Johnson & Johnson (JNJ), SCANA Corporation (SCG): 5 Potential Retirement Stocks

Page 1 of 3

Passive investing in equities for retirement requires prudent, conservative allocation of resources into those equity securities that assure stable or consistently rising income streams with little volatility of price returns over time; discover one particular market-beating strategy here. Preferable are stocks of companies that have earnings power and consistency through all business cycles. Boring and defensive is what generally has been the norm among conservative retirement investments in stocks.

Johnson & Johnson (JNJ)

The details

Focusing on stocks that can deliver a combination of dependable dividend income and capital appreciation over time, here is a list of five potential retirement stocks. These stocks were selected based on the following characteristics:

1). Dividend yields of at least 3%, above the current 10-Year Treasury bond yield of 2.16%
2).
Long-term historical dividend growth above the rate of inflation
3).
Low variability of returns
4).
Betas below that of the broader market
5).
Capacity to sustain earnings and dividends through business cycles
6).
Diversification across several industries

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ), a pharmaceutical giant boasting 51 years of consistent dividend growth, is as dependable for dividend income as it gets. The company has been in operation since 1886, and has a record of 29 years of consecutive increases in adjusted EPS. It is poised for additional years of EPS expansion, driven by its diversified product mix (comprising of drugs, medical devices, and consumer products) and a robust development pipeline. In addition to its earnings consistency, Johnson & Johnson (NYSE:JNJ)’s low-volatility of returns, beta of only 0.48, dividend yield of 3.0%, and consistent dividend growth—averaging 7.9% over the past five years—make it a strong candidate for long-term retirement portfolios. Its balance sheet is rock solid, and features low debt relative to equity. The company is a free cash flow powerhouse, as it converts 114% of its net income into free cash flow.

Johnson & Johnson (NYSE:JNJ) has several catalysts for continued growth in the future, which should support its earnings and total returns. These catalysts include aging demographics, rising incidence of chronic diseases, and growing incomes in emerging markets. With the pharmaceutical market expected to grow at a CAGR of 4.5% through 2017, according to IMS Health, Johnson & Johnson (NYSE:JNJ) is planning to submit 10 new products filings by 2017. Drug introduced over the past few years, including Zytiga for prostate cancer and Invokana for diabetes, have already mitigated revenue losses from Johnson & Johnson (NYSE:JNJ)’s patent cliff. These and other products introduced since 2009 are expected to account for nearly half the overall sales by 2017. Contributions to growth will also come from the medical devices and consumer goods markets. The global medical devices market is expected to expand at a CAGR of 6.1% for the next five years, according to Lucintel, a global market research firm, while demand for consumer goods will receive a major boost from emerging markets.

Scana

SCANA Corporation (NYSE:SCG), an electric utility company with operations in South Carolina, North Carolina, and Georgia, is another candidate for retirement portfolios. The company has been in operation for 160 years. Its consistent earnings performance has enabled it to increase dividends for 12 consecutive years now. The company operates in a favorable regulatory environment, whereby regulated earnings from electricity and natural gas utilities provide stability to cash flows and, thus, to dividends. Utilities are generally the least economically sensitive sectors, characterized by low operational risk, which is the case with SCANA Corporation (NYSE:SCG). Moreover, as a utility stock, SCANA Corporation (NYSE:SCG) has low variability of returns relative to its own average return and the market’s returns as measured by the stock’s beta that is only half the metric for the overall market.

Page 1 of 3
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!