorous underwriting and investing criteria centered on key industry and property level cash flow standards. We believe our focused niche approach provides a competitive advantage, and the potential for higher growth and better yields.

Current Price: $78.82
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $74.90 (-5.0% Upside)

#7 - Procter & Gamble (NYSE:PG)

Procter & Gamble logo

Procter & Gamble (NYSE: PG) - No list would be complete without one of the bluest of the blue chips, Procter & Gamble. This venerable stock makes the list for many reasons. The company is a dividend aristocrat. They are a defensive stock because their products will continue to sell in any economy. They have well-known brands. Any of these reasons by themselves would be a reason to own the stock. But contrarians will ask, where is the growth? The stock has underperformed the S&P 500 over the past decade and in the first six months of 2018, P&G’s stock dropped 15% while the S&P 500 showed a 2% gain. The dividend yield, while attractive at 3.9%, does not put the stock in the elite category, even as a dividend aristocrat.

But P&G may very well be an example of a stock having the ability to perform better than the company. The company is seeking to reach out to younger customers, and its ability to capture millennials will tell that tale. However, the company remains a cash generating machine. They are efficient at holding costs down meaning that there will be plenty of room to continue to reward shareholders either through dividends or stock buybacks.

About Procter & Gamble
The Procter & Gamble Company provides branded consumer packaged goods to consumers in North America, Europe, the Asia Pacific, Greater China, Latin America, India, the Middle East, and Africa. The company operates in five segments: Beauty; Grooming; health Care; fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments; and skin and personal care products, such as antiperspirants and deodorants, and personal cleansing and skin care products under the Head & Shoulders, Pantene, Rejoice, Olay, Old Spice, Safeguard, and SK-II brands. The Grooming segment provides female and male blades and razors, pre- and post-shave products, and other shave care products; and appliances that include electric shavers and epilators under the Braun, Fusion, Gillette, Mach3, Prestobarba, and Venus brands. The Health Care segment offers toothbrushes, toothpastes, and other oral care products; and gastrointestinal, rapid diagnostics, respiratory, vitamin/mineral/supplement, and other personal health care products under the Crest, Oral-B, Metamucil, Prilosec, and Vicks brands. The Fabric & Home Care segment provides fabric enhancers, laundry additives, and laundry detergents; and air care, dish care, P&G professional, and surface care products under the Ariel, Downy, Gain, Tide, Cascade, Dawn, Febreze, Mr. Clean, and Swiffer brands. The Baby, Feminine & Family Care segment offers baby wipes, diapers, and pants; adult incontinence and feminine care products; and paper towels, tissues, and toilet paper under the Luvs, Pampers, Always, Tampax, Bounty, Charmin, and Puffs brands. The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores, and pharmacies. The Procter & Gamble Company was founded in 1837 and is headquartered in Cincinnati, Ohio.

Current Price: $106.76
Consensus Rating: Hold
Ratings Breakdown: 10 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $101.3889 (-5.0% Upside)

One of the hardest things to adjust to in life is change. But for current retirees, change is something that they need to embrace. The old rules of retirement no longer apply. There is now not only a place for growth in a retirement portfolio, but it is also virtually a must. The good news is that there are a number of growth stocks that provide the attractive benefits of dividend investing with an underlying business model that provides an exceptional opportunity for growth. From pharmaceutical companies to real estate, there are good stocks in sectors that will continue to flourish in any economy.

Investing in individual growth stocks is not without risk. As an investor, it’s important for you to understand your personal risk tolerance when you decide whether or not to add a growth stock to your retirement portfolio.

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