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 worldwide. The company offers HUMIRA, a therapy administered as an injection for autoimmune diseases; IMBRUVICA, an oral therapy for treating chronic lymphocytic leukemia; and VIEKIRA PAK, an interferon-free therapy to treat adults with genotype 1 chronic hepatitis C. 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 RSV infection at-risk infants. In addition, the company offers AndroGel, a testosterone replacement therapy for males diagnosed with symptomatic low testosterone; Creon, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid for hypothyroidism; and Lupron, a product for the palliative treatment of prostate cancer, endometriosis, and central precocious puberty, as well as for the treatment of patients with anemia. Further, it provides Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson's disease; Sevoflurane, an anesthesia product for human use; and ZINBRYTA, a treatment for relapsing forms of multiple sclerosis. It serves wholesalers, distributors, government agencies, health care facilities, specialty pharmacies, and independent retailers. AbbVie Inc. has collaborations with Alector, Inc.; C2N Diagnostics; Voyager Therapeutics, Inc.; Janssen Biotech, Inc.; International Myeloma Foundation; Calibr and Scripps Research; The Institute for Research in Immunology and Cancer – Commercialization of Research; the Université de Montréal; Tolero Pharmaceuticals, Inc.; Galapagos; Mission Therapeutics Ltd; Bristol-Myers Squibb Company; Voluntis; and Tizona Therapeutics, Inc. The company was incorporated in 2012 and is based in North Chicago, Illinois.

Current Price: $79.99
Consensus Rating: Hold
Ratings Breakdown: 6 Buy Ratings, 7 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $94.0871 (17.6% 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 operates in two segments, Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). The IH segment focuses on the development and commercialization of medicines and vaccines, and consumer healthcare products in various therapeutic areas, including internal medicine, vaccines, oncology, inflammation and immunology, and rare diseases, as well as consumer healthcare, such as over-the-counter brands comprising dietary supplements, pain management, gastrointestinal, and respiratory and personal care. This segment offers products primarily under the Prevnar 13/Prevenar 13, Xeljanz, Eliquis, Lyrica, Enbrel, Ibrance, Xtandi, Advil, and Centrum brands. The EH segment offers products that would lose or have lost marketing patent protection; branded generic products; generic sterile injectable products; biosimilars; and anti-infectives. It provides products under the Lipitor, Premarin family, Norvasc, Lyrica, Celebrex, Viagra, Inflectra/Remsima, Pristiq, Zyvox, Vfend, Revatio, Inspra, Medrol, Sulperazon, Fragmin, Tygacil, Nivestim, and Retacrit brands. This segment also engages in the research and development, as well as contract manufacturing activities. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual provider offices, as well as disease control and prevention centers. Pfizer Inc. has collaboration and/or co-promotion agreements with Bristol-Myers Squibb Company; Astellas Pharma US, Inc.; Merck KGaA; Immunicum AB (publ); Immutep Limited; BioNTech AG; Neofluidics, LLC; Kite Pharma, Inc.; Leap Therapeutics, Inc.; Nektar Therapeutics; Zenith Epigenetics Ltd., and Kineta Immuno-Oncology, LLC, as well as development agreement with Antares Pharma, Inc. It also has a collaboration agreement with Aileron Therapeutics, Inc. The company was founded in 1849 and is headquartered in New York, New York.

Current Price: $42.20
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 13 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $45.1111 (6.9% 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 communications and digital entertainment services. The company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International. The Business Solutions segment offers wireless services, strategic services, legacy voice, data services, wireless equipment, and other services to multinational companies, governmental and wholesale customers, and individual subscribers. The Entertainment Group segment provides video entertainment and audio programming channels to approximately 25 million subscribers; broadband and Internet services to 13.5 million residential subscribers; local and long-distance voice services to residential customers, as well as DSL Internet access; and voice services provided over IP-based technology. The Consumer Mobility segment offers postpaid and prepaid wireless voice and data communications services to consumers, and wireless wholesale and resale subscribers; consulting, advertising, and application and co-location services; and sells a variety of handsets, wirelessly enabled computers, and personal computer wireless data cards through company-owned stores, agents, or third-party retail stores, as well as accessories, such as carrying cases, hands-free devices, and other items. The International segment offers digital television services, including local and international digital video entertainment and audio programming under the DIRECTV and SKY brands throughout Latin America. This segment offers postpaid and prepaid wireless services in Mexico to approximately 15 million subscribers under the AT&T and Unefon brands; and sells a range of handsets. 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: $30.85
Consensus Rating: Buy
Ratings Breakdown: 13 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $35.7495 (15.9% 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, including beauty products, personal and baby care products, cleaning products, paper products, and pet supplies; food and beverage products, such as dry grocery, dairy, frozen food, beverage, candy, snacks, deli, bakery, meat, and produce products; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. It also provides home furnishings and décor comprising furniture, lighting, kitchenware, small appliances, home décor, bed and bath products, home improvement products, and automotive products, as well as seasonal merchandise comprising patio furniture and holiday décor; and music, movies, books, computer software, sporting goods, and toys, as well as electronics that include video game hardware and software. In addition, the company offers in-store amenities, which comprise 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 March 8, 2018, the company operated 1,826 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

Current Price: $72.71
Consensus Rating: Hold
Ratings Breakdown: 11 Buy Ratings, 11 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $87.0684 (19.7% 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. engages in utility, transport, energy, and communications infrastructure businesses. The company's 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 12,000 km of electricity transmission lines in North and South America; approximately 3.3 million electricity and natural gas connections in the United Kingdom and Colombia; and a port facility that exports metallurgical and thermal coal in Australia. Its 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 4,000 km of motorways in Brazil, Chile, Peru, and India; and 37 port terminals in North America, the United Kingdom, Australia, and Europe. The company's Energy segment offers energy transportation, distribution, 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, cooling, and energy solutions; and distributed natural gas, water, and wastewater services to approximately 59,000 commercial and residential customers. Its Communications Infrastructure segment offers services and critical infrastructure to the media broadcasting and telecom sectors. It has approximately 7,000 multi-purpose towers and active rooftop sites; and 5,000 km of fiber backbone located in France. Brookfield Infrastructure Partners Limited serves as the general partner of the company. Brookfield Infrastructure Partners L.P. was founded in 2007 and is based in Hamilton, Bermuda. The company is a subsidiary of Brookfield Asset Management Inc.

Current Price: $41.27
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $45.8125 (11.0% 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: $73.84
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $70.50 (-4.5% 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: $99.28
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 12 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $94.5882 (-4.7% 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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